Video: Consumer Protection Attorney John Watts Answers Your Questions

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In this video we answer the following consumer protection questions:

The first question is “I have a judgment against me. What do I need to do if I want to pay that off?”

Now, our next question is similar. What if you have been sued, so you get a copy of the lawsuit, but there’s no judgment yet. You say, “you know what, I just want to settle this. What do I do?”

Okay, our next question is, “Why should I send a dispute letter to a debt collector by certified mail?”

All right, so our next question is, “I got sued and then the debt collector or debt buyer or somebody like Midland, LV&V, Portfolio Recovery, Asset, Unified, all these types of companies. That company dismissed the lawsuit without prejudice. The question is, what does that mean for my credit report?”

I think this will be our last question at least on this video. “The question is, do I have any recourse if I pay a higher interest rate because of false credit reporting?”

Here’s a transcription of the video:

Well, hello, my name is John Watts. I’m a consumer protection attorney in Alabama. I want to welcome you to our question and answer session where we will answer your consumer protection questions.

We have received a lot of really good questions. I’ve got a lot of those written down, probably more than we can cover in this session, so we may end up doing two sessions today so the videos won’t be quite so long.

The first question is “I have a judgment against me. What do I need to do if I want to pay that off?”

The context of this is a debt collection judgment. Now, it could be from an original creditor like Chase or Capital One, but it could also be from a debt collector suit, and now this person has a judgment against them. They were properly served, so there is not basis to undo that judgment.

What do we do? You can pay it off.

Now, a couple of ways to do that. One could be through garnishment, so if they are already garnishing your wages, you might say, “Ah, I’m fine with that. Just keep taking out that 25% of my paycheck every week or every two weeks.”

Or, you can try to negotiate a lower monthly payment. It’s not really appealing to the company that has a judgment because if they can get $400 every two weeks, why would they agree to take 200 from you? But sometimes circumstances will allow that.

The most common way to pay these off is with a lump sum. Let’s say you owe $5,000. That’ll be our example. Maybe you can go to them with a $3,000 lump sum, and they’ll agree to take it. There’s a lot of factors. If you have been at your job 27 years, versus you have had 27 jobs in two years. They might be more likely to take a lump sum if your employment history is not real solid. How much are they getting out of the garnishments? If they are getting a whole bunch, they might say, “Ah, we’ll just keep that coming.” If it’s a smaller amount, they may say, “Yes, we want the money right now.”

Then just a lot of times, they do want the money. Money in-hand, versus maybe you’ll get payments in the future. A lot of times money in-hand is very appealing. Here’s a procedure I suggest.

We do something similar if we’ve been hired to do this, but if you do it on your own, this is what I would suggest. You want to get an agreement in writing. In other words, how much do I have to pay on this $5,000 judge to be done with this? Is that 3,000, 4,000, 2,000, what is that? That’s what you want to do. Then make that payment and usually it’s easier if you do it by certified check, cashier’s check, some kind of official check rather than just a personal check. Now the collection lawyer has to wait seven days, 14 days, make sure that that’s good if its done by personal check.

Once that is paid, then you want to make sure that the collection lawyer, and you get this agreement ahead of time, that when they get the money, they will file something in court, called a Satisfaction of Judgment. All that means is there is this judgment out there, and if somebody’s looking that up, they go, “Ah, there’s a judgment against you.” Then they see this piece of paper and it says the judgment has been satisfied, or it’s been paid off. You have satisfied your obligation. That lets the world know, yes there was a judgment, but now you owe zero on it. $5,000 judgment. You pay $3,000. Even though you didn’t pay the full five, if the deal is $3,000 and you are done, then they should file that satisfaction of judgment.

Now here’s the problem. Normally, judgments will be on your credit report. The credit bureaus are … how can I say this? … either very slow or not particularly interested in updating your report to show that you owe zero on this $5,000 judgment.

What we suggest is you get that satisfaction of judgment that’s filed into court. There’s a stamp across it. It says it was filed on July 15 at 2:33pm. Great, so you get a copy of that. You send that to the credit bureaus, and say, “look, guys, you are reporting on page one of my Equifax report,” or TransUnion, Experian, whoever it is. Usually it’s all three. “You are reporting that I owe $5,000. Please look at the document I have enclosed. You will see I owe zero now. Please update it.” Usually if you take the effort to notify the credit bureaus, then they’ll update it, but even then, sometimes they don’t. They’ll keep that on your credit report. They know that that damages you, it harms you. Here’s a simple solution.

Assuming it’s appropriate, and we have done this many, many times, you talk to a lawyer that does this type of work, so if you are in Alabama, we’ll be happy to help you. We file in federal court a lawsuit against the credit bureaus and say, “You have false information on my credit report.” They go, “But wait, you had a judgment for $5,000.” We go, “that’s true, but look here. Satisfaction of judgment. I owe zero. You are doing false credit reporting by telling the world I still owe $5,000.” When we do that, the credit bureaus, they make all these excuses and arguments and all this stuff, but at the end of the day, they know if they have been caught, they have to delete that from your credit report. That’s one of our requirements, not just that it be updated, but we want the whole thing off. They got to pay you money, and they got to pay us money. They know that’s the deal when they lose these cases.

So if you are looking at paying off a judgment, that’s my suggestion for what to do.

Now, our next question is similar. What if you have been sued, so you get a copy of the lawsuit, but there’s no judgment yet. You say, “you know what, I just want to settle this. What do I do?”

Similar to what we just spoke about with the judgment, call the collection lawyer if you are handling this on your own, get an agreement in writing, so again, say they are suing you for $5,000 and the agreement is you pay three grand, get that in writing. That could be a letter. It could be an email, but you want to make sure it’s very, very clear. We’ve had lots of cases where people pay the three thousand, the debt collector still comes after them for the $2,000, but there is no $2,000 owed. See, I owed five. I paid you three. That was the deal, so we owe zero now.

If you don’t get it in writing, they will go, “Oh, I just thought that was a partial payment.” No, let’s make it very clear, in writing. $3,000 and we’re done with this lawsuit.

Then you want to make sure that the collection lawyer dismisses that lawsuit with prejudice. With prejudice means they cannot sue you again. It’s over. It’s done.

Well, is that the end of it? No, because you want to look at your credit report because Capital One or Midland or LVNV, they are saying on your credit report you owe $5,000. If you settle with them for three, and it’s done, then the case is over. Case is dismissed with prejudice, then your credit report should say you owe zero dollars. Now, it can say that at one time you owed five. That’s fine, but now you owe zero. Just like we did with the judgment, usually what we want to do at that point is send a letter to the credit bureaus, and say, “Look, you are reporting inaccurate information.”

Here’s the reason why.

Capital One, Midland, whoever it is, they often won’t update the credit bureau, Equifax, Experian, TransUnion. They won’t tell them that you owe zero now. A lot of times in their mind, you still owe them two, and they may say, “Oh, you know what, we could sell this debt to somebody else.”

You want to catch this very quickly, so you write the letter and you say, “My Midland account” … or Capital One or whoever it is … “you say I owe five. I owe zero. If you have any doubt, check with Midland or Capital One or whoever sued you.”

Sometimes you include a copy of the order dismissing the lawsuit with prejudice. Then they’d say they are going to get it fixed, or if it doesn’t get fixed, you sit down with a lawyer. Again, if you are in Alabama, we’ll be happy to help you. We do this all the time. We file suit in federal court against the credit bureau, and the furnisher. The furnisher is the Capital One, the Midland, whoever it may be who’s doing that false credit reporting.

Now, we’ll say this. If it’s a debt collector, sometimes you don’t have to do that dispute. There are some different laws. I don’t want to get bogged down in that, but the point is, you were sued for five grand. Now that’s over. That’s done. You want your credit report to reflect that, not to show that you still owe 5,000 or maybe you owe 2,000 because they just took five minus three, and they go, “Oh, you owe us two.” “No, I don’t owe you anything. Zero. Nothing.” Make sure your credit report shows is accurate.

Okay, our next question is, “Why should I send a dispute letter to a debt collector by certified mail?”

This was somebody that had seen that on our websites and videos and books, we always talk about, if you are dealing with a debt collector, and if you send anything to a debt collector, do it by certified mail. If you are not going to do that, then you are just wasting your time.

The reason is, you can have the greatest whatever it is, letter, settlement proposal. I don’t care what it is. Anything you are doing with a debt collector in writing. You could have the most perfect letter. That debt collector gets it, looks at the envelope, “Huh, not certified mail. Just throw it. Just chunk it. It’s no good.” Maybe that was a cease and desist letter. “Hey, do not communicate with me anymore.” Once they get that, they can’t call you again, but they’ll keep calling you.

You go, “Wait a minute. I sent you a cease and desist letter.” They go, “What cease and desist letter? We never got a letter from you.” You go, “Yeah, I put it in the mail. It got to you. It never came back.”

They go, “Well, we never got it.”

Well, how do you prove that? You really can’t. You do it by certified mail, because when they lie about not getting your cease and desist letter or your dispute letter, or whatever letter it is, when they lie about that, you pull out this green card and say, “right there. You signed for it.”

Then it’s funny to watch them squirm. They’ll say, “somebody stole the certified mail.”

“Really? Somebody stole the certified mail from you?”

They go, “Well, maybe they didn’t steal it, but it got misplaced. That’s not our fault.”

“Actually it is, because you got the green card and you lost it. That’s not my fault. It’s your fault, debt collector.”

It’s interesting to watch, and they almost always have … there is this progression, “We never got it. We never got it. Maybe we got it. We lost it. When you said ‘don’t ever call me again,’ we didn’t know what that meant, so that’s why we kept calling …” They just go through this progression of lies.

You have to do it by certified mail. Seven bucks, I think. It’s worth the money. If it’s important enough to contact a debt collector, it’s important enough to do it by certified mail.

By the way, this applies to credit bureaus, really anybody that you are communicating with, we kind of joke about … What is certified mail? Well, the expression we use around the office is, “no good news comes by certified mail.”

What do we mean by that? It just means, certified mail is … This is not always true, but it is true enough. When you are sending a letter to somebody and you think that they will lie about getting it, so you want to prove that they got it. That’s when you do certified mail. Now, you could also do FedEx. You could do UPS, priority, just something that has a tracking mechanism in it, where somebody has to sign for it or somebody saying, “Hey, I delivered this,” but the safest thing is certified mail.

All right, so our next question is, “I got sued and then the debt collector or debt buyer or somebody like Midland, LV&V, Portfolio Recovery, Asset, Unified, all these types of companies. That company dismissed the lawsuit without prejudice. The question is, what does that mean for my credit report?”

Let me back up and make sure we are on the same page. A dismissal with prejudice means the case is over. That could be because you settled, or it could be because they realize they can’t prove their case and they just drop the case. With prejudice means they cannot sue you again. Now, we have a situation right now where a case was dismissed actually by a jury or a verdict, not a jury verdict, but the judge ruled in our client’s favor, and then they sued us again on the same day.

It’s like this completely outrageous thing that this debt buyer, Main Street Acquisitions, did. Let’s put aside companies that will do things that absurd. Dismissal with prejudice means it’s over. They can never sue you again, or at least they should never sue you again. Maybe companies like Main Street, they struggle with that concept, but most companies get it, that dismissal with prejudice, it’s over.

Now, where they stumble is, they don’t understand, and I’m taking this outside the settlement context, dismissal with prejudice, they got to get this thing off your credit report, under most circumstances. They can never call you, write you about it as the lawsuit is over and done with now….

What if it’s without prejudice. Without prejudice means it’s almost like the lawsuit never happened, so the next day, the next month, the next year, they can sue you again because they never really “lost” the last case.

That new lawsuit, they have to make sure it’s within the statute of limitations, that it’s a legitimate lawsuit, but the fact that back here they sued you and dismissed without prejudice doesn’t prevent them from doing it again. They can sue you again. In and of itself, a dismissal without prejudice does nothing for your credit report.

With prejudice almost always means they have to get it off your credit report. But without prejudice doesn’t mean that.

Here’s what it does mean. If you were sued, so you get a copy of the lawsuit. You file an answer, and say, “I deny owing Midland, …” Main Street, Unified, whoever it is … “I deny owing you this debt.”

Well, that’s a dispute. Then if that company is credit reporting, and at least if they update your credit report … I won’t get into all the details about what if they don’t update, but if they do update, and almost all the companies that credit report, they do it every single month because they want that fresh notation on your credit report, so it will be the most damaging possible to you, to motivate you to pay the money.

If it’s without prejudice but you filed an answer denying it, and then they update your credit report, they have to show your account is being “disputed.” We’ve had them in the past say, “Well, that wasn’t a dispute letter.”

We’re like, “Seriously? A pleading in court filed in the court that’s an answer, that’s like the ultimate dispute letter.”

We don’t get those arguments, at least not very seriously. They will make them kind of on the front-end and they go, “Okay, yeah, yeah, I know you disputed it.” If they don’t mark your file as being disputed on your credit report, you may can sue the debt collector under the Fair Debt Collection Practices Act, the FDCPA. It’s a subsection called e8 that has to do with credit reporting.

To answer this question, sued, dismissed without prejudice, what does that mean for my credit report, if and of itself, it doesn’t mean anything, but probably you filed an answer, so we have to check your credit report, and if it’s incorrect, then we look at suing these guys. I hope that that’s helpful to you.

I think this will be our last question at least on this video. “The question is, do I have any recourse if I pay a higher interest rate because of false credit reporting?”

The answer is probably. Let me kind of walk you through it.

If we’re talking about a debt collector doing false credit reporting, then the answer is yes. There are statutes of limitations; there are other issues, but normally you can sue under the FDCPA, the Fair Debt Collections Practices Act, for false credit reporting.

What if it’s Capital One? What if it’s the bank that you took out your mortgage with? What if it’s one of those companies, and let’s just assume they are not a debt collector, so they are not subject to that FDCPA, the Fair Debt Collections Practices Act? You can sue under the Fair Credit Reporting Act (FCRA), but generally, not always, but generally, you have to prepare a dispute, online, over the phone, or what we suggest, in writing.

You have to give that to the credit bureaus, that’s Equifax, Experian, TransUnion. Then after that, they have 30 days to investigate. If they don’t fix it, then at that point, you can sue. At that point, you have damages, okay? It can get a little complicated on when the damages start.

Can you go back in time and get damages? That’s a legal issue that there’s a lot of moving parts to that, that I don’t want to get bogged down in this video, but I’ll just say this. Any time you see false credit reporting, you want to take action. If it’s a debt collector, maybe you just go ahead and sue them. That tends to get them to fix it right away. If it’s not a debt collector, dispute it. Even if in the past, this cost you a higher interest rate, go ahead and dispute it. Get it fixed now.

If it gets fixed, then we can talk about it. If you live in Alabama, we can talk about can you still sue that company or the credit bureau. If you dispute it, and they don’t fix it, then we can certainly look at suing them in federal court.

Then it’s some legal issues about can we go back and sort of pick up those damages. I’ll give you an example. Say you refinance your house, and because of errors on your credit report, you get 7% interest. If those weren’t on there, you would have got 4% interest. Well, that’s a pretty good spread. Well, but you don’t realize this, and later you dispute through the credit bureaus, and they don’t fix it. Then you sue. Can you go back and get damages for paying 7 instead of 4. Maybe, maybe not. But you can try to get a new loan now to “mitigate” your damages.

Here you are trying to get another loan. If that loan comes back at 7% or 8%, now you have your damages. Again, there’s a lot that goes into that, but the point is, if you are paying more, higher interest rate than you should be paying, and the credit bureaus or Capital One, or debt collectors, whoever it may be, if these guys don’t follow the law, then normally you have the ability to file suit. Then it’s just a matter of well exactly what damages can you get out of that.

I hope that this is helpful and this whole series of questions on consumer-related subjects has been helpful. If you live in Alabama, and you want to chat with us, pick up your phone and call us at 205-879-2447, or you can contact us through www.AlabamaConsumer.com. That’s our primary consumer website, and we’ll be happy to set up a meeting or set up a phone call with you and go over some options with you. Thanks again for watching this, and if it was helpful, feel free to “like” it or share it or comment. That’ll help us to spread the message. Thanks. Have a great day. Bye-bye.

John G. Watts

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