Should I Buy Your Motion to Dismiss Pack?

Short Answer: Only if you need to file a motion to dismiss.

Long Answer – As follows:

When Should One Purchase our Motion to Dismiss Pack?

A lot of people buy our Motion to Dismiss Pack on the theory that they want the case against them to go away. It isn’t as simple as that. The motion to dismiss pack is applicable to situations where (1) you have filed a counterclaim and the debt collector moves to dismiss it, or (2) you have some legal basis for arguing that even if everything the petition against you is considered true the debt collector does not have a right to collect from you.

The first of these possibilities – that you are defending against a motion to dismiss – is obvious. If they want to dismiss, you will probably want to defend against that. Your motion to dismiss their claim is more of the question.

Purpose of Motion to Dismiss

A motion to dismiss is a way to “test the adequacy of the petition.” It is NOT a way to test whether the debt collector has evidence to support its lawsuit. Motions to dismiss are therefore appropriate, most generally, when you have a challenge to the company’s right to sue you in a specific court or in general, or when you have a challenge to the court’s power over you. There are also what are known as “equitable” considerations we will discuss.

The Debt Collector’s Right to Sue You

The main way this comes up is in jurisdictions where they have passed regulations on debt collectors which the collector has not followed. Most typically this is an issue of registering or not. Several states require debt collectors to register in some way before pursuing debt – and debt collectors often ignore those regulations. If yours did, a motion to dismiss on that basis would be a good idea.

Another way the right to sue you comes up – much less frequently – is that the petition fails to allege ownership of the debt. This could happen, for example, where ABC Collectors are suing you on a Citibank credit card. If they allege in the petition that they bought the debt, then you will want to find out what evidence they have, but this is part of the suit and not a motion to dismiss. If they fail to allege why you’re supposed to owe them on a debt apparently owing to Citibank, a motion to dismiss is probably in order.

The Court’s Right to Hear the Case

You may want to challenge the court’s power to hear the case against you. This arises in two ways. First, the suit could be brought somewhere other than the jurisdiction in which you live. You live in X county, and they bring suit in Y county and you never lived there. That would likely deprive the court of jurisdiction over you and constitute a violation of the Fair Debt Collection Practices Act.

The other, more common, reason for this sort of motion to dismiss has to do with service. Were you served correctly? And this question can be rather complicated. For present purposes, we merely say that a motion to dismiss is the appropriate way to challenge the court’s power over you, and this is a motion you would want to file before taking any other action in the suit. If you think you were not served properly, in other words, you will probably want to file a motion to dismiss.

“Equitable” Circumstances

There are certain gray areas that might be appropriate for a motion to dismiss, and these are called “equitable” considerations.

“Equity” is a historical reference to the way courts used to be in England, but for our purposes they refer to something more like moral rightness. If the debt collector waited too long to bring suit, if it did something to prevent you from making payments, or if you settled the case previously and they still sued you might all be examples of equitable defenses. While they DO involve evidence beyond the pleadings (the normal boundary line for motions to dismiss), you could probably bring these things as motions to dismiss. You would also be wise to plead them as “affirmative defenses” in your answer if you file an answer

What Motions to Dismiss are NOT for

You don’t file a motion to dismiss because you aren’t satisfied with attachments to the debt collector’s petition or don’t think they have the proof. Yes, you’ll attack their case – but later, and in another way. You don’t file a motion to dismiss because you just want the case to go away. And you don’t BUY a motion to dismiss pack here as an inexpensive way to defend the case in general. Our motion to dismiss pack is a specific product aimed at a specific situation. If it doesn’t apply to your situation, you will simply want to get the Gold Debt Litigation Membership and start doing the things you need to do to win the case.

They’re Suing me and my Business, Can and Should I Defend?

We get this question a lot because people borrowing money for their businesses usually have to offer personal guarantees. Then if the loan goes sour, someone sues the owner and the business.

Suing Your Corporation

This issue does not normally arise where the business is either a sole proprietorship or a partnership, because these entities are not treated as “separate persons” in the law. When you’re sued as a partnership or sole proprietorship, you’re just being sued individually.

If you own a corporation, on the other hand, it is a separate person, and only lawyers can represent other persons. That means you can defend yourself, but not the corporation. What should you do? This  depends on what you can afford and what is at stake.

Corporation Valuable

If the corporation has assets and is valuable, you probably need to protect it. That means hiring a lawyer to represent it. If you don’t, the debt collector will get a judgment against it by default, and such a judgment could be or become a major nuisance.

Corporation Not Valuable

If the corporation is not particularly valuable and is not going anywhere, you could consider dissolving it if there’s a judgment, so that is less important. The debt collector may try to prove that the corporation is too “thinly capitalized” and is, therefore, just an “alter ego” for you, however. That is something you should take seriously, and again it would suggest hiring a lawyer – at least for advice on what to do about it.

Proving thin capitalization is much more lawyering than most debt collectors are prepared to do, however. They like to use premade forms to establish cases against people who do not defend themselves. Getting the facts to prove thin capitalization is uneconomic for most debt collectors, although of course this doesn’t mean it couldn’t happen in an individual case. Normally it won’t present much risk.

Hiring a Lawyer

If you hire a lawyer to defend the corporation, it is likely that the lawyer could also represent you personally. If you make that choice, which is wise if you have a lawyer well-versed in collection law, then you will simply be putting your fate in the hands of the lawyer. The problem is that most lawyers are NOT well-versed in debt defense, and there is a new financial variable as well, namely that the lawyer must charge for his or her services and recommend a “reasonable” course of action. That likely will lead to a settlement that might not be in your favor.

The Advantages of Self-Representation

The alternative is to let the lawyer represent the corporation while you represent yourself. This leaves you in the case as an involved litigant. As a practical matter, the case against you and the corporation are pretty much identical, and work on one will be work for both. Not all lawyers would willingly be involved in that scenario, but if yours is, you may get the best of both worlds. That is, you can let the lawyer spend “reasonable” amounts of time defending while you spend “unreasonable” amounts of time defending. Or, rather, since the lawyer is charging you $100 per hour or more, if you can work for less than that, time spent could be reasonable for you while unreasonable for the lawyer.

In debt law, unlike most other types of law, self-representation can make very good sense. You will not have the same bias towards settlement the lawyer has, and you will be free to spend more time on the case. This informs your judgment as to the law yet also makes your defense much tougher. We do believe that the risk of inadequate defense (by lawyers) is significant given the financial constraints, and suggest that your remaining knowledgeably involved could be very important.

Self-representation is annoying and time-consuming, and may not be financially efficient, but it would probably increase your chances of success, and there are intangible benefits of winning that are very significant.

Our Materials

Our materials will be of help to you in defending the legal issues involved in the collection. Our resources on legal research will help you with the other issues as well, but we have not addressed the specific issues of corporate law that could come up if your company is being sued. You will find the teleconferences helpful in many ways.

Do Our Materials Work against Original Creditors

Do Your Materials Work for Cases against Original Creditors?

Yes. When I represented clients in these cases, there used to be a more significant difference between original creditors and junk debt buyers. We’ve written a lot about the differences between original creditors and debt buyers. They boil down into two things: you are more likely to have a counterclaim against a “debt collector” (which all debt buyers used to be considered); and debt buyers are less likely to have the documents they need to beat you. These differences are still there, but they are less important now than they used to be.

We will discuss both defense and possible counterclaims.

Defense

The main reason our materials work against both original creditors and others is practical. That is, it is because of the way law is actually practiced and the way people dispose of lawsuits. As we have often pointed out, parties settle cases only because they think a particular settlement offer is the best overall result they can obtain. It has nothing to do with what might be good, or nice, or anything else, for the other side. As a practical matter, you look for what is best for you and don’t try to help the other side, right?

Debt lawyers consider three things in this analysis: the risk of losing, the price of winning, and the chance of collection. These three things are very different.

Risk of Losing

The risk of losing is the chance that you will lose. It’s obviously never quite zero, but the people suing you pretty much ignore this risk – they think they will win, and the few times they don’t, don’t hurt. At the beginning of a lawsuit, therefore, this risk might as well be zero in the minds of the debt collectors. Our materials are designed to help you see whether they have any weaknesses, and if so, to build on them to create doubt in their minds. For pro se defendants, that’s pretty much all you will ever accomplish.

Price of Winning

The price of winning is very different. That is MUCH more of a consideration for the people suing you. Given (they think) that they will win, what will it cost to get the thing to trial and get the judgment? At the beginning of the case, the people suing you also ignore this issue because most people don’t put up much or any fight. The debt collectors expect their judgment easily and quickly – probably by default without any work at all.

And they get it most of the time. Our materials help you change their perception of this factor. Everything you do will cost them money, and the more you have done, the more they expect you to do. In other words, as you defend, the pile of costs grows, and the pile of expected costs grows even more. Whether they are debt buyers or original creditors, this radically changes the equation in their heads. It raises the likelihood that they will lose money whether they win the case or not.  Frankly, this is why most of them settle for a reasonable amount.

Chance of Collection

The other factor is the chance of collection: given that they will win, can they get money from you. Debt collectors and original creditors both understand that most people want to pay their bills, and the reason some don’t is that they have money problems. They know they can’t get money from you if you don’t have it, and they think you probably don’t have it.

This factor is very much a part of their thinking at all stages of the case, and it’s why most debt collectors will probably give you a discount on the case before you do anything – if you ask. It won’t be much of a discount, but it will be more if you offer a lump sum (eliminating the risk of collecting the rest) than if you offer payments. Does that make sense?

Factors Work Together

Notice how these factors work together. If you don’t give the other side information about your assets, and you do conduct discovery, you (slightly, in their minds) increase their chances of losing and drastically increase the costs of suit. You also delay the judgment they had expected to get quickly – and that reduces their chances of collection if they win.

The two most important factors, cost and delay, are the same for original creditors and debt collectors. Risk of losing goes up more for debt collectors than original creditors, but this factor is never important for either debt collectors or original creditors.

Thus our materials help you drive the value of the case down in the same way for both groups. If the other side regards your case as less valuable, it is more likely to offer you an actually good settlement, or to walk away from the litigation eventually. But what if it doesn’t? How do our materials work then?

Remember that law is a contest with very specific rules. It has always been our belief that either debt collectors or original creditors COULD win their case against you. To do so, however, they have to get the stuff they need and follow through with it, and these are expensive to do.

When we started Your Legal Leg Up, we knew that debt collectors almost never had what they needed to win if the case went to trial, and we were satisfied that they could not get it in a cost-effective and timely way. But we believed original creditors did have the necessary evidence or could easily get it. We have discovered that this is not true.

We are unaware of any reason why this is so. From our perspective, it would seem to be a simple process to retain the necessary records and do what is necessary to “authenticate” them as evidence (make them admissible in court). Nevertheless it is an observable fact that they often do not obtain or use appropriate evidence, and therefore there must be some reason for it. Perhaps it is the same for original creditors as it is for debt collectors – either they don’t think it’s worth it given the collection risk, or they are set up in a way where getting the information would clog up their systems and increase costs in general. In any event, you can find out if they have the evidence and the will to use them correctly by doing only one thing: fighting their case and conducting discovery. We believe there’s a good chance you will win if you do this.

Counterclaims

The other side of debt defense is using a counterclaim to take control of the lawsuit. We do still regard this as an important thing, if you can do it. That’s because if you can hold the debt collector in the suit with a counterclaim, you can make them dismiss the case “with prejudice,” which prevents anyone else from suing you on the debt. It will also help you repair your credit if you destroy the claim against you.

You will probably never have a good counterclaim against an original creditor, whereas you might get one against a debt collector. Some claims do exist – notably defamation or, for extreme acts, something called the “tort of outrageous infliction of emotional distress,” but the courts have historically been amazingly tolerant of original creditors. Much less so of debt collectors.

But again, as a practical matter, these things have turned out to be less important than they might have been. If you win the suit against another party (without prejudice), they are unlikely ever to sue you again even if they could. And if they sell the debt, the person buying the claim would have little chance against you in court. It also appears to be true that after dropping a suit against you the other side would have less energy and desire to prevent you from credit repair. It isn’t that they like you or couldn’t make trouble, it’s just that they have no financial interest in doing so. This appears to cause a lot of them to take no steps to prevent your efforts to remove their credit references.

Most people being sued by debt collectors just want the suit to go away and are not interested in trying to make the other side pay. This reduces the importance of the other side’s status as debt collector or not.

Conclusion

Therefore all things considered, our materials are about equally effective against debt collectors and original creditors. If the matter goes all the way to trial, you might have a somewhat larger chance of losing to an original creditor, but fighting intelligently will give you your best chance of preventing that from happening. The actual court processes are the same in either case, so you will be prepared to fight.

Sample Deposition Questions 2

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Sample Deposition One

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Affidavits of Original Creditors and Debt Collectors

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Jubilee for Student Debt

There is a movement – in its very early stages – for a debt jubilee. You may not have heard of it, but it has some people very worried. And I think there’s a good chance it will come to pass. Soon.

This is the second of a series of articles on a continuing political phenomenon important to people with debt. The first article is “Occupy Wall Street.”  The second article is Econ 101 or What Happens when the Bills Come Due.

What is a “Jubilee”?

A jubilee is the mass forgiveness of debt – a governmentally imposed wiping of the slate clean from all debt of any specific, or all, types of debt. You might think it could never happen here in the United States, but it has, historically, happened several times in various places. Never was it more appropriate than for student debt, in my opinion. Of course, other kinds of debt could also get thrown into the pot when things get going. Is it good? Is it likely? And if it happens, what will be the probable consequences?

Any talk of student loan jubilee should begin with what has happened in the past forty years. During that time, student loans have become not just popular, but essential for almost all students entering college or other formal, advanced education in the United States. In some countries in Europe, for example, schooling is free, but here it is expensive – very expensive. And it has been getting more so at a rate far exceeding the rate of inflation for the past forty years. This is because student loans, which had a noble publicly discussed purpose (making education available to all) had the unintended consequence of making education unaffordable to all. By relieving the price competition, it has allowed schools to increase tuition at a tremendous rate.

The schools and the banks have become filthy rich from the system. Student graduation rates have fallen, and average length of college has increased. And a whole generation of students have entered adult life with a crushing burden of debt.

Because of “special government protections,” bankruptcy is almost never any help to people with student debt. They declare bankruptcy and still end up paying everything they have for student loans that, all too often, were completely useless to them. Whatever you think of Trump’s tax cuts for the super-rich in 2017, the amount would have been enough to rid people of their student debt burdens, so it can be done. It’s just a question of who gets the money: the super rich 1%? Or the poverty stricken 99%?

This question is soon going to be coming to the fore.

Social Security is a Huge Issue

There’s another factor at play. The baby boomers – people born from roughly 1950 – 1965 – have plundered the resources of the past and future. They’ve given themselves tax cuts and embarked upon expensive wars while decimating the interest rates that allowed old people to live on their savings. And while guzzling the resources that could have given the young a start in life. Now they’re beginning to retire, assuming that Social Security will keep them in the comfort to which they are accustomed, for the rest of their long lives. When boomers started paying into Social Security, there were many workers per retiree, now there are less than half as many workers per retiree. Social Security is paid out of current tax revenues, so what that means is that the “surplus” people like to talk about for Social Security is an illusion – that surplus is made up of government bonds which are paid (or rolled forward to be paid later) out of current taxes. The millennials will be paying for the boomers’ retirement, if they choose to do so.

By election time in 2020, the baby boomers will no longer be the largest voting group in the country. Millennials will become the largest voting block, and they will be gaining electoral power for many years after that. It is going to occur to them that the boomers have pillaged their futures. It will occur to someone that the time is ripe for a jubilee to set thing straight. That person will find a passionate following of people who have never felt called-upon to vote. Politicians have pandered to the boomers for many years. They’ve ignored the millennials, and the millennials have ignored them.

That could change very suddenly. I think it will. Some people are in fact already talking about it.

What it Means

The change in electoral power and the likely shift in governmental focus could be huge. One could hope that the millennials will strive to set some priorities that the boomers never managed. In that scenario, student loans would be eliminated and free education installed (perhaps). Social Security would be managed in some way take care of the old without overburdening the young, and peace and harmony could descend forever and ever amen. Something has to change for that to happen, though. Either the super-rich will have to pay much more or the military, for example, will have to take much less. It could happen, but these are both deeply entrenched special interests with a lot of money and power.

An alternative scenario is less attractive but more likely. In that scenario, student debt is eliminated and there’s a lot of talk about cutting back on money to retirees and the military and of taxing the super-rich. What actually happens is more of what has been happening, though – the deficit balloons. The money is paid in depreciated dollars, and the debt is pushed down the line for the future to pay.

Eventually, that isn’t going to keep working.

Motions in Limine

Motions in Limine are pre-trial motions that serve a specific purpose. That is, they are motions designed to preview issues regarding whether certain evidence will be allowed (“admissible”) for the trial and under what circumstances it would or will be admitted. Typically, a court’s final pretrial order will set the time limit and schedule for motions in limine, but even if it doesn’t, you may want to file one.

Remember, they are filed in contemplation of trial – they are not a motion to file in some more general sense. If there is a motion for summary judgment, for example, you don’t file a motion in limine – you oppose the motion and object to the evidence in that motion. You would make all the same arguments, perhaps, but in a different context.

Remember that a court may, or may not, rule on a motion in limine before trial. The idea is to present the objection in a systematic way under conditions that allow the judge to think about it outside of the heat of the moment. It often happens that you’ll present a motion in limine and the judge won’t rule on it because the context of the trial isn’t clear until things start happening in trial. No matter. Make your best argument in the motion and argument and be prepared for whatever the judge does. Pay close attention to what the judge thinks matters regarding whether the evidence will be admitted, and be prepared to argue at trial that those conditions haven’t happened (so the evidence shouldn’t be admitted).

Finally, remember that any ruling by the judge before trial is not necessarily binding at trial. Thus, even if you lose your motion to exclude in limine, you will want to object at trial and take another shot at it. You’d be surprised how often the judge will change his mind. And that means you also have to be prepared for the other side to do the same – and you must remember that in order to preserve your rights you probably have to make your objections again at trial. So think of the motion in limine as a sort of warm up.

 

The Beginning of a Debt Lawsuit

Start of Suit

There are some issues more likely to come up early in the case than at other times. For help with this sort of issue, take a look at the videos and articles below.

Debt Collector Dirty Trick–to Trick You into Defaulting  Video. Sometimes, for various reasons, a debt collector will tell you “not to worry” about answering the petition. This video tells you how to handle that.

Debt Law Is the Law of the Jungle!  Article. Don’t be fooled. If you’re being sued, you’re in a contest, and they’re trying to eat you up.

The Importance of Early Discovery  Article. If you’re being sued for debt, it will help you to get “off the blocks” quickly and begin the process of discovery. This article explains why that’s so important.

Is Defending Yourself Hard?  Article. How hard is it to defend yourself? This article goes a little more in depth than the video on that question.

Is Defending Yourself Hard?  Video. Basically the same as the article–if you prefer to learn in video.

Defend Yourself, Protect What’s Yours  Video. You have an excellent chance to win if you defend yourself. This video tells you why and gets you started.

Pro Se Defense  Video. Some pros and cons about defending yourself in court when you’re sued for debt.

Settling with the Debt Collector  Article. Settlement can be either victory, defeat or compromise. Before you settle at any point in the suit, you should read this article.

What if I Really Owe the Money?  Video. What if you owe the money? Should you just pay it? or fight? This video tells you why you must defend yourself or run the risk of paying twice. And if you fight, you may not have to pay at all.

What’s Your Case Worth to a Debt Collector?  Article. How Does a Debt Collector Decide How Much Your Case Is Worth?

What to Expect the First Day  Article. If you’re being sued, you probably need to go to court even if you answer the petition. Here’s what to expect when you get there.

Why Don’t the Debt Collectors Just Give Up?  Video. If your defending yourself makes suing you so unprofitable, why don’t they just give up when you file your answer?

Stating Attorney Fees in Petition – Probably FDCPA Violation

It used to be common for debt collectors to name a specific amount of attorney’s fees in their Petition when suing on a debt. In other words, there will be an amount stated (specified) as reasonable attorney’s fees and sought as part of the debt in the “wherefore” clause of the Petition. The question is, does this violate the Fair Debt Collection Practices Act (FDCPA)? The answer seems to be “yes” if the petition sues for a specific amount for attorney’s fees. If the company represents that you agreed to any specific amount of fees it is probably a violation of the FDCPA if the contract on which they’re suing provides for “reasonable attorney’s fees.”

That’s because you theoretically agreed to “reasonable” fees (as eventually determined by the court) rather than some liquidated amount.

As a result of some of the “blowback” in the form of counterclaims, many lawsuits never ask for attorney’s fees at all. But if yours does, and they ask for a specific amount, it could violate the FDCPA. Of note is how stringently the courts sometimes read the FDCPA in favor of consumers.

Common in Contracts

Many credit agreements include a section allowing the creditor to collect its “reasonable attorney’s fees” in the event of a default, and on the face of it this is perfectly reasonable. If a consumer fails to make payments, someone is going to have to pay an attorney – the reasonable fees section puts that burden on the person allegedly causing the problems. Like most laws, it’s tough on people without much money, but if someone has to pay (and someone always has to pay the lawyers), then it makes sense that the person breaking the agreement should do it. Or at least that is one reasonable type of agreement.

How it Shows up in the Petition

The way this often plays out, though, is that, after default and sale of the debt (obviously, the right to collect is what is being sold) to a debt collector, the debt collector will often bring suit for a specific amount. The petition will allege the right to attorney’s fees and then, in the “wherefore clause” will state something like this:

Wherefore, plaintiff requests $1,000 as the principle sum owed, plus interest at a rate of 29% from January 3, 2007 ($775 as of the date of filing), plus $450 reasonable attorney fees, plus costs and interest dating from the date of judgment.

I am using round numbers to suggest an attorney’s fee of 25% of the amount sought, and that is not an unusual amount sought as attorney’s fees.

The debt collector will often back up this request for fees with an affidavit stating that the amount named was “its attorney’s fees expended” or simply that the amount is for “fees as provided by contract,” or the like.

Violation of the FDCPA

This language violates the FDCPA because it wrongly suggests that the consumer agreed to a specific amount as an attorney’s fee – and that almost never happens (in the case we’re looking at, the right was to “reasonable attorney’s fees”). Where the right is to “reasonable attorney’s fees,” a debt collector violates the FDCPA by liquidating that amount (turning it into a specific dollar amount) and seeking that amount as if that was what had been agreed. The case you will want to use and to know if you have this situation is Stolicker v. Muller, Case No. cv-00733-RHB Document 61, Filed 09/09/2005, Bell, J, U.S.D.C. W.MI)(granting summary judgment to the consumers in a class action lawsuit on this issue). Note that the court found that seeking attorney’s fees in this way – by including a liquidated amount in the wherefore clause “altered the contract she signed with [the original creditor]… and violated the FDCPA. It specifically violated Section 1692e(2)(A),(B) (a false representation of the character or amount of a debt or the false representation of the …compensation which may be lawfully received); 1692e(10) (using a false representation to collect or attempt to collect a debt) and 1692f(1) (collecting any amount unless such amount is expressly authorized by the agreement creating the debt or permitted by law.”