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Assignment Contracts
We say that there are “no magic bullets” in debt defense, but what we really mean is a variation of "there are no free lunches." You can find things that really help and exert a lot of pressure on the other side, but they're never going to be actually magical; you'll have to work to get them, and you'll have work to use them. Assignment contracts are perhaps the best example of this.
Simple, formulaic things like writing the word “refused” on the summons or claiming that it is illegal to use your name, or . . .
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Have you seen some of those sites by people who have been sued by debt collectors? They start out saying something like “I was sued by a debt collector and won. Let me show you how I did it…”
Everybody’s an expert. And capitalizing on a person who is being harassed by debt collectors’ natural distrust and dislike of lawyers, this new expert is going to show you a way to defeat the debt collectors. Just like he or she did. You’ll learn from someone just like you – someone you can trust.
There is a problem.
As you know if you have spent much time on my site, sometimes debt collectors drop lawsuits simply because you file an answer. Sometimes a debt collector will stop harassing you because you seek verification of the debt. Sometimes they’ll drop a suit because you request discovery – sometimes they’ll drop the suit because you show up the first day. Sometimes they don’t even show up. I hear stories like that all the time. And for you, as a defendant who has been harassed by a debt collector, the relief is wonderful.
But it doesn’t make you an expert. It makes you “lucky.”
I put “lucky” in quotation marks because in almost all the scenarios above, you had to take some action to trigger the dismissal by the debt collector. Just by taking some action – good or bad, right or wrong – you are, as they say, putting yourself “on the side of the angels” – you’re helping to make your own luck. And if you get lucky and win you deserve it, in my opinion.
But there are right things and wrong things you could do at every stage of a lawsuit. If you do the right thing, your chances of winning go up. If you filed something that wasn’t the right thing but still happened to win, for every 100 people who follow in your footsteps, 98 of them will lose and wonder why. And the reason is, that without understanding the debt collectors and debt law, anything you do is just a dance – it happened to rain for that guy in Texas that one time, but it still wasn’t a rain dance. You do that dance and you’re going to get burned.
That make sense? The more you know, the better the chance you will do the right things that make it more likely the debt collectors will walk away or that you will still win even if they do not walk away. This is where YourLegalLegUp, with a long history of helping a lot of people in widely different situations win a lot of cases brings something to the table most sites do not. The value of experience, practice and knowledge.
In the next part of this article we will look at the steps of litigation – how each one presents you an opportunity to get lucky – and the better you do them, the more likely you are to get lucky. Sometimes a Rain Dance is Just a Dance (Pt. 2)
Sometimes it just rains.
This is the second part of this article. Click here for the first part. In the first part we talked about how people sometimes get lucky in defending themselves from debt lawsuits, but that doesn’t make them “good” – it makes them lucky. The question is, how can you increase your chances of being lucky, too. Should you do what worked once for somebody? or do what has repeatedly worked for a lot of people in a lot of ways over time? The answer is obvious. The rest of this article talks about how you can be lucky, too.
A debt lawsuit starts with a “petition” – although it is sometimes called a “complaint,” and there may be other names for it, too: it’s the statement that you supposedly owe the debt collector money, some legal reasons why the court should order you to pay, and a “request for relief” (also known as the “wherefore clause”). The debt collector files this petition with the court and needs no permission to do so. When they file it, the also get a summons.
Some courts let the debt collectors issue the summons, too, although technically it comes from the court. The debt lawyer, as an _ of the court, writes it up, a clerk stamps it (or they may come pre-stamped), and the power of the court – over the case and over you – has been invoked. The summons tells you when to be at court and what to expect (“default judgment for the amount sued upon”) if you fail to show up. In all courts of which I am aware, proper service of the summons, which can happen in several ways, is necessary for the court to have jurisdiction over you.
What the debt collectors know is that somewhere between 80 and 95% of people who are served will not show up in court. If you do show up, and the other side does not – you should immediately ask the case be dismissed, and many courts (perhaps most) will grant that motion. That would be lucky – but only if you were there and knew enough to request the court to dismiss the case, as absent the request the courts will often simply continue (postpone) the case until the next court date.
Assuming the other side actually appears for court as scheduled, your next step is either to move to dismiss the case or answer the petition. Check your rules to see what the rules of pleading are, and if the plaintiff’s case does not comply – and they almost never do in Pennsylvania, for example – you might file a motion to dismiss or its equivalent (Preliminary Objections in PA). Often enough they don’t comply in whatever jurisdiction you may be in, and a motion to dismiss can be a quick way out of the lawsuit. Or you file an Answer. Whichever action you take, the debt collector might choose to walk away from the suit at this point: as I have often pointed out, there are a lot easier people to chase than those who file bothersome Motions to Dismiss or Answers.
Often the debt collector will not walk away at this point, so the next thing you must do is both serve discovery on it and answer discovery if they serve it on you. It is important for anybody to serve discovery on the other side first, but especially for pro se debt defendants: you would never believe the games the debt lawyers play – you want to see those games in action before you start responding to their discovery.
Sometimes the mere service of discovery drives the debt collectors away, but most often, of course, it does not. You will receive vague and unresponsive “answers” like “pursuant to national banking regulation, credit card applications need not be retained beyond a period of two years” (What does that say, anyway?) or “Plaintiff is conducting a search for records and will make them available to defendant as they come into Plaintiff’s possession.” It is the task of the pro se defendant to push past these objections and vague statements to discover what, if anything the debt collector has, and to force it to admit it has nothing more. This, of course, is the reason for a motion to compel. If you do that appropriately, the chance of the debt collector dropping the case is actually pretty good.
Performing legal actions with no reason other than to increase the cost and effort the other side must undertake in order to win its case is “bad faith” in litigation. An action with no reasonable basis in law or fact is “frivolous.” Both of these sorts of forbidden actions and motives can create significant problems for a person caught doing them. None of the actions listed above, however, come anywhere close to these forbidden zones: they all accomplish purposes for which the discovery and pleading rules were designed. The motions seek to weed out unwinnable claims, and the discovery probes the other side to find out what, if anything, they have in support of their claims. Following this broad pattern, you are not only increasing the chances that they will walk away at any point leading up to trial, but you also increasing your chances of winning if the matter does go to trial.
Lawyers are constantly performing a balancing act, always deciding whether it is potentially more profitable to act in one way rather than another. This is not because lawyers are greedy – although many of them are, of course – but is in fact part of their ethical responsibility to act in ways which promote their clients’ interests. These interests are virtually always financial, and thus as you continue to defend yourself with skill, you raise the issue more and more insistently that the lawyer would be better off pursuing other claims. When your skill has actually pushed the lawyer to take the step of cutting you loose, you are “lucky,” and the debt collector drops its suit. If you have a pending counterclaim at this point, you can force it to do so “with prejudice.”
If you have had debt problems and struggled to find your way back to stability, or if you are in the process of making your way back into stability, you almost certainly have damage to your credit report that is holding you back. And this is particularly true of debt litigation.
It may be hurting you in ways you don’t even know about.
Simply put, a good credit rating is the “key to the kingdom,” your way back to the good life you either had before or always wanted.
We here at Your Legal Leg Up don’t really encourage anybody, at any time, to borrow any money. Ever. But we do realize that not everybody shares that opinion. Even if you do, however, your credit rating matters in so many ways and affects you in everything from the rates you pay on your loans to whether you can get certain jobs and where you live.
A bad credit rating is like an invisible, but very heavy, tax on your hopes and dreams. Even if you are still in litigation, you should be taking steps to repair your credit and remove that tax.
Credit repair – correcting and improving the information in your credit report, is possible and can be done by following a series of steps that is not too complicated or difficult. The Credit Repair Manual is designed to give you all the information you need to do this yourself as well as if you hired a company to do it for you. In fact, since the bureaus and information furnishers are not required to do some things for professional companies that they would have to do for you, you can do it better for yourself than the professionals can do it for you..
And save hundreds of dollars while you’re at it.
All you need is the right information and the willingness and energy to use it. We can supply the information better than anyone else.
If you will stand up for yourself, you can probably make the debt collectors go away even if they could win the suit against you. (Which they usually can’t.)
Why?
It’s all about money, right? They want to make money. That’s why they’re suing you. If you will defend yourself it becomes too expensive for the company to pursue the litigation against you.
Consider the question from the point of view of the debt collectors. They buy debt cheaply (very, very cheaply), file sut in large numbers, and win the vast majority of cases without a fight. In St. Louis County, the “call dockets” often have 300-600 defendants, most of whom are being sued by a handful of debt collectors represented by two or three lawyers. If it takes an hour or two for the lawyers to get one hundred judgments totaling (by my guess) approximately $400,000 to $1,000,000 dollars, that’s a pretty good hour’s work.
Now look at the Petition in your lawsuit, down at the last paragraph near the end (where it says “wherefore, plaintiff prays…”). If the company is asking for attorney’s fees against you at all, they’ll usually say so right in the “wherefore clause,” and you may be surprised at how small the number is. In Missouri, the number is typically 15% of what they’re suing you for. If the company is suing you for $5,000, the attorney’s fees might be around $750, but that’s only if they are suing on a contract that allows attorney’s fees. In fact there is often no request for attorney fees at all in the suit.
They ask for the same amount whether or not you fight.
If you don’t fight the case, they get a windfall. If you do fight the case, they usually don’t get any more money even if they win. Instead of hoping for several hundred thousand dollars per hour of work, they’re trying to get $150 per hour-if that. That’s a lot less fun.
And if they are not suing you on a contract that specifically provides for attorney’s fees, they don’t get any fees for fighting no matter how long it takes. Every second you make them spend fighting with you costs them money that they will not get back. Everybody on the other side knows all this, and they never forget it. Neither should you.
What would you do if you were a debt collector who was bogged down in a suit for a few hundred (or even thousand) dollars-but which could cost just as much in attorneys fees. And on the other hand you could make a hundred thousand dollars in an hour of work by picking out other people to sue instead? Debt collectors are practical people. If you stand up for yourself in a way that shows them they will have a real fight on their hands, they will usually drop the suit. It isn’t worth it with so many other people around who will not fight.
Isn’t that what you would do?
This article talks about an important piece of the bad debt puzzle: debt negotiation and settlement.
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.”
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.
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.
If you’re being sued on a debt by a debt collector, you have an excellent chance of winning. Debt collectors rarely have what they need to beat you – and often they can’t even get it without spending more money than the case is worth to them. If you know how to fight a little bit your chances of winning are good, and most of the time you don’t even need a lawyer to do it. Watch this video to see why your chances are so good.
This is the second video in this short series. In the next letter we are going to discuss the actual mechanics of answering the petition and the importance of counterclaims and possible counterclaims you may have. For the first video in the series, click here.
We can help either way. Click on the Articles button on the menu bar above to go to publically available videos and articles,
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