Welcome to our blog post. In this webinar we covered only consumer protection questions including:
1. I got sued but the account is not on my credit report so is it too late to be sued?
2. Is it important to respond to a summary judgment motion in my ejectment case after a foreclosure?
3. If there is a default judgment against me from months ago what can I do since I was never served with the lawsuit?
4. I took out a loan and now a collector is saying my husband has to pay the debt. Is this legal?
5. I’m defending myself in a debt collection lawsuit — do I need to know all the rules of evidence?
6. Is it too late to undo a foreclosure after I’ve been sued for ejectment?
7. When does the FDCPA apply to a mortgage company?
8. Why is it a big deal if a debt collector takes your money without permission — does this really harm you?
Here is the transcription:
Well, hello. My name is John Watts and welcome to this webinar. I actually tried to do this a little bit earlier and had some technical glitches there, but hopefully this will work out. I’m a Consumer Protection and Financial Protection attorney in Alabama. On Fridays at 10:30 Central Time, we are going to be doing a regular webinar where we answer questions that are submitted. You can submit them ahead of time or do it actually during the webinar. We’ll have the links and how you sign up for that webinar, and there’s no charge for it, that’ll be provided either in the description here, or you can go to one of our two main websites, www.AlabamaConsumer.com or www.AlabamaElderLawyer.com.
I do want to tell you this before we get into these questions. I’ve got a pretty good list of questions here. I’m not giving legal advice, this is general, educational information. I’m really trying to help you understand a base level of knowledge and then you can build on that to ask questions to meet with an attorney, whether that’s me or somebody else, to actually get specific legal advice. We hope this will be helpful.
I think today all of our questions are consumer protection-related. We’re talking about debt collectors, collection lawsuits, credit reports, foreclosures, things of that nature. On Friday, we’ll have those, but then we’ll also have some questions on what’s known as elder law. How do we pay for long-term care without losing everything we own? How do we get Medicaid? How do we get the VA pension? What about a special needs trust? Do I need a will or do I need a trust? All these types of questions.
I appreciate you being here. Like I said, this was a completely unscheduled webinar that we’re doing. I hadn’t told anybody about it, I wasn’t planning on doing it, but we had requested on our Facebook page (Alabama Consumer Protection Attorneys) to either publicly put a question up or privately send it to us and had great response. Actually, too many questions to cover on Friday, so let’s go ahead and get started.
The first one is, “I got sued by Capital One. I looked on my credit reports, and it’s not on there. Is it too late to sue?”
First of all, I want to say if you’ve been sued, that’s very smart to pull your credit reports to see what is this account saying? Because it could be Capital One suing you, it could be a debt collector like Midland, Portfolio, LVNV, all these companies out there filing literally 100 lawsuits or more a week each. Tremendous amount of lawsuits in Alabama. It’s smart to get your credit reports and check that out.
Just because it’s not on your credit report does not mean that there’s too much time that has gone by. Basically, when you have what’s called a first major delinquency, that’s kind of a trigger. Then we go forward about seven years. That’s how long it can be on your credit report. What about the time period to sue? That’s what we call the statute of limitations. A lot of controversy over it, I frankly don’t think it’s that complicated, but we say it’s three years, the collection industry says, “No, no, it’s six years to sue.”
There’s arguments about, “What if you go three, four, five, six, seven years, don’t make a payment, and then you make a $5 payment? Does that restart the statute of limitations?” The collection lawyers say, “Oh, absolutely. No doubt.” It’s not quite that simple. Again, you meet with a lawyer to get more specific information. I’m just giving you a general, we’re not covering every exception to every exception here. Basically, you look back and say, “When was my last payment?” Then you start going forward from there. Are you more than three years? Are you more than six years?
If you’ve got seven years for credit reporting and some smaller period of time for statute of limitations, if it’s not on your credit report, then obviously it’s beyond. Well, maybe not. Because it could be it’s just not reporting. It could be it was mistakenly deleted. You definitely want to look at that long period of time for credit reports. Look at your credit reports. It’ll have “date of last payment,” “date of last activity,” that’s important to you. A lot of times we find what’s on the credit report conflicts with what they’re saying in these lawsuits. Very helpful to pull your credit reports, but just understand simply because it’s not on your credit report, doesn’t mean that it must have been more than seven years ago. Maybe it was, maybe it wasn’t.
The last thing I’ll say, and this is something we harp on a lot because the biggest danger when you’ve been sued is not answering the lawsuit. You get what’s called a “default judgment.” You lose. Regardless of anything else, you lose. Understand this. When you’ve been served, when you get a copy of the lawsuit, you have 14 days to answer. That’s in Small Claims or District Court. You have 30 days to answer if you’re in Circuit Court. Keep those dates in mind. If you have a statute of limitations defense, then you put that in your response.
Definitely get with a lawyer, find out what your options are. A lot of times you can handle this on your own, either to fight it, to settle it, or you can hire a lawyer to fight it or settle it. Occasionally, bankruptcy is appropriate. We do have a long webinar, I think it’s an hour and 20 minutes or something, on your five options, and then we answer a whole bunch of questions that naturally come up. To answer this question specifically, just because it’s off your credit reports does not mean it’s too late to sue.
Our next question is, and this is in a foreclosure context, “Is it important to respond to a summary judgment motion in an ejectment case?”
The answer is absolutely. Definitely need to respond.
Let’s define a few words. What is an ejectment case? Again, we have a long video on mistakes people make in an ejectment lawsuit. Basically, an ejectment lawsuit is you got foreclosed, the alleged new owner, usually the mortgage company, says, “You got to get out of the house.” You don’t get out. Then they sue you. Where are they trying to go to? They’re trying to go to a court saying, “You are evicted from your house. You’re ejected from your house,” you might say. Then often, they want money damages against you for hanging out in the house after the foreclosure.
What’s a summary judgment? That’s a motion, and almost all motions are in writing. A motion is just where you ask the judge to do something. Here, the mortgage company, in writing, says to the court, “Judge, there’s no reason to have a trial. No reasonable jury, no reasonable judge could ever find in favor of the homeowner. You need to grant us judgment.” You might think of it as summarily granting judgment. We don’t have to waste time with a trial, that’s the argument.
You’ll get those papers. Usually there’s affidavits, documents, supposedly evidence that may or may not be admissible. Then the judge will normally set that for a hearing. If you don’t show up at the hearing, you normally lose. If you don’t file the right type of materials, the right type of response to that summary judgment motion and follow the rules, then you lose.
What does that mean if you lose? If you lose, that means they have an order that says you got to get out of your house. Now a sheriff will come, knock on your door, and say, “Get out.” People will say, “That’s unfair. I want my day in court. I’m going to skip this summary judgment. I’m just going to go have my trial.” You can say that, but if a summary judgment is granted against you, there is no trial. That is your day in court. Very serious. You need to take it very serious. You need to treat it with the respect that it’s due. If you’re facing a summary judgment motion, that is somebody trying to kick you out of your house so that you don’t get to a trial. Make sure that you handle that properly.
Again, we have a video and we’ll try to link to that in the description under this video for that five mistakes when you’ve been sued in an ejectment action. Really, what we try to do at that webinar, like I said, I think it’s maybe an hour and 20 minutes long, is say if we were having a face-to-face meeting and you didn’t really know a whole lot about this type of law, you didn’t know what your options were, then that would be us explaining that to you. Rather than doing that in person or over the phone, put it on video. That way when we do have a meeting, we can just focus on what we actually want to focus on, which is do you stay, do you fight, what are your odds, what’s in your best interest to do?
Our next question is, “If there is a default judgment against me from months ago, what can I do if I was never served?”
When a lawsuit’s filed against you, you have to be served the papers. If you’re not served the papers, and we’ll talk about what that means in just a second, but if you’re not served the papers, then really that judgment’s not going to be any good against you. You can get it what’s called vacated or the judge will say it’s void. It’s like it never happened. Because you have a constitutional right to actually get the lawsuit so you can defend yourself.
Now, what does it mean for a default judgment? If you don’t answer after you’ve been served, so you get served, you don’t do anything, 14 days Small Claims, 14 days District Court, 30 days Circuit Court, then the judge will write in there, “All right, you lose.” What if you find out about this when there’s a lien on your house, or your bank account gets wiped out, your wages get garnished, you say, “I didn’t know anything about this lawsuit.” If you knew about it and you just made a mistake and didn’t respond, you have a very limited amount of time to challenge that default judgment. If you never served, there really is no time limit.
Let me illustrate it this way. I sue Bank of America a lot. I sue Equifax, collection companies all the time. What if I sue Bank of America, I file it in court, and I say, “Okay court, I’ll take care of serving Bank of America,” but instead of actually serving them, I just put it on my bookshelf over here. Is Bank of America going to respond to that? No, because they don’t know anything about it, so how would they respond to it? Then I go, “Well hey, I served them,” the period of time goes by, “Now I want a default judgment.” That would be unfair to Bank of America. It’s unfair if Bank of America, Capital One, National Collegiate Student Loan Trust, Midland Funding, Portfolio Recovery, whoever it is, if they sue us and we have not been served, then that is unfair and it’s unconstitutional.
Here’s the trick is if they say, “Hey, you’ve been served.” Sorry, I dropped my paper here. This will be our prop here. You’ve been served with a lawsuit, but you go, “I really haven’t been served with it.” Then you attack that service.
First, let’s talk about, what does it mean to be served? It means you’re physically handed the paper. That could be anywhere. In a plane, in a movie theater, at your house, at your work, on the beach, it doesn’t matter. Physically handed it. You’re served. What if you don’t get it physically handed to you? It could come by certified mail. As long as the rules are followed, then you’re served. You sign for the certified mail. Here’s the more common thing. They say that they served you personally.
Let me give you an example. I had a guy that supposedly served, I want to say five years ago. It was in Birmingham. They said, “Hey, we served you in Birmingham.” He goes, “John, I was never served in Birmingham.” We look at the paper and we said, “Okay, it says,” I forget the date, I’m just going to make this up, “April the 10th at 2:33 p.m.” I’m like, “Where were you April the 10th, 2:33 p.m. in 2010?” We had him go through his emails, check with his wife, look at his pay records. He was working in Texas. He had pay stubs from Texas. It’s kind of hard to be in Texas working and yet be here in Alabama being served. Arguably, he jumps on a plane, lands in Birmingham, they serve him in Birmingham, then he flies right back to his job. Kind of crazy, but okay, it’s possible.
I said, “Go through your receipts, go through your credit card.” We found where he had bought gas. I forget the exact details, but his shift was 6 a.m. to 3 p.m. They said he was served at 4 p.m. and he was buying gas in Dallas, Texas at 4:01 p.m. and he worked until 3. You can’t really get to Birmingham and get back in time. You just show that you weren’t really served. Maybe you were in ICU. Maybe you were traveling out of town. Maybe you were in court. Maybe you were in surgery. Whatever it is, show that that was not you.
Sometimes it’s obvious. You look at the paper and it’ll say, “I served John Watts. He’s redhead, 5’2″, 475 pounds.” I’m 6′, about 170, I don’t have red hair, I think I have brown hair. My kids say I have gray hair, I don’t know, maybe I do. I like to think it’s brown. Anyway, it’s not red. I can look at this and say, “Wait a minute, that wasn’t me.”
Here’s the most common one though. It’s they take it to your house and they leave it with somebody. They say, “A-ha, you’ve been served now.” What does the law say? Generally, the law says if they give the paper to somebody that lives in my house, an adult who lives with me, then I have been served, even if that adult doesn’t give it to me. What that means is your 16-year-old kid is not an adult, your cousin that’s staying with you for a weekend doesn’t live there, somebody doing work on your house doesn’t live there. They might take the papers and the sheriff’s deputy, or the process server, somebody like VanSlam, whoever it may be, they may think they’re really giving it to somebody that lives there, but if they don’t really live there and they’re not an adult, it doesn’t matter. It’s bad service.
If you were never served, there is no time limit to undo that judgment. Remember my example. Let’s say I supposedly serve Bank of America, but I really don’t and I get a $500,000 or $1 million judgment against them. They challenge that at any time because they were not served. Same thing with you.
Going back to this question, if I get this default judgment, what do I do? You file a motion. Remember, a motion is just a written piece of paper where you’re asking a court to do something. The motion, you can hand write, you can type it, if you go to a lawyer, we type our stuff. You’d say, “Hey, I want this judgment undone. I want it torn up because I was never served. Here’s my proof.” You might use medical records, travel, things, you’d use affidavits, all sorts of things you would use to prove you were really not served in this lawsuit. If you’re successful, then the judgment gets thrown away.
It doesn’t make the lawsuit go away because now they have to serve you. Normally by coming into court, the judge will say, “Okay, well now you’re served.” File your answer, 14 days Small Claims, 14 days District Court, 30 days Circuit Court. It gets rid of the judgment, it gets rid of the garnishment, keeps them from selling your house in a sheriff sale, putting a lien on your house, so very valuable to get rid of a default judgment.
The next question is, “I took out a loan, but now the debt collector’s harassing my husband saying he has to pay it. Is this legal?”
Here’s the deal. A debt collector can try to collect the debt against somebody who owes the debt, not somebody who doesn’t owe the debt. If I owe the debt, they cannot go to my neighbor, my brother, my mother, my kids, my wife, they can’t go to any of those people to collect the debt. I don’t want to get bogged down with this, but they can talk to my spouse and says, “You know John owes this debt. What’s John going to do about paying it?” That’s okay. If they talk to my kid, if they talk to my neighbor, or my mother, the preacher at church, that’s going to be a big problem for them under what’s called the Fair Debt Collection Practices Act.
They can talk to your spouse. What they can’t do is say your spouse owes the debt if your spouse does not owe the debt. If I owe a debt, then I’m the one that owes it. My spouse doesn’t owe it. My children, they don’t owe it. My neighbor doesn’t owe it. They can only collect it against me.
In the question we have, it says, so this is a wife who wrote this in, “I took out the loan, but now a collector is harassing my husband saying he has to pay it.” No, that’s illegal. Now, a lot of times, collectors will say, “Wait a minute, are you married?” “Yeah, I’m married.” “Did you know your wife had this debt?” “Yeah, I knew she had the debt.” “Then you’re responsible for it.” That’s not the law. At least not the law in Alabama.
If you have a collector that’s trying to collect a debt against somebody who does not owe it, for example, your wife, your husband, your children, whoever it may be, then that is normally going to be illegal under the Fair Debt Collection Practices Act, the FDCPA. Either you or the person they’re trying to collect it against, sometimes both, need to look very seriously at suing the debt collector in federal court under the FDCPA.
Because here’s the deal. When you sue these abusive debt collectors that break the law, it does a couple things. One, you tend to get money if you’re successful. Your lawyer’s paid for. They tend to leave you alone. Even more than that, what you do is you protect the community. Because these debt collectors are used to just abusing people on the phone and there’s no worry about being sued. Then somebody sues them, they go, “Whoa, wait a minute. Maybe we should start following the law.”
What does that do to the community? It makes the community safer. Because you standing up for your rights and suing a debt collector is going to make it more likely that debt collector will follow the law, less likely the debt collector will break the law, and it helps the honorable debt collector. The debt collectors that read the law and say, “Okay, I’ll do what I’m supposed to do.” They now can be profitable. They can make money, keep people employed. If you got some debt collector over here that reads the law and goes, “I’ll just do whatever I want. I don’t care what the law says. I’m going to break the law because I’ll make more money.” That’s unfair to the debt collector that’s trying to follow the law.
If you have a debt collector breaking the law, my very simple approach is we sue them in federal court. We don’t talk to them. We don’t write them. We don’t email them. We sue them in federal court. Then when we’ve got them in court, now if they want to talk, we can talk about settling, or we can go to trial. It’s amazing. When they get caught, they tend to want to write you a check, they write me a check, and they leave you alone. That’s the typical way this works because they say, “Oh my goodness. You are somebody that’s going to stand up for your rights and we cannot abuse you.” It might have been a $300 amount they were trying to collect, but that may cost them $10,000, $100,000, $200,000 depending on how bad their conduct is, so they tend to go, “Whoa, we don’t want anymore of that.” I hope that that’s helpful to you.
Let’s see, our next question is, “Do I need to focus on the rules of evidence if I’m trying a case by myself?”
Here’s the deal. This is talking about a debt collection case, so Midland Funding, Portfolio Recovery, Calvary, LVNV, Asset Acceptance, all these debt collectors out there that sue. Some of these guys file 100 lawsuits a week in Alabama. It’s amazing. If you’ve been sued in District Court or Small Claims Court, so we’re normally talking about below $10,000, then it may be a good option to represent yourself.
We have a long webinar on the five options you have to know about when you’ve been sued. I think it’s maybe an hour and 10 minutes long. We also go through a bunch of questions that just over and over and over were asked. Those five options are file bankruptcy, fight it on your own, settle it on your own, hire a lawyer to fight it, and hire a lawyer to settle it. Bankruptcy is very rarely appropriate. Fighting it on your own can be very helpful.
This question is saying, “If I’m going to go in there and fight it on my own, do I need to know all the rules of evidence, and all this case law, and basically be a lawyer?” The answer is no. Would you be better off to have a lawyer? Probably. If you had the right lawyer, you would expect your chances of success are going to go way up. In Small Claims or District Court, if you will be focused on the key issue, and I’ll get to that in a second, then you have a chance of being successful. That way you’re not paying any lawyer fees.
If you’re successful, we want to look at what did that collector do in that lawsuit? What did they do on your credit report? What did they do, other collection activities against you? Because maybe we can sue them in federal court. If you remember the last question we answered, when you sue them in federal court, they tend to pay you money, pay your lawyer money, and they go away. There are some advantages to doing this on your own.
I may not get this quote exactly right, but it was something like Bruce Lee said, “I don’t fear the man who knows 1000 kicks that he’s practiced one time each,” he said, “I fear the man that knows one kick that he’s practiced 1000 times.” The idea is be competent, be skilled in something, something you’re really good rather than just a whole bunch of things that you’re not very good at. When you’re representing yourself at trial against these debt collectors, the fundamental issue, and when we teach lawyers this, this is what we harp on all the time, the fundamental issue is ownership.
If you go to our blog, it’s Alabama Consumer Law Blog, I want to say it’s 2007, March 2007, we wrote an article and it went viral, or blog post, I guess. It was saying when you get sued by a debt collector, they have to prove not only that you owe the debt, kind of makes sense, they’re suing you for a MasterCard, a Discover Card, they got to prove you owe it. If you don’t owe it, they lose. That’s where the analyses stop for so many people, even for courts. What we said is, “No, no, no, that’s not enough. Yes, you must prove I owe it, but you must prove that you own it.” It’s those two things. Prove I owe it and prove that you, debt collector, own the debt.
Take Bob Smith. He gets sued by Midland Funding for a Chase card and they want to go into trial and say, “You took out this Chase card.” “Yeah.” “Here are some statements.” “Okay, those look like the statements.” “You had a $3,000 balance.” “Yeah, I think so.” “You didn’t pay that.” “That’s right.” “You admit that you owe the $3,000 on the Chase card.” “Yeah, I owe Chase $3,000.” “You admit that you owe my client the money.”
Whoa, no, no, no. That’s a different question. Whether I owe Chase has nothing to do with whether I owe Midland, or Portfolio, LVNV, Asset Acceptance, whoever we’re talking about, unless LVNV, or whoever the debt buyer is, can prove they own the debt. The debt is like this piece of paper. If they own it and they can prove it, then fine. If they show I owe the debt and they own it, yeah, then they’re going to win unless statute of limitations, or some other defense.
What they want to do is come into court and go, “See, the defendant owes the debt. The consumer owes the debt, and so just assume that we own it.” We don’t do that in court. If you sue somebody, you got to prove it. You can’t just go in there and say, “I sued, I probably own the debt.”
I’ve used this example before, it’s kind of a silly example. Let’s say you owe Bank of America $1,000 a month for your mortgage and I sue you. John Watts sued you. I get you on the stand and I say, “Isn’t it true that you live in a house?” You go, “Yeah, I live in a house.” I go, “Isn’t it true that you have a mortgage on that house.” “Yeah.” “You owe a debt on that house.” “Yeah, I owe $100,000.” I go, “Isn’t it true that it’s $1,000 a month?” You go, “Yeah.” I go, “Here are all these statements, $1,000, $1,000, $1,000.” “Yeah, those are statements.” I go, “You admit that you’re behind right now.” “Yeah, I’m behind.” I go, “Judge, I think I’ve proved my case. I get the money.”
The judge will say, “Hold on. You proved that he owes money to Bank of America. What does that have to do with owing money to John Watts? That’s crazy.” I go, “Judge, do you think I would come into this court if I didn’t own that debt?” The judge will say, “Prove it. Prove that you own the debt.” If you think about it, if I own the debt, how hard could that possibly be to prove that I own it? If I’m driving a car and somebody says, “Is that your car?” I go, “Yeah, that’s my car.” They go, “Prove it.” I go, “Whoa, whoa, now that’s too hard to do. It’s not like I have a title for it or a bill of sale. Oh wait, I do have all that.” Debt is the same way. They have to prove that they own the debt.
In my opinion, these are the two most important things you can do. It’s not trying to figure out all these rules of evidence, you’re staying up until 4 in the morning trying to research what somebody in Florida says they do in lawsuits. You’re in Alabama, you’ve been sued in Alabama. Here’s my suggestion. Your obligation as a witness is to tell the truth. It’s not to speculate, it’s not to guess, it’s not to go, “I don’t know, I’ll just make something up.” No, you raise your hand, promise to tell the truth, you need to do that.
When they ask you these questions, “You know that we own the debt.” How would you know that? How would you possibly know that? You have no earthly way of knowing that. This is a secret deal between Chase and Midland Funding. Sometimes it’s Chase and Portfolio Recovery, who then sells it to Midland Funding, who then sells it to LVNV. How would you know whether those people really bought it? You’d think it’s pretty easy right? If they bought it, there would be a bill of sale. You have that with a car. If we buy property, we have that.
They’ll come in with one piece of paper and it says, “The accounts listed in the purchase agreement have been sold, pursuant to the rights listed in the purchase agreement,” and it has a signature. They go, “See, this proves we bought it.” Really? One piece of paper, you bought $500 million worth of defaulted debt? It doesn’t even say how much you paid for it. It references a purchase agreement. They go, “Whoa. You cannot get the purchase agreement. That is the formula to Coke or something. You can’t get that.” If I’m suing somebody and claiming ownership of a house and that’s the issue, do I own the house, I can’t say, “I’m not going to give you my deed. I’m not going to show you the mortgage.” If you sue, you got to bring proof.
Keep in mind, do not speculate, do not guess, do not make stuff up. They’ll bring in an affidavit. First of all, in most courts, affidavits are inappropriate because you can’t cross-examine a piece of paper. You can’t go, “Mr. Piece of Paper, let me ask you a question.” You can’t do that. An affidavit is somebody that’s saying, “I swear this is the truth and we sold the account to Midland.” First of all, we have no idea if that person’s telling the truth. Even if they’re telling the truth, that person doesn’t know if Midland still owns the debt. Maybe I’ve sold it to Midland and the next day Midland may have sold it to somebody else. Now Midland is suing you.
We’ve had situations where multiple debt collectors are trying to collect the same debt at the same time. They each say, “I own the debt.” You both don’t own it. One of you is lying, or maybe both of you are lying. They’ll bring these things in and say, “See, this affidavit proves it.” I don’t know. All it says is somebody claims to have sold the debt to somebody. Where’s the purchase agreement? Where’s the live witness testifying to them? If you don’t speculate, that’ll take you really far in this process. If you’re in this situation and you want more information, we have some resources that we can make available to you. I’m also happy to talk with you before your trial.
The second thing, and then I’m going to move on, is you’ve got to look at this and say, “I’m walking into court. That’s an unusual situation. How do I handle myself? What will happen?” Here’s the simple solution. Go to court. If you’ve got Judge Amari, or Judge Lowther, or Judge [Alls-berg 00:33:06], or whoever your judge is, call the judge’s office and say, “I’m John Watts, I have a small claims trial, I have a district court trial set three weeks from today. I’d like to come watch when you have court.” They’ll love to have you. It’s all open to the public, there’s no secret here. You can walk in, you sit there.
It does a couple things. Makes sure you find the courthouse, know where to park, know how to get through security, know which courtroom your judge is in. Because if you skip this step, and then it’s your Monday morning at trial or your Thursday afternoon, or whenever your judge does it, and you can’t find the courthouse and you’re running late. You can’t find a parking spot. You’re like, “Oh my goodness. I forgot about having to get through security.” Then you finally get through there, and you’re late, and you go, “Which courtroom is my judge in?” You’re going in and out of courtrooms trying to find the right one. That is not a good feeling. Then you walk in late, and the judge is not happy with you, and you’re embarrassed, and all your intentions crumble at that point.
Go ahead of time, watch what happens. What you’ll notice is the judge will do something called a call of the docket. He’ll say, “Midland versus Smith, LVNV versus Jones.” Most people that defend themselves don’t even show up. The ones that do, they’ll go out in the hallway and agree to a judgment with the collection lawyer. You can do that if you want, but I just want you to see this because you’ll feel more comfortable having experienced it, and there’s no pressure on you when you’re just there watching. Make notes so that you’ll know what to expect.
Don’t go to another judge’s courtroom. Go to your judge’s courtroom. Every judge is a little different. Some are very formal and some are kind of laid back. Just figure out what’s exactly going to happen with your judge in these types of cases. I hope that’s helpful to you.
I think we probably have time for maybe one or two more questions.
“Is it too late to undo a foreclosure when I’m sued for an ejectment or an eviction?” I think we talked about what an ejectment case is. You get foreclosed, they tell you to get out of your house. You don’t get out. Then they sue you to eject you, or kick you out, or evict you.
The question is, is it too late once I’ve been sued? The answer is no. You’re in a bad spot, but it’s not too late. There is hope, there are options for you at least to explore. I can’t tell you that you can be successful, but I can tell you that over many, many years, we’ve represented just dozens, and dozens, and dozens of people who’ve been foreclosed, they’ve been sued, we’ve been able to go through that process, undo that foreclosure, get them back to where they were before the foreclosure, a lot of times with a better deal, and then they go on with their life. Is that easy? No, it’s not easy. It’s difficult to do. It is possible to do, however.
I would recommend, if you’re in that situation, check out our video, our webinar on the five mistakes people make when they’re sued in an ejectment action. I think that’ll be very helpful to you. Just keep this in mind. Yes, it is possible to undo the foreclosure, even after you’ve been sued.
Next one we have is, “When does the FDCPA,” that’s Fair Debt Collection Practices Act, “apply to mortgages?”
This is the law that deals with debt collectors. You have a medical bill, an old credit card debt, you get debt collectors. We don’t normally think about mortgage companies as debt collectors.
I was invited to do some training for a nationwide group of foreclosure defense lawyers. My topic was how do we use the Fair Debt Collection Practices Act to help our clients who are either facing foreclosure, or maybe they’ve already been foreclosed. I got up and I announced it. People were looking at me funny, and somebody raised their hand, and they go, “What are you talking about? That applies to debt collectors, that doesn’t apply to mortgage companies.” These were really good lawyers, very skilled lawyers from all over the nation, and they had not made the connection that the FDCPA does. I’m not saying nobody has made that connection, but just by and large, even lawyers that defend consumers don’t think about the FDCPA.
Let me just tell you when the FDCPA applies — it is when the debt goes into default and then it gets transferred to the mortgage company.
Imagine this is the note, this is the debt. What we look at is we say when that mortgage company, I don’t care if we’re talking about somebody buying the debt or servicing the debt, when they first put their hands on it, is the debt in default? If the answer is no, then they’re not going to be a debt collector. What if the answer is yes? Then normally, they will be a debt collector.
Courts have struggled with this and defendants are always saying, “Yeah, you were three months late, but you were not in default.” It’s kind of funny because they’re arguing, “You’re not in default,” because they don’t want the FDCPA to apply. Because it gives you tremendous tools if the FDCPA applies, especially if you’re dealing with Alabama state law, which has really been cut back in a way that harms consumers, just the way the law is. Under the FDCPA, you have a lot more options.
Here’s the definition. If it’s in default when that mortgage company gets it, they’re a debt collector. What’s default? If here is when your payment was due and here is when you sue them, they want to say, “It was somewhere over here that you actually would have been in default.” Here’s a very simple way to do it. You look at the note and it says default. It says if you do not make your payment by the due date, you’re in default.
Mortgage companies and their lawyers go crazy over this. They’re like, “That can’t be the law,” because if you’re payment is due on the 1st, and it gets transferred to Wells Fargo on the 6th, and you pay it on the 7th, that can’t be default. You know what, it is default. That’s what the contract says. We didn’t write the contract, the mortgage company wrote the contract. Fannie Mae or Freddie Mac, they wrote the contract. We’re just following the contract.
It’s funny because these mortgage companies will say … Let’s say you’re coming up on a foreclosure, and this is your foreclosure, and you’re going to file bankruptcy, and you miss it by one day. You file bankruptcy one day late. They go, “You can’t stop the foreclosure, it already happened. You are one day late.” You go, “But it was only one day.” Or you make your payment one day after the grace period. They go, “Boom, there’s a $50 charge.” You go, “But it was one day.” They go, “Oh no, no. Follow the contract. You agreed to this.”
That’s all we do with them, is we say, “Hey, mortgage company, you now have this contract and you or your supposed predecessor wrote this contract. It says if you don’t pay on the due date, you’re in default.” Then that’s what we’re going to do. If we’re one day late, we’re in default, and then it gets transferred to Bank of America, Wells Fargo, Ocwen, whoever. They’re a debt collector now. Almost all of them now, you look at any letters down at the bottom, it’ll say, “Please be advised this is an attempt to collect a debt and we are a debt collector.”
Very powerful law. You want to notice, if you’re dealing with, say, Bank of America, and then it changed over to Cenlar, SPS, Chase, whoever it was, look at when it transferred, were you current or were you behind? Then look at your note. Almost all the notes will say if you’re one day late, you’re in default. Then the FDCPA is going to apply. They’ll fight you like the devil on this because they hate this law, but it’s a very powerful law and it’s worth that battle.
I think this will be the last one we’ll do. This is a case we filed where a debt collector had called our client and said, “I want to make arrangements to settle this.” Our client said, “I don’t have the money.” They said, “We’ll pull,” I forget what it was, “a hundred bucks out of your account. Then the next month, we want to talk about pulling more money.” Our client said, “You can pull it out this month, but come next month, you need to ask me first. Don’t just pull it out. I don’t know that I can do that.” They explained their financial situation.
The debt collector pulled the money out this month, next month our client starts bouncing checks. Why are we bouncing checks? Has the rest of the money gotten pulled out? What in the world? I called the collector, “What is going on?” The collector says, “We had authority to do that.” “I didn’t give you authority to do it.” They say, “We did anyway.” I won’t get into all the allegations and we’ll see how the lawsuit unfolds once we get people swear in under oath, but this is what I wanted to talk to you about.
I get a lawyer that calls me about this. This is not unique to this case. We’ve had this in other cases. They said, “Look, what’s the big deal? We reached into the bank account, we pulled some money out. We had authority to do it.” I go, “That’s the whole issue. If you did, then fine, but if you had no authority, then that’s a really, really big problem for your client,” the debt collector.
The reaction over the years has been, “Who cares? How could that possibly hurt your client? Maybe we’ll pay for an NSF charge, thirty bucks or whatever. But we’re not paying for anything else. Your client can’t possibly be hurt.” It got me thinking about this.
This wasn’t a question submitted for the webinar, but this is something I’ve heard over and over from collection lawyers and lawyers who defend collection agencies, and it’s possible you could be thinking this, if maybe a debt collector’s reached in and grabbed your money out without permission, and that is … This is the illustration I use. What would it be worth in damages, and emotional distress, and punitive damages … We don’t get punitive under the FDCPA, but we get punitive damages, and FDCPA is Fair Debt Collection Practices Act, we get it under state law … If the debt collector walks up, picks the lock on the door, walks into my client’s house, goes to my client’s purse, or wallet, or whatever, pulls the money, physically pulls the money out, and leaves?
He’s like, “That would be bad.” No, that would be horrible. That would be terrible for a debt collector to do that. Think about, what would a jury think, what would a federal judge think if a debt collector went and stole money? Pretty bad, right? It’s real bad. There would be a whole lot of damages when somebody reaches in and steals money from you.
Is it any different if instead of walking into my house and doing it, they walk into a bank and do it? If they lie to the bank, and say, “We had permission.” What if they walk into the house, and maybe your spouse is there, and they go, “John told me I could come in here.” They lie about that and they steal my money. They got a big problem. That’s a crime.
Is it any different when they present something electronically to a bank and they lie on that and say, “We had permission to pull this money,” and they really don’t? Then they reach in and pull that money out. That’s some bad, bad stuff. You think about, what’s that danger to the community, when you have collectors that can just start reaching in, and grabbing bank accounts, pulling money out, and checks are bounding, and people don’t have money. They’ve been violated, their privacy’s been violated. These collectors are like, “What’s the big deal? So we took your money. You owed it anyway.” I don’t really care if I owe it, you can’t come into my house and steal my money. You can’t reach into my wallet, steal my money, and you can’t reach into my bank account and steal my money. There are serious, serious consequences to that.
I just wanted to share that because if you’ve been in that situation, and you call the collector, and they’re like, “What’s the big deal? You can’t do anything about it.” Oh yeah, you can do something about it. It’s called a federal court lawsuit, and then let’s let a judge, let’s let a jury decide, is that bad? Maybe a judge and jury say, “I don’t have a problem with it.” Okay, but my hunch is most jurors, if they believe that you did not give permission for that debt collector to reach in and take your money, they’re going to view that as, “Your money got stolen and that is real, real bad.” When they decide, “How do I compensate this consumer? If somebody went in and stole money, violated them, what kind of emotional distress does that cause?” I suggest it’s a big number.
Then, from a punitive damages standpoint, two purposes of punitive damages. One, to punish the wrong-doer, and number two, to deter the wrong-doer, the debt collector here, from ever doing this again, and from any other debt collector from doing this. I think, if we got people reaching in there and stealing money, that’s a pretty big number. We got to punish people. If I walk into somebody’s house and steal their money, I can go to prison for that. I think there’s going to be a pretty high damage award on that.
Then, we want all the other debt collectors who watch these trials, because when we try one of these cases, the debt collectors are watching it because very few of these get tried, and if they see this big punitive damage award, they go, “Whoa, whoa. Okay, let’s do a quick memo to all the collectors. Stop stealing money. Don’t do that. We have to treat people fairly. We can’t go steal their money because I don’t want to get sued like that.” That’s the effect of a big punitive damage award.
I hope that this is helpful to you. I hope this whole webinar, again, completely unplanned and may have gone longer than I thought. Still have some questions. We have plenty of questions for Friday, but definitely give us your question. If we start getting a lot more questions, then we’ll probably start doing these a couple times a week, or if we have enough, we’ll do them every day. Because we’re trying to get the message out to consumers, whether you’re dealing with long-term care, or debt collectors, or a credit report problem, here’s the fundamental philosophy of our firm. You have to know your rights. If you don’t know your rights, you can’t do anything. That’s like getting in a car and going, “I’m just driving. My eyes are closed, I’m just driving. I hope I’ll show up at the right place.” It’s unlikely.
Even if you know your rights, you have to take action. If you know everything in the world to do and you don’t do it, it doesn’t do you any good to know it. It’s like getting in your car and you go, “I know how to get from Birmingham to Chicago,” and you never press the gas. You’re just sitting there. Nothing’s going to happen. You don’t want to just step on the gas and have no idea of where you’re going. You want both. Know your rights, take action.
The whole point of these webinars is to help you understand what your rights are and at least to raise questions. As you watch this and you go, “I’m going to write down a question. Then when I go meet with a lawyer, I’ll have some questions and I’ll have a base level of knowledge, or at least I’ll know what to ask about in my particular situation.”
Again, thanks for being with us and hope this was helpful. If you want to get in touch with us, you can leave a comment below. Don’t put anything personal in there. If you have a legal question that you want to ask us, sit down and have a consultation, we do a lot of those by phone, or by video, or in person anywhere in the state, 205-879-2447, or www.AlabamaConsumer.com, or www.AlabamaElderLawyer.com. We’ll be more than happy to help any way we can. Hope you have a great day. Thanks for watching this. If you like it, there should be a button to like it or share it, or leave us a comment, and that way we’ll know we’re doing some good stuff here. Thanks a lot and have a great day. Bye bye.