About the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) is the centerpiece of legal protections for debtors against debt collectors. The law was passed in its essential form in 1977, and its goal was to protect debtors against the abuses of debt collectors. This article discusses what makes this law great, and some of its limitations.

The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA)  was enacted to put an end to some of the worst practices of the debt collection industry. It’s been a very good law, but the debt collectors are still doing many of the things the law was designed to present. You may be able to sue them or prevent them from suing you..

The Debt Collection Industry

Before the act, the debt collection industry was routinely engaging in the most abusive sorts of behavior imaginable, from calling debtors at all hours of the day or night and subjecting them to streams of cursing and name-calling, to discussing their debt with children, neighbors, and employers. Debt collectors frequently misrepresented themselves as attorneys and often threatened legal action which they were powerless to initiate. And they often attempted to, and did, collect debts that either never existed or were long unenforceable because of statutes of limitation or bankruptcy.
Whatever the staid spokespeople of the debt collection industry may say, this is the background of their industry. The Fair Debt Collection Practices Act, 15 U.S.C. Section 1692, et seq., was enacted to put a stop to these extreme behaviors in 1977. Because the people intended to be protected by the act are underrepresented by lawyers, and because of the explosion of debt litigation over the past decade, many of the old abuses still continue, and as people increasingly defend themselves from the debt collectors, they develop new tricks all the time.

The FDCPA: A Pretty Good Law

Nevertheless, the FDCPA is in many ways a model piece of legislation. What makes the law so powerful is that, in addition to making certain enumerated acts illegal, the Act also more generally makes acts that are “oppressive,” “false or misleading representations,” or “unfair practices” illegal. This means that, whereas in most laws, the would-be wrongdoer is free to craft his actions around the specific language of the law and find “loopholes,” under the Fair Debt Collection Practices Act, at least, the consumer may argue that these actions are still unfair or oppressive. The Supreme Court has ruled that an “unfair” act can be shown by demonstrating that it is “at least within the penumbra” of some common law, statutory “or other established concept” of unfairness.

That’s pretty broad. The price for this flexibility, however, is that the remedies—what you get if you prove the case—are less powerful. And this may be why the practices are still occurring today.

As mentioned above, there are specific actions enumerated in the FDCPA, and these include most notably, suing on expired debts, filing suit in distant jurisdictions, publishing certain types of information regarding the debtor, calling outside of specified hours. And the list goes on. If the debt collector is acting in some highly offensive way, chances are he’s within the specific provisions of the Act. These can be found at 15 U.S.C. 1692c, d, e and f. You can find the specifics by Googling the Act or provision and determining whether the specific action you’re concerned about is within one of these provisions.

Who or What is a Debt Collector

The definition of “debt collector” became a lot less clear in 2018 when the Supreme Court ruled that owning a debt made one a “creditor” regardless of the status of the debt at the time of purchase. But there are still ways to prove that the company suing you is a debt collector. Doing so means they have to follow the FDCPA – or more particularly it means that if they don’t obey it you can counterclaim against them or file suit yourself.

The Company Suing You

The company suing you, if it’s one of the big debt collectors, probably still is a debt collector. As far as I’ve heard, these companies don’t really do anything other than buy debts and collect on them. But I doubt this situation will persist. After there is some litigation quantifying what makes an activity a “principle purpose” of the business, the debt collectors will likely buy subsidiaries or engage in some other business to an extent necessary to exempt them from the FDCPA. I would, and in this area of business and law, these guys are more knowledgeable and smarter than I am. Expect them to take steps to reduce their liability.

What Is a “Debt Collector?”and When Are You being Sued by One?

So who is a debt collector? Well, there is the classic debt collector – the company that a creditor hires to hassle debtors to pay bills to the creditor. In that situation, the debt collector is an agent of the original creditor and is supposed to follow certain rules (the Fair Debt Collection Practices Act).

There’s another kind of debt collector, though. This is a business or person whose “principle business” is the collection of debts. Just what percentage of business makes the activity the “principle purpose” of the business is not clear – I would suggest it is very significant, at least 90%. But that’s just a guess at this point, as there has been very little litigation on the point. It seems clear that a bank that makes lots of money on regular banking services and also has a junk debt buying subsidiary is probably NOT a debt collector.

There is a tremendous amount of confusion of who is suing you. People will tell me that they are “being sued by a debt collector, but the name on the suit is Capital One,” for example. They think that because the lawyer signs the pleadings, or a lawfirm shows up in court, that it is the lawyer who is suing them.

And in a very limited sense – but only in a limited sense – that is correct. For most purposes, the entity suing them is the one named as “plaintiff” in the lawsuit

Lawyers who Regularly Collect Debts Are Debt Collectors

The lawyer and law firm representing the company suing you are probably debt collectors within the meaning of the FDCPA. That means that their personal actions may bring them within the law, but it isn’t always clear when they will, though. It appears that if the pleading asks for something, the lawyer signing it will be liable (on the hook) personally (and his or her lawfirm, also) for the violation. But the company won’t always be liable for the actions of the lawyer – its agent – as would normally be the case for most things.

If the company was an original creditor, and the lawyer threatened you with suit, and you sought verification of the debt, would the company be unable to sue you using the same lawyer? Not likely. Because the company – not a debt collector – has no obligations to you under the FDCPA, and that’s where the right to verification comes from. If you filed a motion to dismiss the lawsuit based on the company’s failure to verify the debt, it should be denied.

The Name on the Lawsuit Is the Important Name

If your lawsuit says “Cap One vs. You,” you are being sued by an original creditor and not a debt collector. They don’t have to play by the rules that apply to debt collectors. That means they don’t have to verify the debt, and they can do some of the things debt collectors are not allowed to do. You need to direct you Answer, Defenses, and any Counterclaims with the awareness that the other party is the original creditor and not a debt collector. It means, for example, that they needn’t verify the debt before or after suit, and that an attack by you on the ownership of the debt is not going to work – their name is on the debt. There’s no “chain of title” issue where title has never passed to another company.

But how they act when they sue you may bring the lawyers within the FDCPA.

Overcoming Default Judgments

As anybody familiar with my work knows, most debt cases end in either default or “give-up settlements,” where the person sued agrees to everything (or almost everything) the debt collector wants. It is one of the strangest things in all of law: most debt cases that are filed couldn’t be won if they were opposed; but very few people fight. So 90 percent of the unwinnable cases filed in debt are in fact won with the greatest of ease.

Strange.

Pardon the sound quality on this recording, please. It’s old but still helpful.

So what is a default? It is first a court order, and often a judgment immediately or after a short delay, giving the plaintiff – the person who brought the suit – whatever they wanted. It happens when the defendant does not show up or defend himself or herself in court. Note that “default” is not the correct way to describe what happens if you DO show up and lose. The result of not showing up is usually a complete, automatic victory for the plaintiff, and that’s what we’re talking about.

The courts do not “favor” such an outcome. That’s because a case that is won because it wasn’t opposed is not a victory “on the merits” – there’s no real indication it’s fair, and as everybody knows in the debt context, it often is NOT fair. But what can the courts do?

If you have had a default against you, you may have a chance to get that changed. If you take steps, and if they think you weren’t playing games in the first place, they will often reverse the judgment. Then you go back to defending the lawsuit. If you get that far, you will probably win the suit – 90% of winning the case will be in getting the judgment vacated (removed). That will stop collection and start the case over – but if you’re willing to fight, and manage to get the default judgment vacated, you’ll find the rest of it pretty easy.

We have products that can help you vacate the default. And of course if you manage to do that, we can help with the rest of it, too.

You Will Probably Win if you Fight Debt Collectors

If you are being harassed or sued by the debt collectors, there’s no need to give up. You have an excellent chance to win, and it isn’t that hard to defend yourself.

 

Defending Yourself against Debt Collectors Isn’t That Hard

 

Your Legal Leg Up is designed to help ordinary people defend themselves from debt collectors. The problems occur in three main ways. First, before there is litigation, there is usually some sort of harassment – it would be easier and cheaper for the debt collector to scare you into paying if possible. At the same time, it might be possible to get the debt collector settle the issue with you without having to go to court. Thus we help people with debt settlement.

If debt settlement doesn’t work, or if the collector proceeds to a lawsuit without any chance to try to negotiate, you’ll need to defend yourself in litigation. That’s where we got our start, and we have lots of materials that will help you defend yourself. Keep in mind that debt collectors handle everything in bulk. That means they can be very efficient at parts of their lawsuit, but much less so at others. So our materials and approach are designed to exploit that problem. That makes litigation much more expensive and less profitable for the debt collector and maximize your chance of winning, too. That’s why most of our members win their cases.

Even after your lawsuit – or sometimes they don’t even sue – you will probably have damage to your credit report. Thus we help people repair and reconstruct their credit reports. This is a multi-step program that works at eliminating bad information on your credit report while generating new good information.

We have memberships aimed at each of these areas of the debt law. Find the right one for you and let us help you.

Making it Look Hard to Defend

Debt collectors make most of their money by scaring, or tricking, people into forfeiting their rights to defend themselves. That’s far, far cheaper and faster than actually litigating. So debt collectors spend a great deal of time and effort learning how to make people give up. They’re good at that, but if you fight back anyway, you have an excellent chance to win.

Remember that most of what debt collectors are doing with their petition is trying to scare you into giving up. They’re trying to make things scary and inconvenient for you so you won’t protect your rights. Here are some of their more common tricks and some things you can do about them.

One of the most common complaints I hear from people pursued by debt collections is that debt collectors have deceived them into not going to court.Then they get a default judgment and start collecting. Don’t let that happen to you!

Here’s how to spot this one coming– and what to do about it if it’s already happened to you.

The way it comes up is that the defendant (person being sued) receives the summons and petition only a relatively few days before the date given on the summons for showing up to court. The person being sued panics either because the date set is extremely inconvenient or because they do not have the resources to fight the suit regardless of which day is set for court.

They Trick You into Staying away from Court

So you call the debt collection law firm and asks to speak to the lawyer suing you. The lawyer will not speak to you (normally), and so you are forced to speak to some clerk, actually a skilled collection agent. The law firm then plays a “good cop, bad cop” routine, where the person speaking to you takes a message and agrees to get back to the defendant with the words of the lawyer. Or they play “tough but fair” and outright refuse to agree to move the court date.

They routinely move court dates for lawyers.

Either way, they want you to be maximally inconvenienced because they really, really, really don’t want you to show up or defend yourself! They say they will, however, agree to come to an “arrangement” that makes going to court “unnecessary.” Isn’t that nice

Then they either create an agreement and send it to you—or not. But if you think that going to court is unnecessary and don’t go, then the debt collector often “calls for default” (asks the court to give them a default judgment) whether you have an agreement or not.

But the agreement is usually a complete giving up anyway.

NO NO NO NO!

Don’t let this happen to you. If you can’t go to court on the date specified on the petition, think about filing an answer denying the allegations of their suit–and add a counterclaim for unfair debt collection by refusing to “move” (it’s called “continue”) the court date for you when they would do so for a lawyer.

Then you might file a “motion to continue” your court date with the court, telling it that you tried to work out the continuance with the other side but that it would not cooperate. Ask the court’s clerk for the “continuance date” and put that into your motion.

See, courts will almost ALWAYS continue a case if a lawyer asks for it. And if you file an answer first and then your request to continue, they’ll do it for you, too.

If the debt collector has already tricked you and gotten a default judgment, all is not lost. But you must act quickly. You should know that the law does not “favor” default judgments. This means that they lean against allowing them to stand if you make a decent argument against them.

The way you would do that would be to start with a motion to vacate the judgment.

 

Discovery – Starting to Win your Case

It is not necessary to begin discovery at the time you file your Answer and Counterclaim, but if it is at all possible for you to do, it gives you a big advantage.

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Push or Be Pushed – Get that Discovery Started

In the law, it is push or be pushed. That is, if you aren’t already pushing the debt collector to give you discovery or respond to motions, chances are good that they will be giving you things to do. When you’re pushing them, your chances of winning go way up. When they’re pushing you, they go down.

You might not think it would have to be that way. There’s usually plenty of time given to do everything that needs to be done and that the law expects both sides to do things at basically the same time. But theory aside, the reality is that people – lawyers included – will usually do what is pressing them first. And then they may – or may not – do the rest of what they should do.

People in general, and lawyers especially, make sure they’re pretty close to being as busy as they can be. And this inevitably means that choices will have to be made when and if things get tighter. If you push the debt collectors to answer your discovery, in other words, they very well may choose to skip discovery on you. If you skip discovery on them, you will soon discovery they have plenty enough time to keep you busy. That’s just the way things work.

So if you’re in a case where they’ve already served discovery on you, you’re going to have to do double duty – make sure you serve your discovery on them before you give them your answers. If you don’t, the next thing you know they’ll be filing a motion for summary judgment against you.

Better yet, make sure you are first out the discovery gate – and then keep tightening the screws. Serve discovery on them along with your Answer. This requires you to be prepared for your case pretty quickly, but it will pay off in a big way down the line.

Make them Answer Discovery

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Do Your Legal Leg Up Materials work against Original Creditors?

Do the YourLegalLegUp Litigation materials work on cases brought by original creditors as opposed to debt collectors? Yes–but watch this video to see how lawsuits by original creditors are different from those brought by debt collectors.

I used to think the difference between debt collectors and original creditors meant more than it does now. Perhaps it’s because there is such a huge amount of debt out there that even creditors lose track of it. Perhaps all the debt makes any one debt cheap. But in any event, the difference between original creditors is less than it used to be. The original creditors often do not have the records they need to prove the debt, and even more often than that they don’t have the will to pursue it if you fight.

In any case, you will pretty much always be better off it you do fight the lawsuit and go through the discovery process – especially if that means filing a motion to compel. It’s work, but if you can prove they don’t have what they need, you can make them drop the case. And if you find that they DO have what they need, your making them work so hard will make them settle for much less than they would have. Or if you can’t settle, you’ll take your best shot – and you’ll have put off the result for quite a while even if you lose.

Our materials will guide you through that process. You need to know how the system works in order to use it, and our materials give you what you need to understand the system.

Importance of Early Discovery

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Preparing for Mediation Pro Se

Mediation is “rigged” against pro se defendants in debt law cases. Why do I say that? Is there some evil force at play? No…

The mediator might be trying his hardest to be fair and honest, but even so the process is rigged. To understand why, let’s first go back to who the mediator is.

A mediator is usually (but not absolutely always) a lawyer.  That is useful and appropriate in general because you generally want someone who knows how the legal process works and what you might encounter, in general, if you went to court. At the least it will almost certainly be someone who spends a lot of time in court or with lawyers and is impressed with lawyers.

Often the parties are given a list of “approved” mediators by the court. You’d have to get permission to get someone else. In some situations the parties are completely free to find their own mediator.

And I gather that in some situations a mediator is just assigned by the court automatically, and you don’t get to choose.

Mediation is Rigged

Whatever way it works, the lawyer has an advantage. The mediators have a reputation, and the lawyers can find out what that reputation is far more easily than you can. They won’t use a mediator who has a reputation of pushing too hard against them.

And the mediators know that, of course. You see, the debt collection lawyers are “constant.” They handle many, many of these cases, and if one of them decides never to use a mediator…well, that could be a lot of money to the mediator. If you decide against a mediator or don’t like him or her after going through the process, your options are extremely limited. Your opinion simply doesn’t matter as much to the mediator. And that’s true of everything in the whole process.

Lawyers Trust Lawyers

Next, have you ever heard the saying that “everything looks like a nail to someone who is good with a hammer?” That will apply to mediation. As I said, you can pretty much expect the mediator to be a lawyer or at least an ex-lawyer. Lawyers tend to respect, trust and understand other lawyers.

The mediator might like and respect you and be warm and friendly and all that. But when the chips are down, the mediator will tend to trust and believe the lawyer more than you. And he or she will also expect you to lose the case if it goes to trial, no matter what the evidence shows, because of this sympathy to the lawyer for the debt collector.

No matter what the evidence shows.

And this is true even if the mediator doesn’t specially trust or respect collection lawyers. We all know that debt collection isn’t rocket science, but lawyers come basically from the same caste, and they expect other lawyers to be able to beat non-lawyers.

Your Advantages Could Get Forgotten

The mediator will get paid regardless of whether you settle, and regardless of who wins. That reduces the amount of attention the mediator must spend on your central advantage: the price of litigation.

Further, the mediator will almost certainly not know much about debt law or the debt collection business. That means the mediator will tend to undervalue your second main advantage, the Rules of Evidence! If you have my materials (you should!), you will probably know far more about the relevant law and the “facts of life” than the mediator does. That’s because lawyers tend to take sides in their lives. I would never have represented a debt collection company, and debt collector lawyers rarely defend against debt collectors. So no debt collection attorney from either side would be likely to be truly impartial.

And most other lawyers don’t know much about debt collection at all. Thus the mediator’s tendency to trust and believe the debt collector is magnified in importance.

Mediation Can be Intimidating

Finally, let’s consider the mediation process itself. It’s a chance for one-on-one combat (so to speak) between the parties without the rules of evidence being so important. (And the rules of evidence are another of your biggest advantages). The debt collection lawyer will act like he can prove everything –no sweat. The mediator will believe that. Both will exert pressure on you to “realize” how strong the debt collector’s case is. You will feel lonely and outnumbered. The debt collector’s lawyer feels no risk in this situation –it’s just a job to him—whereas the personal stakes are much higher for you.

What You Must Remember

Through it all, you have to remember, cling tenaciously to the facts that… most debt collections lawyers do not have the evidence they need to win their case and cannot get it cheaply enough to go to trial against you and make money. What have they actually shown you? Can they pull up and show you and the mediator an affidavit from the original creditor that proves that they, the debt collector, actually own the debt, how much it is, that you owe it and didn’t pay? Can they prove that you owe the money? How? Remember that if they want to introduce any account information from the original creditor they’ve got to have either a witness or an affidavit. Can they get it cheaply enough to justify the expense? Not likely! You may have to remind the mediator of these facts—many times.

Don’t Forget Collection Risk

Also, you have to remember their “collection risk.” How likely are they going to be able to collect the money from you? If you didn’t pay (and if you owed) it was probably because you couldn’t afford to pay. Just because they manage to get a judgment, if they do and over your strenuous efforts in court and before, that doesn’t mean, by a long shot, that they’ll get their money.

Your Advantages

Your main tasks in mediation are to remember these facts. AND to remember not to provide them any information or material that could help them get past these problems. If you say you could pay, or if you admit the account was yours…you make their job in court much easier.

Also, remember your advantage: if they have a lawyer or two present, the clock is running, and someone is paying and not very happy about that. Time is on your side in mediation as elsewhere. Remember the Litigation materials and what your advantages are. If you can withstand the fear and temptation to give up, you’ll be in very good shape and can settle (or not) according to what is really in your best interests.

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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