What is “Valid” Service of Process


What is “Valid” Service of Process

This question comes up a lot, and I have probably addressed it before. But for this set of videos I want to give a shorter, sweeter answer. Bear in mind that service of process is the way a court asserts jurisdiction over you – “process” is not the lawsuit, it’s the summons, the sheet of paper from the court, and “service” is the way it’s given to you. If it isn’t done correctly, the court lacks power to control your fate. As you’ll see, the rule isn’t some sort of absolute constitutional requirement – it is constitutionally required, but it can vary under circumstances of practicality. We’ll discuss some of those here.

If you’re in small claims court, there may be special rules regarding service of process. There often are. For example, service by certified mail, or even just first class mail, may be sufficient. If you receive a summons by mail, you should look up the court’s rules on service. Sometimes, even if service by mail is good, there may need to be some proof that you actually received it. Check your rules and see if what you got was good enough. Obviously you don’t want to call them, identify yourself, and ask if receiving service by mail was good enough, since that would be admitting you got it.

If you’re being sued in something other than small claims court, it’s probably going to take more than just the mail. They’re probably going to have to hand you the suit or offer to do so.

Here again, the rule is not absolute. If they offer you the summons, and you refuse it or run away, you will have been served. It isn’t necessary for you to take it for service to have happened, just for it to be offered.

But what if they tack it on your door? Or put it between the screen door and your front door? That’s normally not going to be enough, since there’s no certainty you will be the one getting it, but if that happens, you’ll want to research the question before deciding it wasn’t good enough. Incidentally, if we’re talking about a foreclosure or rent eviction, tacking the suit to the door might be enough to get jurisdiction over the property even if not over you, personally. That would mean that they could evict you if you don’t answer, but not hold you liable if there’s anything else owed.

What about if they give the summons to a neighbor? Probably not enough (check your state’s rules) and possibly a violation of the Fair Debt Collection Practices Act, too.

How about giving it to you child at the door? This, too, is going to be determined by state rule. Most states have rules that allow service upon residents at a place who are a certain age or above. So ordinarily that would not give a visitor a right to accept service on you, or a child under a certain age.

If you haven’t been served adequately, you may wish to oppose the court’s jurisdiction over you. I actually usually suggest you hire a lawyer to do that for you, since it’s just a more powerful statement and can be done without being tremendously expensive. You would file what’s called a “motion to quash service,” to have it deemed ineffective by the court.

What if they can’t find you or reach you at home? There are other ways you can be served, but usually the plaintiff has to ask for permission to do that. They could serve you “by publication,” which means posting notice in some legal publication. Since no one ever reads those publications, you won’t see that, but if you’re aware they’re trying to reach you, you should follow the case docket and see if they ask for permission to serve you that way. If so and the court gives them permission to do so,  you’re probably going to want to go ahead and waive service and ask them to mail you the summons and complaint. But it’s quite rare for debt collectors to take all the trouble to serve by publication for a very good reason: if they can’t find you to serve you, they’re not likely to be able to find your assets to collect on them. Everybody in the debt collection business likes to get paid, and if they don’t think they will be, they usually won’t put in the effort.

As you can see, I generally think the debt collectors should have to put in the effort to serve you. If they can’t, there isn’t much reason for you to make that easier for them. They might drop the suit on you completely. That’s a winner.

How to Talk to Lawyers and Judges When you’re Sued for Debt


I’ve discussed some of the background realities of talking with judges and the attorney for the other side when you’re representing yourself as a defendant in a suit for debt in “Real Words about Talking to Judges and Lawyers.” There, I mentioned that you face systemic discrimination as a pro se defendant because neither judges nor the lawyers will respect you. The judges don’t primarily for classist reasons, but the lawyers for the other side have various reasons. There’s a bias against you, and that means certain things we’re going to talk about.

It means, above all, that you have to be better than the lawyer for the other side to receive appropriate respect. There are reasons this is possible, but it’s primarily because of the business model of the debt collectors. They take a factory approach, and that means that your case will simply get very little individual treatment from the company – it just isn’t profitable for them to do that. Nor is it profitable for them to hire lawyers from the Ivy Leagues, let’s just say. Their whole approach is to bug you into paying without suing you and then to file huge numbers of suits knowing most people won’t defend themselves at all and will allow a default judgment.

Defending yourself takes you way out of the “ordinary.”

And it’s a start, but you also still have to put in enough work to be better than the other side, and that’s what we discuss here.

Because of the general lack of respect for pro se defendants, when you say something, you will be more likely to need to cite controlling authority than a lawyer would. They can make references to “black letter law” (which is just legalese for “generally obvious”), but you will do better, if the issue is important at all, by citing a case that supports it. That means research is going to be important to you.

One thing non-lawyers seem to have trouble with is keeping things “relevant.” If you’re arguing about whether the debt collector has proof they own the debt, some things will shine a light on the issue, but the fact that the company has been sued by the federal government for collection abuses will not be, for example. Because of the way the court sees you, it will have very little tolerance for any straying off topic – it (the judge) will think you’re wasting time and often tune out. Therefore, make sure everything you say relates to exactly the issue you’re discussing.

A related issue is keeping things brief. Again, the court will quickly sense that you’re wasting time if you veer away from the most important things at all. The judge doesn’t need to know why you thought something or planned something, it needs to know what the law requires. Pro se defendants seem to have a tremendous difficulty with this – you want to tell your story, but let me tell you that the court could not give one damn about your story. Legal talk is very different in this respect than regular human talk. Do NOT waste the court’s time.

Don’t whine. This is probably self-explanatory, but it’s part of the other things I’ve mentioned. Because the court does not care about your feelings, it will regard anything you say or insinuate about your feelings as a waste of time. And whining is irritating and unprofessional.

Know when to hold and when to fold. This is part of maintaining self-discipline and paying attention to the judge. When the judge says they’ve ruled, you are on extremely borrowed time. Ordinarily you should shut up and sit down. As I point out in “Real Talk,” you do that by saying, “Thank you, your honor.” But sometimes you don’t think you’ve had a chance to raise a crucial point. In that situation, you say something like, “I hear that, your honor, but I wanted to make sure you knew that they caught the defendant red-handed holding the knife with blood all over him…”

What I’m saying here is that if you want to say something after the judge has already ruled, it had better be damn good, and even then you’re on thin ice, but sometimes you have to say something to preserve the record. Judges can be hasty, and specially so with pro se debt defendants, so sometimes you may feel you have to point something out, but make sure it’s good – otherwise you’re just going to make the judge mad.

And speaking of anger, you must ALWAYS keep your feelings in check when you’re talking to the judge. If you raise your voice you could get thrown in jail for contempt of court, but of course it’s much more likely that the judge will just stop listening to you for the rest of the case. Baseball coaches seem to think it helps sometimes to get kicked out of a game, but this is never going to be a good strategy for you. Shut up, collect your thoughts, and be ready for the next thing.

And now just a few words about the lawyers. First, keeping your cool is just as important with them as it is with judges. They can’t throw you in jail, but they can certainly tune you out in lots of ways. It won’t be good for you if they do.

Because you’ll be negotiating in various ways with the other lawyer, you need to remember one thing: talk is cheap. Because they don’t have a lot of respect for you, if you tell them “we should settle this thing now, or I’m going to file a motion for summary judgment next week…” they’re just going to ignore that. They don’t think you’ll do it. Any similar threats are pointless and more harmful than good. Instead, do the work first and let your actions speak for you.

Incidentally, a lot of lawyers try the same trick with the same results (nothing), but whereas I could probably draft a motion for summary judgment and send it to the other side saying that if they don’t settle I’m going to file the motion, you probably couldn’t even do that. There’s a chance they’d read it if a lawyer wrote it, but they probably won’t read anything you send until you file it. So go ahead and file what you’re going to file. Let your actions do your talking.

Talking to Judges and the Other Side When Sued for Debt


Real Words about Talking to Judges and the Other Side
When Sued for Debt

If you are being sued for debt and representing yourself – that’s called “pro se” – you’re going to have to talk to judges and also to the lawyer for the other side. That presents special challenges for pro se defendants, and particularly pro se debt defendants.

The first thing you must remember is that any FACTUAL thing you say can be taken as an “admission.” That means, if the fact you made the factual statement is established, the fact itself will be regarded as proven. That can be huge in debt cases where debt buyers often cannot prove things with legitimate evidence. If you say “I know I owe…” or “I know I did…” or “You told me…” or anything else that leads to
a factual statement, that fact will be regarded as proven. Not BY you, incidentally, but AGAINST you. So don’t try to get cute and say, for example, “I know you can’t prove your case.” The rule only applies to what are called “admissions against interest” and it’s a one-way street: you can’t make admissions for the other side. Is that clear?

When you’re talking to judges, they may simply ask you, for example, whether you used or had a credit card or something along those lines. You may be disputing, primarily, whether the debt collector has a right to collect from you, which could be a completely different issue, but if you admit you got the credit card you will lose the case 99% of the time. You must resist the temptation to answer such a question with an admission. You can say, instead, “that’s one of the things the other side has to prove, and I’m not admitting it.”

You are not a witness under oath when you’re talking to the judge in open court unless you are, in fact, testifying, and you should not feel required to make admissions. If the judge presses you very hard, simply say you don’t think so.

If the lawyer for the other side asks you point blank for some similar admission while you’re negotiating or haggling over discovery or at any other time than while you are under oath, you should simply say you “deny” it. That’s what you’re doing by your denial of the allegation in your answer.

Now let’s go to some “unwritten” facts, you might say. And they’re frankly not going to be pleasant to hear, but you need to know them. Both judges and the other side – lawyers and their minions – regard you as socially inferior. You may feel it and feel intimidated, or you may not even feel it, but most of the time it is a simple fact. They do not respect you in a fundamental way.

With judges that can never be remedied. They can respect your intelligence and your willingness to compete, shall we say, but they are in a position of power over you that is virtually absolute, and they’ve been in that position or some similar position for a long, long time. This gives you kind of a delicate task which we’ll come back to in a minute, but first we’ll talk about the lawyers and the other side generally.

Lawyers don’t respect you, either, and neither, most especially, do their owners the debt buyers. Again, you cannot fix that, but you must treat them, as much as you possibly can, as your equals. They’re not your parents and will never, under any circumstances, do anything in your interests that doesn’t help their interests, so do not ask them for guidance in any way. Ask me. Or ask a trusted friend. And then do your research. But when you’re talking to the lawyer you should be aware of the power dynamic and resist it. Not saying be rude or overbearing; I’m saying to keep your cool and treat the lawyer the way you’d treat anyone else you’re in a professional relationship with. Because that’s what you are.

Believe me, though, they start with contempt for you, and that will never change unless you fight and win. Professionally, again, I emphasize. You fight and win by standing up for your legitimate rights, keeping your cool, not making admissions, and forcing their hand where possible. Eventually, if you do these things, they’re likely to develop a sort of grudging admiration for you – fighters like fighters, in a way. They respect that about each other. But they’re never going to invite you to the boathouse, if you know what I mean. Know that fact.

Now let’s get back to judges, because your relationship to them is much more complicated.

Your job, as an advocate, is to instruct the judge on what the law requires, as you understand it. If the other side is suing you for a debt they cannot prove they own, you have to tell the judge that that failure to prove ownership requires they lose the case. When you object at trial or in motions, for another example, you have to tell the judge why legal precedent in your state requires that your objection be sustained.

Lawyers do this all the time, although even lawyers handle judges they don’t know extremely well, with kid gloves. And your job is much much harder because the judges regard you as socially inferior. You still have to tell the judge what the law requires, and you can’t mince your words about that. But never, ever, interrupt a judge, raise your voice, or lose your cool, and don’t forget that judges can make mistakes (and so can you, of course), so work with that. It doesn’t mean they’re against you – it doesn’t usually mean much of anything. It’s usually impersonal, and even if it isn’t you have to act like it is.

Remember that judges are in a god-like position over you, and a lot of them seem to think they are god, too. If they tell you to shut up or it’s over, they’ve ruled on a question, they expect you to thank them! They do, and it’s standard. The judge says, “I’ve overruled your objection,” and you say, in response, “Thank you your honor.”

It could seem disgusting, but it’s tradition as much as anything else, and you are respecting their position when you say that more than their person.

So you have a challenging balancing act with judges. You have to tell them what the law requires and what makes you think so – and they actually may not know or remember. But you must keep in mind that their power is nearly absolute, so you should usually treat your arguments as “reminders” to them of what you expect they already know. And yet you are their intellectual equals, too, so you should stand up for the right of your position even if the judge is questioning it.

With all that said, a lot of judges are intelligent, nice people. ALL of them are, at least some of the time to some people. Recognize that fact and understand that they play a role in this case, and that role is to make judgments, some of which you aren’t going to like. Don’t personalize their rulings, and don’t think that because they disagree with you on some point that they’re against you. Unless you’re a competitive athlete or a lawyer, this is probably way out of your experience, but referees in football are required to look at every play and make their best judgment regardless of who they like better. They try to do that, and so do judges, most of the time. Understand that fact – it’s just their job.

When you’re talking to the other side, but especially when you’re talking to a judge, remember to listen carefully. So often people just listen to what others are saying primarily as a way of marking time – you have something to say, and you’re just waiting for them to finish so you can say it. Don’t do this in the law. Listen to what they’re saying – it’s usually important.

And make sure the things you say are important, too. Stay on point and remember that anything you say that seems to go off-point will cost you respect and attention. No one wants to hear your feelings or difficulties. They want to hear what the law is and what it requires. If you’re representing yourself, you’re going to have strong feelings, but keep them in check and keep them quiet. Talk about the few things that matter to whatever you’re discussing.

Remember that above all, the case that means so much to you means very little to the other side or to the judge. It’s just a job to them, which they may take more or less seriously, but for you it is much more important. Act like the case is important to you and work steadily and hard, and stay humble. Hope the judge will take his or her responsibilities seriously enough to be fair and listen to you when it matters, and that the lawyer on the other side is as uninspired as most of them are. Keep those things in mind and you’ll have a great chance to win.

Our 20-20 Membership


Our 20-20 Membership

People often ask me what they should get first from Your Legal Leg Up. To me, the answer is obvious, and it’s both the first and last thing you’ll pay for in most cases: the 20-20 membership. It’s the best we offer both in value and price. It’s so much better than the other options, in fact, that I almost feel guilty when people buy anything else, but sometimes they do, and there could be reasons one of the other memberships would be right for you, so I’ll talk briefly about your other options at the end of this article.

Teleconferences

All of our memberships include access to our teleconferences, and I’m not aware of any other program that offers anything like that.

What teleconferences are is an opportunity to ask questions in real time. You can ask about what things mean, what the bad guys might be driving at or trying to accomplish with something they’re doing, and how you might respond. We’ll help direct you to sources of information or guide your research. Sometimes you might just want to know where you are in your case, what a word means, or how to say or search for something… stuff like that.

Sometimes you’ll just need some encouragement and a reminder to keep up the good work because
working steadily is important but difficult in legal work, where there are deadlines that can be months away, but you forget how much time things take even aside from doing the work itself.

And sometimes you’ll want to hear other people who in the same boat as you are. Debt defense pro se can be a lonely process, but there are a lot of people trying to defend themselves. You can talk to them, and we offer encouragement and coaching as well as more substantive help too. People who use it find it enormously helpful. We can’t offer legal advice – you’d have to pay between $150 – 250 per hour to get that – but consider it a very active form of coaching and help.

Teleconferences currently happen three times per week and members can come to any and all of them. They’re scheduled for an hour each, but often go above that amount of time because I want everyone with a question to get it answered. If need be, we’ll increase the number of teleconferences per week to make it easier to get those questions answered.

Fees and Prices – Why the 20-20 Membership is Best

Most of our memberships involve a registration fee and a monthly payment, but the 20-20 only requires one payment for a full year that will be less than the other memberships for a year. The other memberships offer discounts on our digital products, but with the 20-20 you get all the digital products for free.

In other words, for one price you get all of our digital products and access to all the materials on the website for a year in addition to the teleconferences. The digital products which are designed to make the whole process easier and more effective, and the many articles and videos should help you get a deeper understanding of specific topics as well. You don’t get any “bonuses” because you get everything with the membership.

Materials You’ll Get – You Get ALL Digital Products we Offer

Maybe that’s all you need to know, but if you like to see it all before you make a decision, I’ll say you get all the digital products on our comprehensive product page.  This includes numerous reports, including among others, Got Debt, Assignment Contracts, and Three Weaknesses Almost All Debt Collectors Have, the Manuals for Debt Litigation, Debt Negotiation, and Credit Repair, and all the Motions Packets, including the Motion to Vacate Default, Motion to Dismiss, Motion to Compel, and Motion for Summary Judgment. There will be others, too. You will also get our Model Discovery Pack and, if you live in either California or Pennsylvania, products relevant to those areas.

And you’ll get access to all the hundreds of articles on our site. Many are free to the general public, but many others are restricted by level of membership. As a 20-20 member you get them all. Go here to sign up for the membership now, be sure to click on the 20-20 membership option.

Why Such a Good Deal?

I know this is going to sound like sales talk, but the 20-20 is a much better offer than we’ve ever made, and some explanation might help it make sense. There are two reasons, one selfish, and one not so selfish, for making this offer.

The selfish reason is that I’ve noticed that when people get sued they regard the law suit as a major priority and will pay what they have to (if they can) to give themselves a chance to win. That makes a lot of sense to me. But if they sign up for a monthly membership, there often comes a time when the case is less scary, or there comes a time when they need to buy a product but don’t have the money. So they cut corners and skip a product. That lowers their chance of winning, which isn’t good for Your Legal Leg Up’s reputation. It’s very important that you all win if at all possible, so making a deal which will never make you cut corners makes good business sense to me. And it’s why I’m here in the first place.

The other reason is just that I can do it. The products are here (and the work has been done, though they are sometimes revised), and I want you to be able to do your best work and get your best results without always having to sweat gallons. You’ll have plenty to do, but we can make things a lot easier. So I want to do that and am fine with making a little less than I might in to do it.

The Other Memberships

I mentioned the other types of membership a little bit above. Those are the Gold, Platinum and Diamond memberships. The main advantage with them is that if you show up and the debt collector gives up just because you do, you’ll save money because you won’t be paying for things you don’t us. Don’t laugh, that can happen. And it does happen maybe 1 percent of the time. They’re looking for an easy, automatic victory, and just by answering you make them decide to go away. Like I said, that happens about 1% of the time as far as I can tell. To be frank, nobody that’s happened to felt bad about getting the 20-20, but it’s a fact that a monthly membership would have cost less in that situation. Just about any other situation, though, and the 20-20 will save you a bunch of money and a ton of time and worry.

It’s the way to go for almost everybody. Go here to sign up for the membership now, be sure to click on the 20-20 membership option.

Spokeo, Activist Courts, and Consumer and Debt Law

People involved in debt and consumer law have heard a lot about “Spokeo” in the past few years, and they’re going to hear more. Spokeo is a wolf in sheep’s clothing, a Supreme Court decision purporting to limit the Judicial system’s ability to override the functions of the other branches of government, but actually itself a vast usurpation of that power. It has been used to gut consumer and debt law protections enacted by Congress, and it will increasingly be used to do so. I expect it to be extended to state courts and jurisdiction as well.

So, what is “Spokeo” and how does it usurp legislative power? We discuss these issues and suggest some possible approaches in the following article.

Spokeo” is the way many refer to a case and the Supreme Court decision that decided it. The case was Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016).  Spokeo, Inc. was a business that compiled information on essentially everybody and made it available to people searching it. Some of the information was free, and some was only available upon payment (not a distinction relevant to the case). It disseminated information on creditworthiness and lifestyle and general biographical information, and its reporting on creditworthiness (allegedly) brought it within the reach of the Fair Credit Reporting Act (FCRA).[1]

In the case of Robins (the plaintiff in the suit), Spokeo reported that he was in his mid-fifties, employed, affluent and married – all of which Robins alleged was false. Robins claimed the information had hurt his attempt to obtain employment. Robins brought suit under the FCRA.[2]

The Supreme Court held (essentially) that he had not alleged a “concrete, actual injury.” Probably every single person reading this article intuitively knows how false this holding was, in reality.

The Court based its analysis on Article III of the Constitution, which limits judicial action to actual “cases and controversies.” They pointed out a fundamental concept of the law, which is that courts are only empowered to hear cases involving real people with real adversary interests – otherwise people would make up cases to test abstract limits of the laws as a sort of judicial review. To keep the Judicial branch in its own lane, courts have determined that, to satisfy Article III, a plaintiff must show (1) injury in fact, (2) causation, and (3) redressability (ability of a court order to “solve” the wrong that has been committed. With respect to the injury requirement, the injury must be (1) “concrete and particularized” and (2) “actual or imminent.” A “bare procedural violation” of a statute is not enough: there must be some harm already, or some harm must be imminent.[3]

Article III’s “Standing” Requirement and the Federal Court’s Attack on Statutory Consumer Rights

To satisfy Article III, a plaintiff must show (1) injury in fact, (2) causation, and (3) redressability. With respect to the injury requirement, which the Supreme Court discussed at length in its seminal opinion in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), the injury must be (1) “concrete and particularized” and (2) “actual or imminent.” A “bare procedural violation” of a statute is not enough.

All of these requirements are designed to insure that a litigant is protecting his or her own specific rights and not some theoretical general or public right which would be akin to judicial review.

In Spokeo, the Supreme Court seemed to take the position that the “harm” or injury Robins alleged was a procedural violation – like he was some purist offended by Spokeo’s carelessness in keeping information. The harm, however, was crystal clear and not at all theoretical or akin to judicial review: Spokeo had wrong information about Robins. Having and disseminating false information about him WAS the wrong, and it was also the very “harm” that the FCRA was designed to prevent. The fact that the incorrect information was also damaging to him was irrelevant to the Article III analysis, though of course it would be relevant to the amount of damages he should have gotten.

The Court was not unaware of this; its decision was a blatant attack upon civil and consumer rights, many of which are quite difficult to quantify and are intangible. The Court is hostile to these rights, and Spokeo was a usurpation of the legislature’s Constitutional power to create them and give people the right to enforce them. Thus it is a lasting monument to the hypocrisy of the current Supreme Court. There will likely be many more over the coming years. The Spokeo decision has been used to attack civil and consumer rights from the instant it was written, most notably, perhaps, the Telephone Consumer Protection Act (TCPA), but what will be the harm to a debt litigant under the FDCPA of the debt collector failing to publish warnings in conspicuous print if the consumer sees the warning anyway? What’s the harm of making harassing phone calls late at night? The Supreme Court has put itself in the business of evaluating and quantifying those harms, while the FDCPA made them per se violations. The courts will use Spokeo to attack the FDCPA as well.

State Law Applicability of Spokeo

Even a casual reading of Spokeo will reveal that the Court pretended to be careful to limit its ruling to federal courts. There is no doubt the state courts will follow, however. Note the reasoning, applicable to every state, in the following paragraph of a New York State opinion. I include the links so you can more conveniently track down the cited cases:

“Under the common law, there is little doubt that a `court has no inherent power to right a wrong unless thereby the civil, property or personal rights of the plaintiff in the action or the petitioner in the proceeding are affected'” (Society of Plastics Indus. v County of Suffolk, 77 NY2d 761, 772 [1991], quoting Schieffelin v Komfort, 212 NY 520, 530 [1914]). Related to this principle is “a general prohibition on one litigant raising the legal rights of another” (Society of Plastics, 77 NY2d at 773). Thus, if the issue of standing is raised, a party challenging governmental action must meet the threshold burden of establishing that it has suffered an “injury in fact” and that the injury it asserts “fall[s] within the zone of interests or concerns sought to be promoted or protected by the statutory provision under which the [government] has acted” (New York State Assn. of Nurse Anesthetists v Novello, 2 NY3d 207, 211 [2004]).[2] The injury-in-fact requirement necessitates a showing that the party has “an actual legal stake in the matter being adjudicated” and has suffered a cognizable harm (see Society of Plastics, 77 NY2d at 772) that is not “tenuous,” “ephemeral,” or “conjectural” but is sufficiently concrete and particularized to warrant judicial intervention (Novello, 2 NY3d at 214; see Spokeo, Inc. v Robins, 578 US __, __, 136 S Ct 1540, 1548 [2016]).

MENTAL HYGIENE v. Daniels, 33 NY 3d 44, 50 – (NY App. 2019).

What to Do

 

People familiar with my writing and videos will perhaps recognize that some of the language in Mental Hygiene is familiar. We argue the issue of standing all the time at a more basic level: a debt collector must show that it owns the right to sue – the injury in fact requirement is a constitutional necessity that the plaintiff show it owns the debt in question. Provided you dispute the debt collector’s ownership, which I have said every defendant should do in every case.

If you are alleging a violation of the FDCPA or the FCRA, you must obviously take some care to allege actual harm closely connected to the right you claim was violated.  If they are suing you for debt beyond the statute of limitations, their unfair collection practice has caused you emotional distress, the expense of hiring a lawyer or seeking help, the time reading, thinking about and responding to the suit, the price of paper in filing your answer or responsive motion, postage incurred in providing notice to the debt collector, gas in taking the suit to be filed, and whatever else you can think of.

The courts are extremely aggressive in TCPA litigation, where they have held that “a single emailed fax” was not a cognizable harm even though Congress said it was, and even though even a single emailed fax would require some time to read and elicit some emotional response. If ONE emailed fax isn’t enough despite the fact that Congress made it so, then what about two? Or twenty-two? Expect the courts to apply this type of analysis routinely, and state your damages in as lurid and concrete a fashion possible.

Many state consumer protection laws are subject to what is called “strict liability” and do not require any harm at all – even a mere “technical” violation creates liability. The Supreme Court is willing to recognize that a trespasser, by stepping one foot across the line, has caused cognizable damage even though it may not be seen, felt, or even exist at all – it’s a legal wrong (to a property interest most often held by the wealthy). Will it see deceptive sales language that did not deceive a consumer as a violation in the same way? I believe a careful litigant should consider alleging shock and outrage, perhaps a call to a lawyer  or at least photocopying expense – something, anything – to show actual harm until some theoretical limitation has been placed on the courts’ “discretion” to reconsider and reevaluate damages determined by the legislature. Spokeo abandoned the principle of Judicial limitation.

[1] Among other things, the FCRA states that “[a]ny person who willfully fails to comply with any requirement [of the Act] with respect to any [individual] is liable to that [individual]” for, among other things, either “actual damages” or statutory damages of $100 to $1,000 per violation, costs of the action and attorney’s fees, and possibly punitive damages. § 1681n(a).

[2]Apparenty Robins did not dispute his “report” (and perhaps he couldn’t because of the nature of Spokeo) and sue under the provisions provided by that. Instead, he seems to have alleged a failure of Spokeo to use the required care to obtain information. This may have been a litigation decision based on the attempt to bring the claim as a class action, which requires “commonality” of legal issues among the class members. If so, it was the wrong decision for Robins’s individual chances, as it turned out.

[3] “Imminence” has created some interesting legal issues not important here. The courts have held that an enacted law may create imminent harm, but they have also held that where the executive has renounced enforcement of the law, the harm is not imminent.

Usury and Non-Bank Loans

I have had my hands full lately with the National Banking Act (NBA). Specifically, the question is whether the NBA, which protects national banks from usury claims, applies to debt collectors which buy the debts. It turns out that question has several possible answers.

National Banking Act Allows Usury

Here’s the background: some states have laws limiting the amount of interest lenders can charge. Under the NBA, a bank can issue credit cards that charge high interest in states with usury laws. Yes, it’s a scam (they call it “exporting interest rates”), but they can. What happens if your debt gets sold to a debt collector? The NBA applies to national banks, not other businesses, so you might think a debt collector would be committing usury by trying to collect illegal rates. That would also violate the Fair Debt Collection Practices Act (FDCPA).

Under Madden, Debt Collectors Don’t Receive NBA License to Commit Usury, Regulation Changes That

The Second Federal Circuit of Appeals found that debt collectors collecting usurious rates was, in fact, illegal in a case called Madden v. Midland Funding, LLC 786 F.3d 246 (2015). Some other circuits, notably the 8th, have tended in the other direction. The Supreme Court denied certiorari (review) of Madden, so it remains in place as law of the 2nd Circuit. Unfortunately, the debt collectors managed to sneak a new regulation through that negates Madden. That regulation is at: 12 C.F.R. part 331, 84 Fed. Reg. 66845.

Possible Outcomes

This leaves us in an odd place. If you are in the 2nd Circuit currently being sued by a debt collector on a card with interest higher than your state allows, you have a powerful defense and a counterclaim probably under the usury law and FDCPA. I think it is still good, though you can expect some fighting on the question of retroactivity of the regulation. What about claims arising in the future, though? What about claims outside of the 2nd Circuit?

Courts are supposed to give “great deference” to regulations duly issued by agencies charged with enforcing specific laws. Without going into details, this regulation would seem to fit that bill and should probably receive that deference. It is not unheard of for the courts to reject such a regulation, but it is rare, and, in my opinion, very unlikely in this situation – even in the Second Circuit. Thus I believe that in the future this defense will not be effective. I do believe it could be raised in good faith however, at present, and that may have some advantage for a pro se defendant. It will be a long shot even in the Second Circuit, however, and longer elsewhere.

What about claims existing now but outside the 2nd Circuit? Will the regulation affect the way the 8th Circuit, for example, reads Madden? It probably should not, but it probably will. The regulation is supposedly based on the FDIC’s reading of an existing statute rather than a new legislative enactment – it will probably be considered an authoritative interpretation of the statute even though, in practical effect it is a new legislative act. But this is not certain, and again, I think the issue may have advantages for pro se litigants to raise, and winning is not out of the question in my opinion.

What if you live in a state with a usury law and a debt collector is trying to collect higher rates – but is not suing you. Can you sue them? I believe the answer is yes – all the foregoing analysis applies to the attempt to collect the debt, not necessarily limited to litigation attempting to collect the debt.

Incidentally, the NBA explicitly extends to all FDIC-insured entities. This question came up in a teleconference relating to loans issued by WebBank, which apparently IS FDIC insured. Our consideration of whether WebBank itself can charge usurious rates, then, must conclude that it can indeed do so.

One might consider that enforcing an explicitly illegal contract (usury) would be void as against public policy under state law. And so it is. However, the federal preemption doctrine that the NBA invokes overrules that – states cannot claim a federal policy is against their public policy.

If you get a loan now and at some point in the future a debt collector tries to collect usurious rates that would have allowed to the original lender, I think you’re out of luck regarding the defenses and counterclaims we’ve discussed here. The new regulation permits it, as I read it. Of course you still have all the usual defenses and attacks we always use against debt collectors, so your chance of winning remains srong.

Usury and Non-Bank Loans

National Banking Act and Debt Law

I have had my hands full lately with the National Banking Act (NBA). Specifically, the question is whether the NBA, which protects national banks from usury claims, applies to debt collectors which buy the debts. It turns out that question has several possible answers.

Some Background

Here’s the background: some states have laws limiting the amount of interest lenders can charge. Under the NBA, a bank can issue credit cards that charge high interest in states with usury laws. Yes, it’s a scam (they call it “exporting interest rates”), but they can. What happens if your debt gets sold to a debt collector? The NBA applies to national banks, not other businesses, so you might think a debt collector would be committing usury by trying to collect illegal rates. That would also violate the Fair Debt Collection Practices Act (FDCPA).

The Second Federal Circuit of Appeals found that debt collectors collecting usurious rates was, in fact, illegal in a case called Madden v. Midland Funding, LLC 786 F.3d 246 (2015). Some other circuits, notably the 8th, have tended in the other direction. The Supreme Court denied certiorari (review) of Madden, so it remains in place as law of the 2nd Circuit. Unfortunately, the debt collectors managed to sneak a new regulation through that negates Madden. That regulation is at: 12 C.F.R. part 331, 84 Fed. Reg. 66845.

Do you Have a Usury Defense or Attack?

This leaves us in an odd place. If you are in the 2nd Circuit being sued by a debt collector on a card with interest higher than your state allows, you have a powerful defense. I think it is still good, though you can expect some fighting on the question of retroactivity of the regulation. What about claims arising in the future, though? What about claims outside of the 2nd Circuit?

Courts are supposed to give “great deference” to regulations duly issued by agencies charged with enforcing specific laws. Without going into details, this regulation would seem to fit that bill and should probably receive that deference. It is not unheard of for the courts to reject such a regulation, but it is rare, and, in my opinion, very unlikely in this situation – even in the Second Circuit. Thus I believe that in the future this defense will not be effective. I do believe it could be raised in good faith however, at present, and that may have some advantage for a pro se defendant. It will be a long shot even in the Second Circuit, however, and longer elsewhere.

What about claims existing now but outside the 2nd Circuit? Will the regulation affect the way the 8th Circuit, for example, reads Madden? It probably should not, but it probably will. The regulation is supposedly the FDIC’s reading of an existing statute rather than a new legislative enactment – it will probably be considered an authoritative interpretation of the statute even though, in practical effect it is a new legislative act. But this is not certain, and again, I think the issue may have advantages for pro se litigants to raise, and winning is not out of the question in my opinion.

What if you live in a state with a usury law and a debt collector is trying to collect higher rates – but is not suing you. Can you sue them? I believe the answer is yes – all the foregoing analysis applies to the attempt to collect the debt, not necessarily litigation attempting to collect the debt.

Application to WebBank

Incidentally, the NBA explicitly extends to all FDIC-insured entities. This question came up in a teleconference relating to loans issued by WebBank, which apparently IS FDIC insured. Our consideration of whether WebBank can charge usurious rates, then, must conclude that it can indeed do so.

Public Policy

One might consider that enforcing an explicitly illegal contract (usury) would be void as against public policy under state law. And so it is. However, the federal preemption doctrine that the NBA invokes overrules that – states cannot claim a federal policy is against their public policy. In a very real sense, it is to exploit this facet of the law that the NBA exists in the first place

Why It’s Hard to Find a Good Debt Lawyer you can Afford

Why it’s so Hard to Find a Good Debt Lawyer you Can Afford

For a copy of this article in pdf form, click here: hiring debt lawyers

What Lawyers Need to Charge for Debt Defense Work

In this article we talk about what lawyers need to get in debt cases and why you probably can do better by defending yourself.

I hear lots of different numbers from members who have tried to get a lawyer to represent them in debt cases – there’s no telling exactly what number you’ll hear if you talk to a lawyer regarding your specific case. Probably big. That isn’t necessarily wrong or a rip off in any way – it just reflects some underlying financial realities.

Law is a Business

Most debt lawyers who represent defendants are in it for ideological reasons – this is a type of law where the lawyers choose sides and pretty much stay on them. And as you should know, it pays much, much better to be on the side of big rich corporations than it does to represent the people they’re after. There may be some firms that have managed to automate and mechanize the defense process to such an extent that they can do a good job and make a bundle, but I haven’t seen or heard of them.

As far as I’ve ever seen, representing debt defendants is a very tough business. How does that translate into daily reality?

Daily Realities

First, an established lawyer needs to bill about $150 – $200 per hour. I know that seems like a lot,
and it is a lot, but you don’t just get a lawyer for that money – you get an office and a staff. Or to put it slightly differently, the lawyer has to hire those people and pay for those things out of what she charges you.

When a lawyer takes a case, and “appears” on your behalf in court, it often isn’t easy to “withdraw” from it later if, for example, you don’t pay your bills or if the case goes in unexpected or disastrous ways.

That means the lawyer, as a practical matter, has to charge you up front at least enough to make the case pay, taking his best guess where that case may go. And then hope for the best regarding whatever else you may come to owe. Hence a high retainer – often particularly high in debt cases because… let’s face it… you’re being sued because someone says you didn’t pay your bills.

Uncertainty

Then there’s the uncertainty regarding how much time the case will take – good lawyers often have lots to do, and lots of choices. Taking one case can mean NOT taking another one. A debt case, with relatively low amounts at stake, can be low on the totem pole of priorities.

The Duty to Make Fees Reasonable

The amount at stake – no matter how much you think your case is big – is small for most lawyers, and that raises an ethical issue. Lawyers are supposed to keep their fees somewhat in line with the results obtained.

Does saving you from a $25,000 debt justify a $10,000 bill? Maybe – although if you could afford the $10,000 you probably wouldn’t be being sued. What about a $7,500 debt though? How much fee is justified there?

The average lawyer is caught between a rock and a hard spot in debt cases, because doing a good job takes time. If it’s a big debt, it might allow more time, but getting the fee could get tough. If it’s a small debt, it won’t justify the fee.

And then there’s the learning curve. Most lawyers don’t know debt law, and they don’t know how much they don’t know. The good ones know it could take some time to catch up, but how do they charge you for that? That’s easy to do in a corporate merger involving millions of dollars, not so easy in a debt case where you’re sweating bullets over ten thousand in possible liability.

The bad ones don’t worry about catching up. But you’ll obviously pay for it one way or another, right?

Leverage

We just came out with a product – the First Response Kit – that includes an Answer and a first set of discovery – interrogatories, requests for documents, and requests for admissions. That took about ten hours to create.

Your Lawyer Works One Case at a Time

A lawyer working on your case would probably charge, or want to charge, around $1,500 – $2,000 for doing that. Or would have to do a less thorough job. And that’s just one small example of the way the business works. Every time someone has to show up for your case or do any work on it, someone has to pay.

Or Maybe a Little More

If the lawyer can take a large number of cases, he or she can achieve some economy of scale – that is, can divide the cost of showing up among all the clients who need it on a given day. But it’s tough, and very rare, for anyone to manage this.

The Debt Collector’s Lawyer Works a Hundred Cases at a Time

The lawyer suing you shows up on a hundred cases at a time. That’s because he filed those suits, and it doesn’t matter whether the people being sued want to show up or not – they’re in the case because he put them there. The debt defense lawyer, on the other hand, is representing only voluntary clients. When I was practicing law, I’d send people letters suggesting, more or less, that they hire me. I got a 3–5% call-back rate. That is, only 3-5% of the people I sent letters to even discussed the suit with me.

A union-paid lawyer I knew offered all union employees being sued for debt free representation. And under his circumstances, he could tell them he’d get them off every time. He got a 1% return on his letters.

That meant the debt collector’s lawyer could work 100 times more efficiently at the early stage of a lawsuit.  As the suit wore on, some of that advantage went away, but they never lost it all. And that advantage translated into every document created, every argument made, and every appearance at court throughout the lawsuit.

And that’s why it’s so hard for you to get a good debt lawyer at a price you can afford. Your lawyer is always fighting against a lawyer who can charge less to do more for his or her clients.

There Is a Happy Ending

As uneven as the process is in terms of hiring a lawyer, there is another way. You can represent yourself.

Sure, you have challenges, from scheduling for hearings to learning a bunch of new stuff. But you don’t have to make $200 per hour or worry about cutting corners to justify what you charge. You get the full value of your work, and it is often worth much more than $200 per hour.

And when you make the other side work, you know you’re making them worry because someone is paying their lawyer that $200 per hour.

Of course you want to do a good job, but because the case is worth the full value to you, you can take the time to do a good job. If the time comes when you decide it isn’t worth fighting anymore, you can stop. You’ll lose the case if you do, mind you, but it’s your choice, while a lawyer representing you wouldn’t have that choice and thus must charge you to prepare for the possibility of being stuck in a case.

All you need is a little help doing some of the new stuff that you don’t understand, and you can get that help from us.

Your Legal Leg Up

Your Legal Leg Up is a website and business dedicated to helping people defend themselves from debt lawsuits without having to hire a lawyer. As you can see below, we have a number of products as well as memberships that should help you wherever you are in the process. In addition to that, our website is a resource for all. Many of the articles and materials are reserved for members, but many are available to everyone.

Finding Resources

Our website is both a business and a public resource, and you can use it to find information on a wide variety of debt law-related topics. While many of our resources are restricted to members, of course, many more are free to the public. Please feel free to use it. Every page has a site search button in both the header and footer. It’s a little magnifying glass icon that looks like this:

Click on the magnifying glass icon, and a small window opens. Put in a key word – a word you think relates to what you’re looking for – and enter. You will get a page of results.

Don’t be a “Verification Sucker” – When You’re Not in Kansas Anymore

When a debt collector sues you as the first thing you hear from it (they can do that), this does not give you a right to dispute and require verification. Your rights are through the legal process, and you must answer the petition or you will be defaulted. Sometimes debt collectors use people’s confusion over their rights and do things which suggest you could dispute the debt. This video discusses your rights.

You would be amazed how often people ask me whether they should “just send a verification letter” to the company or law firm when they get served with a debt lawsuit. Or as one person put it, “now that I’ve called the court to tell them I object, should I just send a verification letter? Or was that enough?”

No. It wasn’t enough – it wasn’t even anything at all.

Dispute and Verification

Click here for a copy of this article in pdf form: Don’t be Verification Sucker

Let’s take a quick step back here and review some facts and some rights.

When a debt collector first contacts you regarding a debt it is attempting to collect, it is required by law to provide you certain information. If the contact is not in writing, it must send you a notice in writing. If the contact is in writing, that contact must contain a notice. That notice must inform you of the debt collector’s identity, the nature and amount of the debt in question, and your right to dispute the debt and require verification. People often refer to this notice as the “verification letter,” although more properly it’s a notice of the right to dispute the debt. If you dispute, they must verify the debt before attempting to collect again, and you have thirty days to dispute the debt.

If they don’t want to attempt to collect again, they don’t need to dispute. It’s a law supposed to prevent continued attempts to collect on an unverified debt.

A Lawsuit is NOT a First Contact

If you’ve never heard from a debt collector, can they sue you for a past due debt? And if they do, must they give you notice of your right to dispute? Yes. And no. They can sue you without first bugging you for money. If they do sue you, the lawsuit is NOT a contact that triggers your right to dispute and verification. That’s what the Fair Debt Collection Practices Act (FDCPA) says, and the reason for that is simple: you’re in the court system and play by court rules once a lawsuit gets filed.

You Must Answer

And the court rules are that once you get served with a lawsuit you must file an Answer (or other “responsive filing” – a motion to dismiss, for example) or you will be in default. Put another way, if you don’t respond in court with an Answer denying liability or a motion to change or get rid of the lawsuit, you will lose. The lawsuit changes the rules, and you “aren’t in Kansas anymore.” [That’s what Dorothy says in the Wizard of Oz when all the weird things start happening.]

Don’t be a Verification Sucker

The debt lawyers know the rules very well, and one would like to think that it’s only an “excess of caution” that causes them sometimes to print the FDCPA language on their lawsuit. But given the fact that so many people have sent dispute letters instead of answers, and the fact that the debt collectors KNOW this, that might be naïve.

What I’m here to tell you is that whether or not such language is on your lawsuit, YOU MUST ANSWER THE SUIT or face a default judgment. Don’t be a sucker – file an Answer or other responsive document within the time allowed by the rules of civil procedure. You must defend yourself in court – you’re not in Kansas anymore, and the FDCPA no longer applies.

A Little Window, Maybe

Litigation does not technically rule out the FDCPA entirely, just the “first contact” rule. It may be that the debt collector’s attachment of the notice to a lawsuit is itself a violation of the FDCPA, as it may be an attempt to sucker you into seeking verification instead of answering the lawsuit. It might be an unfair attempt to get a default judgment. I have argued as much before. That might give you a counterclaim to their lawsuit.

And if you have sought verification rather than answering, and they got a default judgment, you should certainly consider moving to vacate that judgment either on the basis of that deception or your own confusion. The courts favor judgments on the merits rather than technicalities, so there’s a very good chance such a motion to vacate, if filed in time, would work.

But these are not exceptions to the rule that you must respond to the lawsuit in court. If you get sued, the FDCPA no longer applies in that way. You must respond or they will get a default judgment against you, and the next you will hear about it will be when they garnish your wages or bank accounts. Don’t let that happen.

Disputing and demanding verification would be much easier, no doubt, but it doesn’t work at this point.

Don’t look for the “easy” way. Look for the RIGHT way.

 

Why Defend Yourself from Debt Collectors

Why you Should Defend against Debt Collectors, and Why you Can Do it Yourself

Get a copy of this article in PDF format by clicking here: why defend yourself

When you are sued by a debt collector, you are presented with two questions that often merge into one because of money.

  • Should you defend yourself (at all) from the lawsuit?
  • And if you do defend, do you have to have a lawyer?

A lot of people answer the second question first. They decide they need to have a lawyer in order to get anything done, and then they decide they cannot afford a lawyer, so they fail to defend themselves at all. This is a mistake.

First: Should you defend yourself?

Our answer to this question is absolutely “Yes.”

There is a tendency for people to think that lawsuits (filed against them) are only filed because the lawsuit is “good,” and that the plaintiff will or should win. That isn’t really true of any kind of lawsuit. In most kinds of law, however, the plaintiff’s lawyer will have done some research into the law and facts and will have some confidence that it’s a winner. After all, in most kinds of lawsuit, one expects a defense – the lawyer anticipates spending a considerable amount of time and money on the case before collecting anything significant.

And most plaintiffs are at least somewhat reluctant to start a lawsuit because of time and expense; often they are extremely reluctant, and with good reason.

Debt Law is Different

These things are simply not true of debt cases. In debt cases, a debt purchaser buys hundreds of thousands or millions of dollars of supposed debt and files suit without ever doing ANY research into the validity of the debt at all. When they file suit, very few debt collectors have any idea at all of whether they have a right to the money, and they have little, if any, evidence of the debt. They think they might be able to get some if they have to, but they file suit expecting not to need any evidence at all. And they’re usually right.

They Expect you to Give Up

They design their cases to cause people to give up without fighting. Since most people, in fact, do give up one way or another, the whole debt collection business is based on not spending money or time on a case.  As soon as you do anything at all to defend, you cause the company to diverge from its business model. Of course, they know some people won’t just give up – they know people hate them, after all. So even though you have stepped out of their business model by resisting, you haven’t really challenged them yet. To challenge them, you must make them spend time and money on your case alone. We’ll discuss that below.

What if you Don’t Want to Fight?

Actually, NO ONE really wants to fight. It takes time and involves various uncomfortable feelings, from insecurity to anger, to frustration. You will at some point need to weigh these lifestyle questions, but the appropriate place to start is with the legal questions. And our answer to those is that it makes sense, always, to fight the debt collector.

Regarding the more practical questions, it is also usually true that fighting the debt collector will pay off very well. For example, if they’re suing you for $5,000, it’s a fair bet that they have already damaged your credit, and they are obviously trying to get at least $5,000 from you. If you defend yourself, you can save the $5,000 and repair your credit: what hourly rate would that be if it took you 50 hours of your time? $100/hour.

And the amount at stake is often much more than $5,000, and the time required to defend often much less than 50 hours, but you will have to make your own estimates of these things.

What if you Really Think you Owe the Money?

We get this question a lot because for most people, debt lawsuits are not “lightning from a clear blue sky,” as the saying goes. They know they haven’t been paying some bill, and people have often been bugging them about it. So should you still fight?

Yes, absolutely.

And this is because although you think you owe money, you might not owe the person suing you the money, and you might not owe what they’re suing you for. On top of that, and behind our legal system, is that you only “owe” what they can prove you owe – and most debt collectors cannot prove you owe anything. So even if you think you owe, you should fight to make sure you’re dealing with the right person for the right amount – and that they can prove it.

What if you Want to Settle?

If you hope to settle, you still need to start out by fighting – people only settle lawsuits when they think doing so is the best outcome for them. In other words, they’ll settle if you persuade them that they’ll make more money by settling than by not settling. You do that by fighting – nothing makes them think the case is going to take money to win than by making them spend money. That’s just common sense, right?

Do You Need a Lawyer to Defend You?

The answer to the question of whether to fight or not is almost always “yes.” And if you doubt that, consider how many times corporations simply roll over when people sue them – it almost never, ever happens. You know that, right? But even if you decide you should fight, you have to decide HOW to fight. Do you need a lawyer? or can you do this by yourself?

Remember what we said about “most” lawsuits – the lawyers do back up work and have a pretty good idea they deserve to win. Additionally, they typically expect to, and do, spend quite a bit of time and money to make sure they do win. For these reasons, and others, you might not want to handle a typical lawsuit pro se.

Debt law is not like that at all.

Debt Law is Different

We discuss this question in great detail in a lot of places, and therefore we will only touch on it lightly here, but debt law is not like other forms of litigation. It will almost always come down to a dispute about whether certain records should be allowed as evidence. And of course you need not to admit or do things that will hurt you. You almost certainly will not need witnesses, and they probably won’t have any, either. Thus debt law is relatively simple, and people can defend themselves without a lawyer.

We can help you do that in a lot of ways.

You will find a lot of help on many topics related to debt law on this site by using our search button at the top of the page or in the footer. And you can sign up for free information by going to this link and signing up. Sign up for Free Information.