Debt Litigation | Your Legal Leg Up

Discovery – Requests for Documents

June 19, 2018

This is going to be a brief article. For a fuller discussion and samples, look in the Litigation Manual and Forms. Still, you should be able to create your own after reading this. If you do not already own the Debt Defense System, you should consider it. Membership with us allows us to help and guide you every step of the way.

As with other discovery, Requests for Documents are controlled by the rules of civil procedure for your jurisdiction. And there are two sets of rules you must consider: your state rules in general and, if you are in some sub-court of the state, the rules regarding your court; and your “Local Rules” if your court has them.

Sub-Courts

An example of what I mean by “sub-court” might be what we have in Missouri, Associate Circuit courts. These are courts that are designed to handle smaller amounts of money. Or small claims courts (even less money). Many states have similar types of arrangements, and these sub-courts will have their own special rules, and these rules always control when and how much discovery you can conduct. I normally suggest that people avoid these courts because the can be a little too relaxed about the rules. Relaxed rules may seem “easier” for you, but in reality what they do is let the debt collectors get information in that they couldn’t otherwise – and your best chance of winning is to keep that evidence out.

Even if you’re not in that sort of sub-court, your court may have “local rules,” which are rules designed to elaborate on your state’s rules of civil procedure. The rules of civil procedure will create the general structure of discovery and set the penalties for not cooperating – the local rules will establish certain limits: only a certain number, for example, or that they must be in a certain format (not “compound,” usually, meaning without sub-parts).

Whatever the situation, you must find the rules controlling your discovery, or you may do something wrong, giving the debt collector an easy out. To find your rules of civil procedure, follow this link. Any special rules may be mentioned in your rules of civil procedure or in your court’s web-page. I am not aware of these rules – but you must be.

Content of Requests for Documents

The term “document” for purposes of requests is very broad and contains things like electronic records, facsimiles, any non-identical copy of a record, etc. The term is usually defined in the rules of civil procedure, and the way you would define it is to refer to that rule: “by requesting documents, defendant intends all documents as defined by Rule ___, ____Rules of Civil Procedure.

What You Request

You want everything thing the debt collector could use to support its case or attack yours. At a minimum you should ask for any document in their possession or control which you signed or which they contend applies to you in any way. You want all documents relating to the amount or terms of any alleged debt, every document showing or relating to any agreement you made with them, including any notes or comments. You want every document showing or relating to anything you said. If you have a counterclaim, you’ll want to create requests that get everything they have related to that.

Standard

The standard for requests for production is that you are asking for documents in their possession or control. Possession is obvious, but control includes documents that other people have created for them or in support of their business: accountant’s records, for example, or account records (of your account) if the original creditor agreed to provide them if requested. If these documents are not provided or objected to, but then they try to use them at court, you should request to have them excluded from trial.

Objections

When the other side objects – as they will, to everything you ask – you will, eventually, have to eliminate those objections so that you can be sure you have everything they have. Just because they deny having something you would expect them to have, though, does not mean you can file a motion to compel. Rather – once they have answered, you pretty much have to take them at their word for not having stuff they say they do not have. That is, unless you have evidence they are actually hiding something.

Discovery – Requests for Admissions

June 19, 2018

Like my article on requests for documents, this is going to be a brief article. For a fuller discussion and samples, look in the Debt Defense System. Still, you should be able to create your own after reading this.

As with other discovery, Requests for Admissions are controlled by the rules of civil procedure for your jurisdiction. And there are two sets of rules you must consider: your state rules in general and, if you are in some sub-court of the state, the rules regarding your court; and your “Local Rules” if your court has them.

Sub-Courts

An example of what I mean by “sub-court” might be what we have in Missouri, Associate Circuit courts – courts that are designed to handle smaller amounts of money, or small claims courts (even less money). Many states have similar types of arrangements, and these sub-courts will have their own special rules, and these rules always control when and how much discovery you can conduct.

Even if you’re not in that sort of sub-court, your court may have “local rules,” which are rules designed to elaborate on your state’s rules of civil procedure. The rules of civil procedure will create the general structure of discovery and set the penalties for not cooperating – the local rules will establish certain limits: only a certain number, for example, or that they must be in a certain format (not “compound,” usually, meaning without sub-parts).

Whatever the situation, you must find the rules controlling your discovery, or you may do something wrong, giving the debt collector an easy out. To find your rules of civil procedure, follow this link. Any special rules may be mentioned in your rules of civil procedure or in your court’s web-page. I am not aware of these rules – but you must be.

What Admissions Are

I have done my best to warn you throughout this series, in my Debt Trouble series, and elsewhere, about the risks of admissions. Whereas requests for admissions are covered in the rules of discovery, they really are not discovery: they are a sort of agreement that certain issues do not need to be argued about. You aren’t seeking information or evidence, you are asking the other side not to dispute the issue – to make evidence unnecessary. That means that while you can argue about what documents or interrogatory answers mean and whether they “establish” any fact, once an admission is made, the issue is resolved and decided. When it comes to answering their requests for admissions, that means you should be very, very cautious. One reason I encourage people to send out discovery first is that I want you to see how they handle yours before you try to answer theirs.

Content

If you have unlimited requests for admissions, you should make sure, at least, to ask them to admit to no knowledge or information regarding each part of their petition. For example, if their first allegation is that you owe them money, you ask them to admit that you do not. And then you ask them to admit they have no evidence that you do. (That’s two separate requests, because requests for admissions must never be “compound” – they can’t have more than one part.)

Special Warning Regarding Requests for Admissions

It should be obvious from the above that requests for admissions are basically just traps for suckers. They will deny or object to every single request you make on any basis, however flimsy. If your rules limit your total discovery to a certain number of requests and include requests for admissions in that number (so that for every request for admission, you lose an interrogatory), I suggest you skip the requests for admissions altogether. On the other hand, many jurisdictions do not limit them this way. The reason you use requests for admissions is that you want to have the materials you need for a motion for summary judgment even if they don’t respond to your discovery at all.

Four Sneaky Tricks of Debt Collectors

June 19, 2018

Debt collectors make their money by scaring or tricking, people into forfeiting their rights to defend themselves. Often they will let you think you have come to some sort of agreement with them to avoid court (and judgment), they won’t work with you to accommodate your schedule, and in general try to trick, intimidate and scare you into staying away from court. Then they get default judgments. Here are some of their more common tricks. Check out the Litigation Manual and materials for things you can do if debt collectors try these on you.

Don’t let them trick you out of your right to defend yourself. If you fight, you have an excellent chance to win – if you don’t show up and they get a default judgment you may find your wages or bank accounts garnished before you know it.

How to Argue Motions in Court

June 19, 2018

What to Say and How to Say it

When you’re sued for debt, you may need to make or defend motions in court, and this sometimes means making arguments before the court. This video will help you know what to say and how to argue motions in court.

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Defending Motions for Summary Judgment in Debt Collection Cases

June 19, 2018

Debt Collectors Do Not Fear You

June 19, 2018

And they Never Will

If debt collectors can almost never make money on a case if you fight intelligently, then why don’t they just give up when you file an answer and counterclaim? This article discusses why and explains why you should keep fighting.

If you have read my articles or watched my videos, you know that I believe the debt collectors rarely if ever start out with what they need to win a case. And they can almost never get what they need in a cost-effective way if you defend yourself intelligently (i.e., if you know a little bit about what you’re doing). In other words, I believe that in most cases if you defend yourself—with a little help that my site and materials are designed to provide—the debt collectors cannot win their case against you in a way that makes money for them.

So here’s a question: why don’t they just drop your case as soon as you begin defending yourself intelligently? Shouldn’t they be afraid of you?

Well, why do blackmailers publish the damaging stuff when their victims promise that the can’t afford the asking price? Or why does the mob break legs when you don’t pay a debt?

For a legitimate business, companies focus on creating products and making profit. Debt collectors don’t produce anything – their goal is only to make you pay. And they know that if they get a reputation for letting people get away, other people won’t be afraid enough to pay. They need fear.

Sometimes it is good business to lose money.

The debt collectors are operating a “scam” on an essentially heroic scale: I’d venture to guess that they couldn’t win ten percent of their cases on a profitable basis if the people they were suing would resist intelligently. That isn’t to say that the debt collectors couldn’t win the cases, or even shouldn’t win them (sometimes), but the model of their business is such that they buy huge amounts of debt without really knowing what sort of proof exists to support that debt. And proving cases in a court of law, in the face of intelligent and determined opposition, is an expensive and risky proposition even when all the documents exist—and in debt law, they often do not. Even where there are lawyers on both sides of big-time commercial disputes, cases very rarely go to trial—they almost always settle at a significant discount to what one side demanded.

That’s life in the real world. Lawyers are expensive, and lawsuits are wasteful and bitter.

Not so in the make-believe world of debt litigation. There, the debt collectors get judgments for everything they ask for something like 80 or 90% of the time they serve the lawsuit on the defendants. And this, as I’ve pointed out before, is all the more bizarre because their business model suggests that they would seldom if ever actually win the cases! What gives?

Pain. Pain and fear.

The debt collectors are very much like extortionists in that they strike terror into the hearts of their victims. People rightly fear lawsuits, and people without money fear them more than people with money.

So what could mess up a blackmailer or a debt collector? A reputation as a “soft touch.” Imagine what would happen if a blackmailer gave in to every victim claiming a lack of money! The same thing that would happen to a debt collector who dropped every case where someone filed an answer and counterclaim. They’d get a reputation for giving up, and that would ruin the business. In the case of the debt collectors, it would eventually reverse the strange numbers that make the whole business so profitable.

They can’t let that happen. And that is why debt collectors rarely just drop your case when you show up (although they do sometimes). If you fight your case with determination, though, they will seldom feel the need to go all the way to trial. They want to manage their reputations, but they don’t want to lose a lot of money while they’re doing it, especially since losing a lot of cases after trial might be as bad for them as settling too easily. That means they will almost always eventually either drop your case or offer you the kind of settlement you could actually afford to pay. Pennies on the dollar. There’s a good chance they’ll drop the case entirely if you refuse to settle, but there may come a time and price where it makes sense to settle just to end the fight.

That’s what happens in the real world of law.

So – Do they Ever Fear Anybody?

No. Not really. See, you worry about debt collection suits because losing would hurt you and could seriously cramp your lifestyle. It’s a new and awful experience for you where you never really know what you’re doing and whether it’s enough. Debt collectors are different, though. In the first place, they file many, many lawsuits and almost always in them. Regardless of the circumstances, that doesn’t hurt the self-confidence.

More importantly, lawsuits are just a business for these guys. They have no real “skin in the game.” Losing costs them almost nothing, and they do this every day. There’s nothing scary about a day’s work. And if they lose your case, they have a thousand more to file.

They DO worry about wasting time, though. The one thing that could seriously reduce the profits of the debt collectors is something that would multiply the amount of time they must spend on the cases. That WOULD be a disaster for them, as they have figured costs out very carefully, and lawyers are their biggest expense. Thus, the longer you stick around, the bigger a problem for them you become.

But fear you? Nah. They’ll drop the case eventually because it isn’t profitable – that’s all you need.

Rights under the Fair Credit Reporting Act

June 18, 2018

You’ve heard about having rights to a fair credit report. Here, in plain English, is a list and explanation of your most important rights under the Fair Credit Reporting Act (FCRA).

The Importance of Credit Reports

Our country runs on credit and credit information and the credit reporting behind them. Of course there are the obvious uses of credit to purchase things, but as more and more people are finding out, credit reports are used for much more than that – they often impact employment decisions, housing decisions and rates, business equipment lease rates, and insurance availability and price, among other things. Bad credit has a high price in so many ways.

Credit Reporting Network

As important as all the interests affected by it are, the credit reporting network (the businesses which create and publish your credit information) is a vast and largely faceless bureaucracy. The federal Fair Credit Reporting Act (FCRA) was designed to create some accountability in this network and protect consumers from some of its abuses. The FCRA was designed to safeguard the accuracy, fairness and privacy of information in the files of consumers held by the reporting agencies.

Different Kinds of Credit Reporting Agencies

There are many different kinds of consumer reporting agencies – almost everybody knows about the credit bureaus, of course, and there are also specialty agencies that sell information about check writing histories, medical records and rental history records. The FCRA was directed primarily at these agencies, rather than the creditors or companies with which you normally do business.

Here is a partial list of your major rights under the FCRA.

This isn’t a complete, exact replication of your rights under the Fair Credit Reporting Act. As with most important laws, the exact rights and their limits change as courts interpret the laws. But this will give you an accurate overview – a place to start.

Access to Your Credit Report Limited

A consumer reporting agency may provide information about you only to people with a valid need – considering an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for the information. And in most cases you must give your consent before the information is obtained or used.

Rights When Credit Information Used Against You

Anyone who uses a credit report or another type of consumer report to deny an application for credit, insurance, or employment – or to take other adverse actions against you – must tell you, and must give you the name, address and phone number of the agency that provided the information. You are entitled to a free copy of that report.

Right to Find out What Is in Your File.

You can find out all the information about you in the files of a consumer reporting agency. You must be offered a free disclosure if:

A person has taken adverse action against you because of information in your credit report;
You place a fraud alert in your file as a victim of identity theft;
Your file contains inaccurate information as a result of fraud;
certain other reasons.

All consumers will be entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies.

Right to Dispute and Correct Information

If you identify information in your file that is incomplete or inaccurate and report it to the consumer reporting agency, the agency must conduct a “reasonable” investigation, and it must report the information as disputed. If it is unable to verify the information after investigation, the agency must remove or correct the entry.

For practical reasons, this provision may actually provide more important rights against the businesses that report credit events (the debt collector reporting a debt as unpaid, for example) than against the reporting bureaus.

Time Limits for negative information.

In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.

Negotiation and Settlement of Debt

June 18, 2018

This article talks about an important piece of the bad debt puzzle: debt negotiation and settlement. Ideally this can occur without litigation – but you must be aware that if you decide not to pay someone what you owe – or they think you owe – you could get sued.

Pretty much everybody knows what debt negotiation is, at least in theory. It goes like this. Obviously there’s somebody who says you owe a bunch of money, you negotiate, and you end up paying either less than or none of what you supposedly owe. That’s the view from a mile up. Sweet, isn’t it?

It sounds like free money, but it really isn’t. If you think of it as an opportunity for something free, you will not be able to do it – you’ll be left wondering what went wrong as your financial security goes out the window. Instead, debt negotiation and settlement is a cross between a hard-nosed, back-room negotiation and a game of “chicken.”

So What Are You Negotiating? What Are You Settling?

You know, it’s interesting that people rarely ask what debt negotiation is all about – what are you “giving up?” What are they getting in return for the large amounts of debt you hope for them to give up? Suppose you owe a credit card company $20,000 and you have been making the minimum payments most of the time – but sometimes you can’t, so they have hit you with a bunch of fees, and you’re watching the debt pile up at an incredible rate. What do they get if they agree to take a single payment of $1,500?

It feels like you’re stuck – there may be no way you can make payments that would significantly reduce that debt. So what do you have to negotiate with? A whole lot of “nothing.”

You have risk and the difficulty of collection. In other words, you have the fact that unless you agree to pay and really try to do it, they will likely get nothing at all – or will get much less than they could.

That doesn’t sound like much, does it? And yet it is much more powerful than you might suppose. Anybody you owe a lot of money to is feeling the pinch. Even a large credit card bank, which doesn’t need your money for its survival by any means, is watching that debt mount and realizing that every time it gets higher, you get less likely to pay it. At the bottom of your options may be the possibility of bankruptcy, but they know that long before that you will simply stop paying and dare them to sue you.

You Often Get their Attention by Stopping Paying them

In essence, that it what makes debt negotiation work. You stop paying them and dare them to sue you – and then you offer to pay them again, only much less. Sounds crazy, doesn’t it? But it works if you take it seriously and don’t think of it as some sort of gold mine or a way to “get away” with something. Instead, think of it as a significant part of a serious turn-around in your life. It has several costs – you should have no doubt about that, and it is something you do when there are no better choices available. There’s a chance that withholding payments will result in your being sued, and it almost certainly will result in at least a temporary trashing of your credit report. How you manage these risks and costs will determine, more than anything else, how well you do in negotiation.

There are ways to make it work much better than others, though. There are things you can do to manage your risks of being sued, and when the negotiations actually begin, a few techniques that can help. The main thing about debt negotiation and settlement, however, is that it, like other kinds of negotiation, is much less about negotiation than positioning. People only give you what you want because they believe it is the best outcome for them, too – the question is, how to do you give them that feeling when you’re asking to pay ten cents on the dollar of debt? And how do you make the risks to yourself “acceptable?”

How you answer those questions will determine how good a deal you get from your creditors.

Discovery in Debt Law – Our Discovery

June 18, 2018

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Easy Way Out of Debt

June 18, 2018

Is there a “Silver Bullet” to Debt Collectors?

In mythology, one of the few effective ways to kill magical creatures is with silver, and so a “silver bullet” is a semi-magical response to stop something bad. Is there a silver bullet approach to the debt collectors? Is there something you can do, with little effort, that will just make them go away? There seems to be a cottage industry of people selling that sort of easy one-size-fits-all solution.

The debt collectors make their living off that kind of thinking.

There are NO Free Lunches in this world, but you have a great chance

You have to stay away from magical thinking if you want to have a chance when the debt collectors sue you. Fortunately, theirs is a business that is set up like a factory, and if you put in a little effort, you can find and do the things that work. They do take some effort, and they won’t always win, but there are things that make you much more likely to win than to lose. And once they see you’re ready to stick to it, they may very well walk away from the whole thing.

After all, they make their money off people who don’t fight or don’t know what they’re doing. We help you do both, and your chance of winning is very, very good.

As we often say, around 90 percent of people being sued for debt do not defend themselves. Consider what that means: it means that it’s really more expensive for a debt collector to find out whether it has a good case against you – much less to build it and beat you in court if you fight – than just to bring cases and dismiss them if things get tough. And that’s exactly what most debt collectors do. Therefore, rather than look for words to scare the debt collector away, it makes sense to build a tough defense that makes them work hard to try to beat you.

Do the things that give yourself a chance to win and the things that make it tough for them to beat you. Then you probably will win if they don’t walk away first.