Alabama Consumer Law Blog

Anthony Bush with Anderson Nelms & Associates filed a case on January 22, 2009, against Beneficial Assurance LTD, Inc., Homecomings Financial, LLC, America's First Federal Credit Union, Credit Bureau Services International, Inc. and Experian.

This case arises out of a bankruptcy discharge that the plaintiff received several years ago (2007) but the defendants continued to report discharged debts as having a balance owed. A discharged account must be listed as a zero balance as no money is owed to the defendant/creditor.

This lawsuit alleges violations of the Fair Debt Collection Practices Act, Fair Credit Reporting Act and state law including deceptive trade practices.

This type of misconduct (leaving false balances on accounts that have been discharged) has been going on for some years and we have filed numerous lawsuits over the last three years related to this but creditors and collectors continue to violate the law in attempts to extort money out of consumers who no longer owe the creditors and collectors any money. We wish Anthony Bush the best of success with this suit in his efforts to help encourage creditors and collectors to obey the law.

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Our office filed this month our twentieth federal lawsuit against the famous debt buyer Midland for suing our client in a collection case, losing the collection case, and then refusing to remove the false credit reporting from our client's credit report. The three major credit reporting agencies (Equifax, Experian, and Trans Union) were also included in the suit.

This is a situation we see happening again and again with debt buyers in Alabama. They sue in small claims court or district court. They have no proof. They show up to trial with no proof other than the pipe dream of trying to prove their case through a consumer/defendant who has no idea about whether or not the debt buyer owns the debt. Then the debt buyer loses. Then the debt buyer tells the credit or consumer reporting agencies (Equifax, Experian, and Trans Union) to keep the false credit reporting on the consumer's credit reports.

Our clients have received five judgments against Midland in federal court but the wrongful conduct continues.

If you are sued by Midland, or any of these other junk debt buyers, please make sure you protect yourself by learning about your options and taking immediate action.

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Our friend Anthony Bush with Anderson Nelms & Associates filed a case on February 2, 2009, against Bay Finance Company, Redstone Federal Credit Union and the consumer reporting agencies of Equifax, Experian and Trans Union.

This case arises out of a bankruptcy discharge that the plaintiffs received last year but the defendants continued to report discharged debts as having a balance owed. A discharged account must be listed as a zero balance as no money is owed to the defendant/creditor.

This lawsuit alleges violations of the Fair Debt Collection Practices Act, Fair Credit Reporting Act and state law including deceptive trade practices.

This type of misconduct (leaving false balances on accounts that have been discharged) has been going on for some years and we have filed numerous lawsuits over the last three years related to this but creditors and collectors continue to violate the law in attempts to extort money out of consumers who no longer owe the creditors and collectors any money. We wish Anthony Bush the best of success with this suit.

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Americans For Fairness In Lending has a nice list of ten items that the government needs to consider and act upon to help restore some order to the markets and to be fair to consumers.

We won't repeat them here except to say we are particularly concerned about the horrendous practice of mandatory binding arbitration - particularly when it occurs through an amendment contained in a "bill stuffer". Its funny how companies don't want to be bound by mandatory arbitration (for example car dealers say its unfair for manufacturers to require binding arbitration) but these same dealers say it is absolutely fair to have mandatory binding arbitration on consumers. I know its hard to be always be consistent but come on....

Check out the article and if you agree let your elected officials know what you think and what you expect.

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Nicolas Ortiz has an excellent post on offers of judgment in FDCPA cases. We previously blogged about this and will continue to do so as this strategy is being used more and more by debt collectors who get sued.

As Nicolas Ortiz puts it, the basic gist of an offer of judgment is:

If a plaintiff rejects an offer of judgment and recovers less that the offer amount at trial, he must pay the defendant’s costs. These costs include transcript costs and the like, but it do not include the biggest ticket item, attorney’s fees. As the First Circuit put it: “Rule 68 can never require prevailing civil rights plaintiffs to pay defendants’ post-offer attorney’s fees.” Crossman v. Marcoccio, 806 F.2d 329, 334 (1st Cir. 1986). The same holds true for other, non-civil rights cases. Rule 68 cannot be used to shift fees.

Debt collectors use offers of judgment as a weapon but we like to turn this around on them. We'll accept ones that are a good deal and then remind the court in every future case that a judgment exists against the defendant. We have never had a defendant want to do another offer of judgment after doing one (or a group at one time) with us...... Maybe they don't like hearing about previous judgments in future cases? :)

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A lawsuit was filed this month in the Middle District of Alabama against the well known debt buyer from California Midland Credit Management and Providian Bank. In the suit, our friend Anthony Bush represents Frederick Myers who claims he was contacted by both Providian and Midland on a debt that is not his. He disputed it but still Providian sold it to Midland for collection purposes and ultimately Midland went so far as suing Mr. Myers in small claims court.

We know Anthony Bush sees this as well as we do - so many of these debt buyers are filing suits with no proof and even suing people who do not owe any money to the debt buyers.

We wish Mr. Myers the best of success in his case that alleges violations of the Fair Debt Collection Practices Act (FDCPA), Alabama Deceptive Trade Practices Act, and state law (negligence, harassment, and invasion of privacy).

If you are dealing with a debt buyer, make sure and educate yourself so you know what your options are and what course of action is best for you.

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Our good friend Mike Lindsey has been appearing live on the local sports radio station with Jay Barker, Al Del Greco and Tony Curry in the mornings on WJOX program, The Opening Drive, informing Alabama consumers of their rights against debt collectors and credit reporting agencies. This is valuable information, especially in this time of financial crisis.

As times have gotten tougher, the debt collectors and debt industry have gotten more aggressive in collecting debt, often violating the law. We are hearing more and more stories about debt collectors contacting family members, neighbors and co-workers.

We have worked with Mike and are glad to see he his helping to get the word out. To learn more about Mike and his practice you can go to his website.

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Our friend Matthew Dunaway has several good recent posts on bankruptcies on his Birmingham Bankruptcy Blog.

*Chapter Seven Bankruptcies - 10 Things You Need To Know

*Bankruptcy Basics - 10 Things You Need To Know

*Finally, Bankruptcy Right For You? - 7 Things To Consider

Stay current on Matt's blog as it will be providing, we are sure, more and more useful information to you.

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We are often asked by victims of abusive debt collectors what is the general overview or road map to what happens when they file a federal lawsuit under the Fair Debt Collection Practices Act (FDCPA) against the abusive debt collector. We have recently started a similar series concerning Alabama injury lawsuits over on our Birmingham Injury Blog and thought it would be a good idea to do something similar with an Alabama FDCPA case.

We'll have a follow up blog post on each of these topics but for this post we will only lay out the steps to give you a good overview.

1. Suit is filed.
2. The lawsuit (complaint) is served on the defendant or defendants.
3. 20 days after being served, each defendant must answer the lawsuit or file a motion to dismiss.
4. If a motion to dismiss is filed, then the court will set a briefing schedule and sometimes (though not usually) have a hearing. The court will then issue a written ruling detailing whether or not the case against that defendant can proceed or if that particular claim against a defendant will be dismissed. If the motion is denied, then the defendant will need to file an answer to the lawsuit.
5. The defendant then files an answer detailing what parts of the complaint it agrees with and which parts the defendant denies. The answer also lists the "affirmative defenses" that the defendant claims will let it win the case even if it is guilty of violating the FDCPA.
6. The parties have a "meeting of the parties" to prepare a joint proposal to the federal judge with the deadlines and schedule of what will happen in the case.
7. The judge will review the proposal, occasionally will have a meeting with the lawyers, and then will issue a scheduling order which sets forth the deadlines and the limits on discovery.
8. The parties can engage in discovery to learn information about each other's positions.
9. Written discovery occurs.
10. Depositions normally (but don't have to) follow written discovery.
11. Often one party will move for summary judgment asking the judge to go ahead and rule in that party's favor on the whole case or part of the case as no reasonable jury could rule on the issue any other way. Sometimes this occurs on a single issue (did the defendant violate the FDCPA but leaving the issue of damages for the jury) or sometimes it is on the whole case (did the defendant do anything wrong at all).
12. The federal judge will set a briefing schedule for the summary judgment motion.
13. The judge will often hold a hearing to determine if the motion for summary judgment is appropriate or if it should be denied so a jury can decide the issues. The judge will issue a detailed written order setting forth the ruling and the basis of the ruling.
14. Often mediation will occur before a trial. This is where the parties try to resolve their differences with the help of a neutral person. This can be a private individual - usually an experienced lawyer or former judge trained in mediation. It can also be with a magistrate judge who agrees to step in to try and resolve the case before trial. Sometimes a federal judge will order mediation but normally it is at the option of the parties.
15. Trial occurs.
16. The losing party can ask the judge to change his or her mind about a ruling so that a new trial can occur.
17. Appeal to the Eleventh Circuit Court of Appeals in Atlanta, Georgia.

We will take each one of these steps and provide more detail so that as you consider filing a FDCPA lawsuit in Alabama against an abusive debt collector you will have a detailed guide to what will happen as we firmly believe that knowledge is power.

As always please contact us if you have any questions or would like us to send you more information free of charge. If you like this blog post, please subscribe to our blog through the RSS feed.

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This video describes (with an admitted slant) the compelling story of Lilly Ledbetter who was defeated at the U.S. Supreme Court in her attempt to gain justice for Goodyear breaking the law by paying her less than comparable male employees. This led to Congress passing a law prohibiting courts from throwing out similar cases based on when the discrimination was discovered.

Here is where the president signed the Lilly Ledbetter Fair Pay Act:

We congratulate Lilly Ledbetter for her wonderful fight and her determination to turn a negative court ruling into a positive law for everyone. Well done.

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A recent Smart Money article by Anne Kadet lays out in a very clear manner what is wrong with the credit reporting industry (Experian, Equifax, and Trans Union). Rather than summarize this article, read it. Then read it again - its that good and important.

Here is an excerpt to show you why this article is critical:

So suppose there’s a whopper of an error on your credit report. Suppose it says you’re dead. That’s what Ken Clark, a financial planner in Little Rock, Ark., was told when he tried to buy his wife a minivan. The auto dealer called Clark a con man because his report was marked “deceased.” When Clark called the credit bureaus to report that he was still breathing, he learned that the real authority on the matter was a Utah bank that issued him a credit card and later reported him dead. To fix the error, Clark had to send a notarized letter and a copy of his utility bill to the bank, which in turn assured the bureaus that he was alive.

Clark’s story sheds light on how the dispute process works. Credit bureaus say they usually need to check with the lender because 30 percent of disputes are filed by shady credit-repair companies that challenge all the negative information on a consumer’s report, regardless of its validity. Bureaus also have to deal with consumers who pull stunts like concocting official-looking statements on phony letterhead; one bureau says it recently got a letter from “Banke [ed.-this “typo” is intentional, replicating the original] of America.” To sort the good from the bad, the industry sends almost everything through the automated system e-OSCAR (Electronic Online Solution for Complete and Accurate Reporting), which forwards consumer disputes to lenders for verification.

Here’s where the trouble begins. Rather than call the lender or send it the consumer’s letter and supporting evidence, the bureaus zap the documents to a data processing center run by a third-party contractor. This system yields considerable savings. Equifax reduced its per-dispute cost from $4.50 to 50 cents by outsourcing the work to Costa Rica and the Philippines, for example. But consumer advocates say these workers are under enormous pressure to process disputes and forward them to lenders as quickly as possible. While the bureaus say quality is the overriding factor, employees deposed in civil suits describe a harried pace. One TransUnion manager testified that workers were expected to complete up to 22 cases an hour. An Equifax worker estimated she was allotted four minutes per dispute. To process the letters so rapidly, the workers summarize every complaint with a two-digit code selected from a menu of 26 options. The code “A3,” for example, stands for “belongs to another individual with a similar name.” The worker can also add a single line of commentary. The two-digit code and short comment is the only information the lender receives about the dispute.

To protect yourself, pull your credit reports, review them, dispute the errors, and if the errors remain file suit against the responsible parties. To learn more about the Fair Credit Reporting Act (FCRA), feel free to go to our website or contact us for a free consultation.

(Thanks to Denise Richardson for pointing out this great article to us and thanks to Anne Kadet for writing this!)

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There has been a huge increase in debt buyer lawsuits against Alabama consumers, particularly in Shelby, Jefferson, and the surrounding counties. There are only so many people we can meet with one at a time so next Thursday, February 19, 2009, at 4 PM, we are offering a free seminar/workshop for individuals who have been sued by a debt buyer and who are not out of time to answer the lawsuit.

At this seminar (in the main conference room at our office) we will discuss the vulnerabilities of debt buyers in their lawsuits that the debt buyers don't want you to know about. Virtually every debt buyer lawsuit filed is filed with NO proof and the collection lawyer does not even have the proof at their office. At trial the normal pattern is for debt buyers to show up with no witness, no documents, no proof of any type - in short no support for the allegations made in the lawsuit. Debt buyers will sue for breach of contract but then will admit at trial they don't even have the contract! It still amazes us to see this.... We will also discuss other little known secrets that debt buyers don't want you to know as they understand knowledge that is acted upon is power. They want you to be power-less, not powerful.

At this seminar we will go over these types of matters and then we will have time to individually meet with you for one on one consultations.

If you would like to attend this seminar, contact us right now as space is limited and we expect to be filled up by Monday.

We look forward to seeing you next Thursday at 4 pm.

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We have previously blogged about the background of a collection lawsuit in Alabama, the filing of the collection suit, service of the complaint upon you, and the answer that must be filed. Today we will discuss what happens after you file your answer.

Once the court receives your answer denying the allegations of the complaint, then the court will set the case for trial. If you have a lawyer, then the lawyer will receive a copy of the trial setting through email and/or regular mail. You may also receive a post card sized court notice through the mail telling you of the trial date. You will certainly receive one if you do not have a lawyer.

Often times, the collection lawfirm (Zarzaur & Schwartz, Nathan & Nathan, Parnell & Crum, Nadler & Associates, Ingram & Associates, etc) will send you a letter inviting you to discuss settlement with the lawfirm. We have previously blogged about the danger of settling the case with the debt buyer and its collection lawfirm - be careful and protect yourself by getting all agreements in writing. Be particularly suspicious if the letter says you have failed to return phone calls when, in fact, no phone calls have been made. This is a dirty trick of debt buyers and their lawyers to unfairly put you on the defensive. If the letter contains a blatant untruth, why would you want to talk to them?

Regarding the trial notice - make sure and schedule off the entire day. While normally courts start at 9 am, and you need to be there at the start time, the actual trial may occur hours later so you don't want to have issues with work or child care. Make all the arrangements as soon as you get the trial notice.

Next, we'll discuss what happens at the actual trial.

You can read more about lawsuits at our website here, here, and here.

If you have been sued, feel free to contact us to learn more about your rights and options.

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As we noted earlier in our thoughts on what the economic problems would mean for consumers facing collection, a collection industry report indicates that more collection lawsuits are being filed. The reasons? As "Inside ARM" indicates:

Kaulkin Ginsberg Director Mark Russell gave a couple of reasons for the up-tick in debt collection lawsuits. He said, “I believe that the rise in collections lawsuits is happening for two reasons: 1) collectors want to be top of mind with debtors, and 2) because we are heading into tax return season and creditors and debt buyers may be pursuing judgments more aggressively to utilize tax returns to resolve outstanding debt.”

The report concludes as follows:

Like businesses, consumers are also getting a break from the stereotypically horrid pursuits of debt collection lawyers. “Courts feel they’d like to see us resolve something amicably; certainly some have more sympathy towards consumers,” Stein said.

If you are dealing with collectors, understand that a lawsuit may be filed against you. If this happens, don't let a default judgment be entered against you - take action instead. Answer the lawsuit and force the debt buyer to prove its case. If you have any questions or want more information from us, please feel free to contact us through our website or call us here.

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We appreciate that the Washington Post ran this article about debt collectors calling but there is one area we want to clarify as it might leave consumers with the wrong impression about debt buyers (debt scavengers/bottom feeders/buyers of distressed debt - whatever you want to call them).
The article mentions that the Fair Debt Collection Practices Act (FDCPA) applies to third party debt collectors but not the original creditor. Here is the part that could be confusing:

The act doesn't apply, however, to the original lender. And if the original creditor sells the debt to another company, Talbott said, the law treats the new owner the same as the original lender. In either of these cases, collectors have wide latitude in how and when they contact borrowers.

To be clear - the original creditor is normally not subject to the FDCPA. A company that buys the debt - the "new owner" - IS subject to the FDCPA if it bought the debt when the debt was in default. So, if a debt is sold because one company is buying another or buying a huge portfolio of current accounts, the article is correct - the FDCPA does not apply. But, as is the case in the vast majority of the time, if the debt (credit card, car loan, etc) was late and in default then the new owner is considered a "debt collector" and is subject to the FDCPA.

This was established by several courts including the Kimber decision several decades ago in Alabama that said a debt buyer is subject to the FDCPA and suing after the statute of limitations (SOL) has run is a violation of the FDCPA.
So, if you are dealing with a debt buyer, remember that normally it is subject to the FDCPA even if it claims it is not. Please feel free to contact us for more information.

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A question we are sometimes asked is "Does it matter if I actually owe the debt that an abusive debt collector is collecting on and if I sue the abusive debt collector does the debt go away?" The short answer to this question is "No".

Whether or not you owe the debt does not matter if you are the victim of an abusive debt collector. There are four essential elements of having a claim under the Fair Debt Collection Practices Act (FDCPA) and not owing the debt is not one of them.

The flip side of the coin is that just because you can sue an abusive debt collector (and if you can you often should) this does not mean you don't owe the debt. Of course, if the debt collector (debt buyer) sues you and loses as they often do because they cannot or will not prove you owe the debt and that they own the debt, then you have a judicial determination that you do not owe the debt collector any money.

We thank Nicholas Ortiz for his fine post on "The Concept Of An FDCPA Suit" that reminded us of this question that is often asked.

If you have any further questions or would like us to mail you more information about your options and rights under the law, please feel free to contact us.

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I met Gerry Oginski this weekend at a legal conference and enjoyed talking with him. We discussed his wonderful collection of informative videos. Normally, his videos apply more to our personal injury and wrongful death practice but this one applies across the board and certainly applies to you when you are looking at choosing a consumer attorney to sue an abusive debt collector or to sue the credit reporting agencies for violating the Fair Credit Reporting Act.

Look to see whether the lawyer gives you detailed information or forces you to go into his or her office to get the information. Will the attorney mail you useful information? Is useful information provided on the website or blog? Or does the attorney website sound just like any other lawyer who has recited the violations of the FDCPA or FCRA?

You can view the video here:

If you have any questions for us or would like to receive more detailed information, please let us know.

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Our friend Denise Richardson has an interesting post concerning investigations into the runaround that consumers are getting. Click over to her site and watch the videos. Particularly the ABC video where a congresswoman calls banks - if she has this much trouble, don't be surprised if you face similar runaround.

If you are facing foreclosure issues, understand that there are laws that must be followed by the banks or they may face liability. If you have questions, please contact us so we can help you understand your options.

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