We found this recent short video where our friend Pete Barry discusses an overview of harassing conduct by debt collectors.
If you live in Alabama and are facing harassment by abusive collection agencies or debt collectors, please contact us as we sue abusive debt collectors and we will be happy to sit down with you for a free consultation and explain your options to you.
As most of you know we think the world of Pete Barry who has focused his entire practice on suing abusive debt collectors. He was recently on Fox News Morning Show with some other guests and he emailed us these Youtube.com videos. Enjoy them and we are sure you will find useful information in these.
If you live in Alabama and are facing harassment by abusive collection agencies or debt collectors, please contact us as we sue abusive debt collectors and we will be happy to sit down with you for a free consultation and explain your options to you.
We have filed numerous lawsuits against Palisades (a prominent debt buyer which sues hundreds of Alabama consumers a month). Palisades lost its collection lawsuit against our client but for some unexplainable reason refused to delete its account from her credit report. Not only did it refuse to delete the account (after the Judge said she did not owe any money to Palisades) but Palisades continued to update her account on a regular basis making it appear that she still owed the money even as recently as this year. In addition, Palisades send the debt out to a collection agency so that the collection agency could attempt to force her to pay the money that a Judge said she did not owe.
As we are blogged about in the past, there is an epidemic in Alabama of debt buyers suing people who do not owe any money to the debt buyer. As if this was not bad enough, the debt buyers refuse to correct their credit reports. The excuse we have always heard is that the debt buyers sue so many consumers in Alabama that they cannot be expected to know who they have sued; much less who has beat the debt buyer in the suit. In this particular case, it is interesting that the debt buyer Palisades lost its case against our client in late 2006, but yet in 2008, it was still reporting the debt as being owed and has referred it out even this year to a collection agency to collect this money from our client. This certainly cast great doubt upon the claims that it simply takes a while for a debt buyer to know when it has lost the case even though the law says that as soon as the debt buyer has lost the case, it is absolutely charged with that knowledge.
If you would like to read the complaint, you can do so by clicking here and reading the pdf version of the filed complaint from our website. If you have been sued by a debt buyer and won your case (verdict for defendant, dismissal or dismissal with prejudice) then we strongly urge you to check your credit reports and if the debt buyer is still listed on there, please feel free to contact us for additional information on what your options are at this point.
In this post we will look at how our clients typically answer Alabama collection lawsuits filed by debt buyers.
You have been accused of owing the debt buyer money. Our clients do not agree with this as typically the first time they have ever heard of the debt buyer is when they get sued - so they typically deny liability. This is because of the following three reasons which we typically put in answers:
1. The debt buyer does not own the debt;
2. Consumer does not owe the debt buyer; and
3. The statute of limitations has expired.
Of course your situation is unique and we can't advise you how to answer a lawsuit but the critical thing we can tell you is to answer it! Don't allow a default judgment to be entered against you.
Our next post will examine what happens after you file an answer denying the allegations of the debt buyer.
While we normally advise our clients who are sued by debt buyers to fight the lawsuit as debt buyers are unwilling or unable to prove their case, we do understand the desire of some Alabama consumers to settle the lawsuit filed by a debt buyer. If you decide to go this route, please be aware of several looming dangers and take steps to protect yourself. We will address in a quick fashion four of the biggest ones that will face you.
First Danger - Default Judgments
First, we have seen situations where Alabama consumers have settled with the debt collector/debt buyer (through the collector's attorney) and even though the case was settled, the debt buyer still moves for and gets a default judgment. This results in a judgment on your credit report for many years and can lead to garnishments and constant problems. The judges who enter these default judgments are not to blame as they are being misled by the debt buyers who intentionally do not tell the judge that the case is settled. Instead the debt buyers simply tell the judge that the defendant (Alabama consumer) failed to respond to the collection lawsuit.
Solution To First Danger - Written Confirmation
The solution is to never rely on anything that the debt buyer tells you. Confirm everything in writing to the debt buyer's attorney. Fax it. Mail it. Email it. Send it certified. Every way you can think of. Put in writing that the case is settled and that the lawsuit will be dismissed with prejudice (see the "Second Danger" below for more on this) and that you do not need to file an answer. Put in there that the debt buyer promises to not move for a default judgment against you if you pay the settlement. Put the way the payment is to be made (check, cash, money order, etc) and when it is due. Make the debt buyer respond, in writing, that your written letter or email is accurate. If the debt buyer or its lawyer won't agree to this in writing, you should at least be honest with yourself that you are vulnerable to the debt buyer getting a default judgment against you.....Solution? Don't settle without the written document.
Second Danger - Dismissal Without Prejudice
Debt buyers will sometimes not go for the default judgment but instead will actually request the court to dismiss the case but withOUT prejudice. They do this so they can sue you again. Kind of defeats the purpose of settling with them, huh? If you are going to settle the case, you should be done with it. Forever. Not having to deal with the debt buyer suing you again or transferring it to a debt collector.
Solution To Second Danger - Written Agreement
This will sound like the solution to the first danger - that's because having a written agreement is so important. The safest thing is to hire a lawyer to write up the agreement but if you don't do that then at least put in writing and have the debt buyer agree that the case will be dismissed WITH prejudice. This means you can never be sued again for this debt.
Third Danger - Account Stays On Credit Report
You settle the case. Most people expect the account (or "trade-line") to be removed from their credit reports but this normally does not happen. Often the debt buyers will simply change the status to "settled" and will show it as a zero balance account. This is a negative item on your credit report that can hurt you for many years to come.
Solution To Third Danger - Agreement To Delete
You'll notice a theme - get the agreement in writing! Specifically on the credit report issue, have an agreement with the debt buyer that upon payment the debt buyer will request that the consumer reporting agencies (or credit bureaus) - Equifax, Experian, Trans Union, and whoever else the debt buyer reports to - delete the account. Often times the debt buyer will swear that the country would fall apart if they requested the deletion but it is a simple matter that takes about 2 minutes for the debt buyer to do. The credit bureaus don't care - they'll normally do whatever the debt buyer tells them (that's a problem when you defeat the debt buyer in a lawsuit).
Fourth Danger - Account On Credit Report For Full Balance
Even if you don't have a written agreement, the debt buyer should still update the credit bureaus that you have paid off the debt and it should have a zero balance - you don't owe anything as it settled so it must show a zero balance. Amazingly, many debt buyers feel that because at one time you supposedly owed them (which we have never seen proven) that they can keep the balance on your report for years and years even after you settled it. This demonstrates the malice and vindictiveness of these debt buyers who do this. Truly one of the most nasty dirty tricks with Alabama consumers' credit reports.
Solution To Fourth Danger - Dispute And/Or Sue
You can always check your credit reports for free, review them to see what the debt buyer is saying about you, and then dispute directly with the credit bureaus. If it is not corrected, sue the debt buyers and, if appropriate, the credit reporting agencies.
Another option, particularly if the debt buyer has updated the credit reports after the settlement (a fairly common practice) and has shown it with a balance owed, you may be able to sue right then under state law and the Fair Debt Collection Practices Act. Also, you should look at your credit reports to see if they debt buyer pulled your credit report after the settlement. If so, it is likely it had no right to do and this will violate the Fair Credit Reporting Act and potentially expose the debt buyer to punitive damages to try and persuade these guys to stop taking these wrongful actions.
What To Do Right Now
Here's the bottom line - if you have been sued feel free to call us - we'll give you your options. Bring us your cooperation and participation - leave your wallet at home. We may can defend you against these debt buyers. But if you decide to settle it, please keep the things we discussed in this blog post. If you have been burned by one of these debt buyer dirty tricks, come see us. We sue abusive debt collectors. We can't think of many more abusive dirty tricks than these - talk to us about suing the debt buyer who lied to you or put false information on your credit reports.
We will probably expand this post in the future but the basic gist of this law or doctrine is that if something goes against you in state court (like a collection lawsuit) you cannot go to federal court to get it "undone" or "set aside". You have to handle that in state court by appealing it to the state supreme court or whatever the procedure is in your state.
Normally this hurts consumers in that there may be a bogus judgment against you in state court and you go to federal court and file a Fair Debt Collection Practices Act (FDCPA) case against the collector or lawyer and claim the judgment was bogus. The federal court will normally not accept this as you have to go through the state appeals process.
This doctrine helps us, though, when we win the state court collection suit. We've previously talked about how winning your collection lawsuit means, under Alabama law, that you do not owe the collector any money. If the collector does not appeal, then the case is over. That issue is forever closed. When you sue in federal court, the collector (debt buyer) will say that you didn't really prove you don't owe the money - but the federal judges will be quick to point out the Rooker-Feldman Doctrine and say to the debt buyer "you should have handled this in state court if you really believed this" which is poetic justice given all the times debt buyers and collectors have used this doctrine against consumers.
So, if you have won your collection suit, this has powerful implications if you then sue the debt buyer, for example, because the debt buyer has not removed the false account from your credit report (given that you do not owe it). Contact us if you live in Alabama and want to discuss this in detail.
The Oregon Debt Law blog by Joel Christiansen looks to be an excellent resource. It contains a good number of posts going through the Fair Debt Collection Practices Act (FDCPA) and the Oregon equivalent. We have just become aware of this and will read through these posts and will link to some specific ones but in the meantime we suggest you check out this blog if you are interested in learning more about the FDCPA.
[Thanks to Jonathon Stein of the California Debt Blog for making us aware of the Oregon Debt Law blog].
The Chicago Tribune has an interesting article on the number of suits in the Chicago court system and some of the problems faced by consumers who have been sued - including those who do not owe any money.
We suggest reading the entire article but here is a brief quote:
But because debt collectors operate on volume—pushing through lawsuits based on little more than lists of names, addresses and alleged amounts due—there are also plenty of instances of mistaken identities, cases where debts are alleged when the bills have been paid and even situations where people have fallen behind and tried to work out repayments only to be hauled in to court.
While in Birmingham and other cities in Alabama we don't have the same numbers of cases filed, it is still a huge problem with false suits being filed against Alabama consumers who don't owe the money. If you have been sued, feel free to contact us to learn more about your rights.
[Thanks to the Consumer Law & Policy Blog for pointing out this article].
Pete Barry is a friend of ours and we were thrilled to see a long story written about him recently. We suggest if you have any interest in the Fair Debt Collection Practices Act and debt collectors, read this story. Actually, even if you are not interested, read this story anyway - its a fascinating story of his life and practice.
Here is one excerpt related to plans by the collection industry to take away consumer's rights to go to court:
Then he explodes: "That is the most preposterous thing I've ever heard!" he says, almost at a loss for words. "The notion that a sector of this economy that creates more consumer complaints than any other business sector in the country thinks that it can self-regulate and thinks that it should shut the courthouse doors for all consumers? To privatize the court system? It's the most preposterous, far-fetched, stupid idea I've ever heard in my life!"
Still hunched on his couch, Barry is speaking—shouting, really—as if he were standing before an angry mob itching for bloody revenge.
"The collection industry is now seeking to rewrite the constitution? To strip us of our right to have a case or controversy? That's the stupidest thing I've ever heard! But it's totally consistent with the lawlessness with which this industry rules itself. They think they're above the law. They think they've got the solution for you and me: They're going to set up a private court system that will allow them to remove from the public eye their misconduct."
Enjoy the fine article by Jonathan Kaminsky....
After a debt buyer has decided to sue you, and in fact has sued you, then the debt buyer will have the court serve you with a copy of the suit. This can be done by the sheriff handing you a copy of the suit or sending it by certified mail or by a private "process server" giving it to you.
Once you have been served, the clock starts running to answer the case so you won't be held in default and automatically lose the case. In small claims and district court (where most collection cases are filed) you normally have 14 days to answer.
It is important to not try to "duck" or "dodge" service - you may think you have avoided service but you may in fact be considered to have been served. Therefore, you may not know that the time is already running. If you know you have been sued, we recommend facing the issue head on. Get the lawsuit and then file your answer and make the debt buyer prove that it owns the debt and that you owe it for the debt. Rarely will the debt buyer be able to do these two things that it must do to win the case.
Next, we will address what we typically put in Answers to collection cases in Alabama.
Alabama consumers are often sued for debts they do not owe. Being sued is a very serious matter and particularly when you don't even owe the debt. What should you do? We are asked this more and more and so many Alabama consumers are being sued by debt collectors.
If you don't owe the debt, then being sued is a violation of the Fair Debt Collection Practices Act (FDCPA) which regulates debt collectors. As we have previously blogged about, certain types of activities are prohibited by the FDCPA. Certainly suing someone for a debt they do not owe is unfair and is also an untrue statement.
What the debt buyer has said about you to the entire world (lawsuits are public records) is that you owe the debt buyer money. If you don't, then this is a false statement. Its also fundamentally unfair to sue you for a debt you don't owe. When combined with putting this false information on your credit report (that you owe the debt buyer money when you don't) you can understand why our clients who have been falsely sued are very upset.
One solution that we suggest is to tell the debt collector or its attorney that you do not owe the debt buyer any money and request that they dismiss the case WITH prejudice. This will ensure you won't be sued again by the debt buyer.
If the debt buyer refuses to dismiss the case with prejudice, then after you win the bogus collection suit brought against you, you can potentially sue the debt buyer for:
1. Violating the FDCPA
2. Violating the Fair Credit Reporting Act (FCRA) if your credit report is not corrected
3. Sue under state law for Malicious Prosecution - i.e. bringing a case against you with no legitimate basis to do so
4. Sue for defamation - telling the world by the lawsuit and by your credit report that you owe money you don't
5. Sue for invasion of privacy - putting out in the public eye the false statement that you owe money may invade your right to privacy.
If you have been falsely sued, feel free to contact us for a free review of your options.
In our first post in this series we discussed the background of how a debt gets to a local
collection law firm such as Zarzaur & Schwartz, which then leads to the filing of a lawsuit by a debt buyer.
In this post we want to examine how a lawsuit is filed. We will take a typical situation where a lawsuit is filed in Jefferson County (Birmingham) by a debt buyer. The collection law firm will file a Complaint which is the legal pleading or document which sets forth the allegations against you. Normally this is filed in District Court (up to $10,000.00) or Small Claims Court (up to $3,000.00). When it is filed in one of these Courts, there is normally not much detail. For example, there is typically not an indication of who the original creditor is or the account number, or anything like that. It will simply state that the debt buyer alleges that you owe money based upon the stated account, open account, and/or breach of contract. We have previously discussed these claims in our post on statute of limitations.
In most situations this complaint is a one-page document. This is filed in the Courthouse along with the address that you can be served. A summons is also filed which explains to you when you need to answer – which in this case is 14 days.
In our next post we will examine how you are served with the collection lawsuit.
We are often contacted by Alabama consumers who have been sued by a debt buyer such as Palisades or Asset Acceptance or Unifund and for the vast majority of our clients, it is their first experience of any type with a lawsuit. We have decided to present this series of blog posts to explain how a collection lawsuit starts, what your role is in it, what the role of a lawyer that you might hire is, how a trial occurs, and then what happens after the trial depending on whether you have won or lost.
Before we actually get to the lawsuit, we need to discuss the background of how you get there.
Typically we are dealing with credit card debts and when a credit card is not paid after certain period of time, the credit card company will cease its own collection efforts and will have a third-party debt collector try and collect it. After this doesn’t work, it will then sell the debt to a debt buyer. The debt buyer (which qualifies as a debt collector under the Fair Debt Collection Practices Act) will then either collect it on its own or will send it out to an actual collection agency. At other times, the debt buyer will send it to a national law firm such as Wolpoff & Abramson which will then assign it to a local law firm. In Alabama this is typically Zarzaur & Schwartz or Nathan & Nathan or Nadler & Associates or other collection firms that the national firm may assign it to. It can also be assigned directly to the law firm by the debt buyer.
Sometimes you will receive a letter from the debt buyer or the attorney saying that a suit will be filed against you if you do not pay. As we have previously blogged about, you need to take all these letters very seriously and we do recommend that you contact an Alabama consumer attorney as soon as you have any contact with a debt collector or debt buyer or collection lawyer, so that you can make sure and take the appropriate steps.
In our next blog post, we will explain exactly how a collection lawsuit is filed and then we will work our way through the process of what happens from that point forward.
Alabama consumers are receiving more and more 1099s from debt collectors and debt buyers where these collectors are claiming the consumer defaulted on debt and should have to report it as income. There are times when this is appropriate but as we understand the law the 1099 can only be for the principal, not the interest. Most debt buyers have no idea what portion of the debt is principal and what portion is interest. See this article written from the debt buyer industry's perspective.
If you have received a 1099 (normally a 1099-C) then you may want to write to the debt buyer and find out what portion was interest and what portion was principal and how the debt buyer knows this. If the debt buyer is unable or unwilling to provide this information, then this may be a violation of the law. We will monitor this developing area of the law and will report any new ideas or findings.
We are often asked by Alabama consumers if they should record abusive debt collectors who call. While this is a complicated question, our general answer is "No". Recent cases have raised concerns for us about whether Alabama residents can record calls from other states that might require the consent of both parties.
Alabama is known as a "one party" state. Only one person or party has to agree or consent to the recording of a call. While we disagree with these rulings, some courts have ruled that if the call comes from a "two party" state into a one party state (like Alabama) consent must be obtained before recording.
There are numerous exceptions in the law of some (if not all) two party states that allow you to record a crime and often harassment is considered a crime but this question has become so complicated we generally recommend that you not record. You may not know where, for example, the call is coming from.
The safest thing to do is to either just take detailed notes of the call during and immediately after the call and/or tell the other person you are going to record if they keep talking. An abusive debt collector may not believe that you are recording as they often hear this from consumers.
Either approach is fine but we caution our clients to not record unless they know with certainty where the call is coming from and that it is legal to record. You do have to assume that the agency will record all calls and most of the time when you call you will get a message that calls may be recorded. If in litigation they don't have the calls, this may raise a question as to why they destroyed the tapes that would support your claim of abuse.
Tapes are not needed to prove a case against an abusive debt collector and there is no need to risk running up against the law of some other state without carefully considering the consequences and circumstances. If you live in Alabama and are being abused by a debt collector or collection agency, please contact us.
A friend pointed out some interesting things on the Unifund website. We wanted to share these with you to give you an idea of how big these debt buyer companies can be. Here are a few quotes off of the Unifund website:
Since our founding in 1986, Unifund has purchased, sold or otherwise liquidated and managed billions of dollars of delinquent accounts receivable. We have been a pioneer, creating many of the products and procedures that are now commonplace in the maturing Accounts Receivable Management industry. At Unifund, we use proprietary technology and processes in unique ways, enabling us to obtain superior recoveries from previously charged-off accounts.Every year, Unifund purchases several billion dollars of charged-off receivables from major banks and financial institutions of all sizes.
Unifund is in a legitimate business but if Unifund or any other debt buyer has harassed or abused you and you live in Alabama, feel free to contact us for a free consultation on your rights.