Debt collectors often masquerade as the original creditors both to make you think they have more evidence than they have and to make you feel guilty if you fight them. Here’s how to figure out if they’re trying this trick on you and what to do about it if they are.
Debt Collectors Make Their Money by Getting People to Give Up
Debt collectors often claim that they stand “in the shoes” of the original creditor. They do this as part of an attempt—illegal in my opinion—to intimidate the people they are harassing into believing they have more information than they do. You should make them pay.
How the “in the Shoes of the Original Creditor” Argument Comes up
There are various ways the “in the shoes” argument comes up, often beginning with the petition, in which the debt collector (a company you may never have heard of) claims to have extended credit to you, to have sought repayment, and to have been refused payment. You know it never happened that way if you think about it, but they’re hoping you won’t think about it at all.
What typically happens is that some debt collector bought the debt from somebody claiming you owed them money. As part of that purchase, they may have obtained a few electronic copies of statements and a computer record claiming you owe the money. This isn’t nearly enough to prove you owe them the money, and they want you to think that they have all the records because “they” lent you the money. They will often take it another step and actually submit affidavits claiming that you borrowed money from them (they say, “plaintiff” rather than their name, since that would reveal the deception). Or they will send you requests for admissions asking you to admit borrowing money from them—again, they say “plaintiff,” to hide the fact that they’re asking you to admit you borrowed money directly from them.
This is outright deceit, and it ought to offend anyone’s sense of fair play. But when you claim, rightly in my opinion, that this is an unfair debt collection practice under the Fair Debt Collection Practices Act (FDCPA), the debt collector argues vehemently that it has a right to make these claims because when it bought the debt it “stepped into the shoes” of the original creditor.
Nonsense.
The Grain of Truth behind Debt Collector’s Deception
The grain of truth behind the debt collectors’ deception is that a company collecting another’s debt generally has all the same rights to collect the money as the original creditor did. Debts are transferable in most cases, in other words, and the person assigned the debt has the same right to collect as the person transferring the debt.
But debt collectors do not “become” the original creditor (their buying the debt, after all, is what made them a “debt collector”), and claiming to be the original creditor is patently deceptive. Under the Fair Debt Collection Practices Act, a person (including companies) that routinely buys debts for the purposes of collecting on them is considered a “debt collector.” Essentially all of the provisions of the FDCPA apply to debt collectors, and foremost among these are the provisions against “deceptive” or unfair debt collection practices. These provisions apply to debt collectors but in general do not apply to original creditors. Thus the debt collector’s claim to stand in the shoes of the original creditor is, regarding their collection efforts, absolutely untrue.
Make them Pay with the FDCPA
As mentioned above, the debt collectors often send you discovery materials (i.e., requests for admissions, interrogatories, requests for documents) which use the word “plaintiff” instead of the company that you theoretically borrowed money from. What would prevent you from reading the word literally? They ask you to admit borrowing money from them—and you know you never did. Or they ask you for all the documents reflecting your account with them, and you know you never had an account with them. Why not simply deny it? That would be the literal truth, and in the legal process you are held to the literal truth.
As I have argued above, the claim that the debts were originally owed to the debt collector are false and deceptive. They misstate the law and are designed to make you believe that the debt collector is more able to collect the debt than it actually is. If you are looking for a counterclaim—and I have often pointed out that counterclaims can give you important power in a lawsuit by a debt collector—you might consider this an opportunity to make a counterclaim. You might consider this tactic, regardless of where it comes up in the litigation, as an unfair debt collection practice.
Should I talk to a Debt Collector and What Should I Say
If you are being called or harassed by a debt collector, one of the purposes of that debt collector is to get you to talk. Should you? This is going to depend on whether you have anything to say.
Debt Collectors Target Struggling People
As I have mentioned before, the debt collection business is targeted at distressed people. The debt collectors already know you don’t have much money, and they know you probably have other people trying to get money from you. Their job is not to force you to pay somebody—it’s to force you to pay them. Another way to put that is that they are not competing with you—they’re competing with other debt collectors. You are the football in a game between the debt collectors, the string in a game of tug of war. Does that make sense?
Silence Can Be Golden when Dealing with Collections
The job of the debt collector is to get you to pay them instead of someone else. They can do this either by annoying you so much that you pay them to get them off the phone or by establishing a sympathetic connection to you so you gladly do it for the voice on the other end of the line. Both of these methods involve keeping you on the phone and the connection open, and neither of these methods is directed at your well-being. Also, if they can get you to reveal information about your job or bank, or any kind of assets you have, they can improve their chances of making you pay against your will. So unless you have your own purpose for communicating, you shouldn’t do it.
Sometimes it Makes Sense to Talk to Collectors
What might be a good reason for you to communicate? Well, because you want something tangible from the debt collector to whom you are speaking. You could want them to reduce interest rates, waive penalties, agree not to give information on your debt to the credit reporting agencies, or any number of actual, materially beneficial things. If you’re hoping to get a friendly voice or understanding, a debt collector is the wrong person to talk to: they already understand everything they want to know about your situation. Talk to someone else for that.
Negotiate—And Get It in Writing
Don’t be afraid to negotiate. You can ask for anything from them, and in most cases the debt collector could give you anything you might request. So be bold. If you want to settle for ten cents on the dollar, you can ask. They may laugh—but laughter is just a part of the negotiation and doesn’t mean they won’t do it. And if they agree to do anything, you must get the agreement in writing. In a practical sense, it doesn’t count if you don’t get it in writing. You won’t be able to prove it, and in some cases an oral “modification” would not even be legally recognizable even if you could prove it. It must be in writing.
They’ll want something in return. An immediate payment, an agreement to pay by a certain date, something. You can agree to this if you can do it, but you’re spinning your wheels if you cannot, so it makes sense to limit your promises to things you’re sure you can perform. Don’t over-commit, as this may negate the agreement you reach and will almost certainly increase the number and hostility of the phone calls you are receiving. Remember that the debt collector is keeping records of everything you say (so don’t tell them where you work or bank).
Stop Talking to Collectors When You’ve Said What You Need to Say
And when you run out of reasons to keep talking to the debt collector, make sure that you actually stop talking to them. There is always a price for anything you say – you’re giving them free information that they will use to decide to sue you. Sometimes talking to them is worth that price, but if that changes, you should feel no obligation to keep talking.
What about Partial Payments?
We think partial payments are bad unless you know exactly how you will pay the whole debt and unless you understand what making the payment will do to you. To read more on this issue – and you really should if you’re even thinking about making a partial payment, click here: Never Make Partial Payments.
Filing a Motion to Amend your Answer
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Don’t Talk to Debt Collectors
When should you talk to a debt collector? And why shouldn’t you talk with them otherwise?
You Should Only Talk to them If you Have a Good, and Immediate, Reason to Do so
As a recent commenter pointed out, debt collectors are often “not nice.” But whether they are nice or not, their job is to take your money away and give it to their company. That means that, personality aside, their interests are against yours, and you should never mistake politeness with being on the same side. Likewise, you shouldn’t polite discourtesy for power or anything other than what it is. In this video we review the basic rule of communications with debt collectors: it is rarely a good idea.
Hang up when you’ve said what you need to say
Once you have said what you need to say to the debt collector, if anything, you should hang up.
There are too many bad things that can happen for you to stay on without a good reason. You could make admissions that damage your case (if they get around to suing you), you could give them information they could use to take your money if they sue you and win.
Remember that what lawyers usually hate more than anything is a lack of definite information. Every time you open your mouth and speak to a debt collector, you’re giving some lawyer what he or she needs to decide to sue you. And even telling them you don’t have any money may not be helpful because that could tell them it would be easy to beat you in court.
Less is definitely more when it comes to talking with debt collectors.
Was an Affidavit Attached to Petition?
As we have often pointed out, having a counterclaim can be extremely helpful in getting a claim dismissed so that you no longer risk being sued on the debt and your credit report is no longer being harmed. If the debt collector has used an affidavit in its efforts to collect from you–especially in a lawsuit–this may have given you a great opportunity to counterclaim or sue in a different lawsuit. This video explains what that opportunity is and what to do about it. For more, get the Debt Defense System.
When you received the summons and petition to your lawsuit, was there an “affidavit” attached? That is, was there a statement of some sort, usually sworn and notarized, that said that the records of the original creditors were true and accurate?
Debt collectors often include such documents in their petitions – affidavits from their own records keepers about the records compiled and maintained by the original creditors. This misleads the recipient of the lawsuit into believing that the debt collector has a better case than it does, and it violates the Fair Debt Collection Practices Act (FDCPA) in most jurisdictions. That’s because debt collectors are not, in most jurisdictions, allowed to testify to the accuracy of records they did not have responsibility for – and records created by the original creditor could not be known to be accurate by debt collectors. They try to hide this fact by using all sorts of legalese in the affidavit. This video shows how the practice violates the FDCPA and what to do about it.
The Importance of Counterclaims
I have talked about counterclaims often throughout this site, and counterclaims are very important if you can make them for the reasons discussed below. Things have gotten a little more complicated in this area recently, however. It used to be that almost everyone who might sue you was a “debt collector” under the Fair Debt Collection Practices Act. Two big things have happened to change that.
First, many of the banks are no longer selling debts but are bringing their own lawsuits as plaintiffs. This makes sense as a way to preserve evidence – although they still often do not have what they need to win.
And second, the Supreme Court has ruled that debt buyers are not necessarily “debt collectors” under the Fair Debt Collection Practices Act. The FDCPA has historically been the easiest source of counterclaims. If you can argue that the company suing you has debt collection as its “principle business” (as opposed to making and servicing loans or selling stuff, for example), you can still sue them under the FDCPA. Likewise, there are sometimes state law claims you can make. If you were defrauded, for example, you might be able to counterclaim for fraud against a debt collector.
With those limitations in mind, our original article and video are below.
The Importance of Counterclaims
If you are being sued by a debt collector, the best defense can be a good offense. It is important to file a counterclaim if you can both because it takes the fun out of the suit for the debt collector and because it allows you to hold the debt collector in the lawsuit long enough to force it to dismiss its claims against you “with prejudice.”
In many jurisdictions, the party bringing a lawsuit retains the option to dismiss it at any time up to trial without consequence or even without the need for permission. This can mean in debt cases that the debt collector files suit, and after you have hired a lawyer and filed an answer, the debt collector is free to drop the suit, possibly for later refiling. In any event, when the suit is dismissed “without prejudice,” you are left without a convenient way to force the debt collector to stop reporting the debt to the credit bureaus, so it continues to harm your credit report.
The solution to these problems is filing a counterclaim – that holds the debt collector in the law suit until you have negotiated a resolution to the issues.
In the Shoes of the Original Creditor
Debt collectors often masquerade as the original creditors both to make you think they have more evidence than they have and to make you feel guilty if you fight them. Here’s how to figure out if they’re trying this trick on you and what to do about it if they are.
Debt Collectors Make Their Money by Getting People to Give Up
Debt collectors often claim that they stand “in the shoes” of the original creditor. They do this as part of an attempt—illegal in my opinion—to intimidate the people they are harassing into believing they have more information than they do. You should make them pay.
How the “in the Shoes of the Original Creditor” Argument Comes up
There are various ways the “in the shoes” argument comes up, often beginning with the petition, in which the debt collector (a company you may never have heard of) claims to have extended credit to you, to have sought repayment, and to have been refused payment. You know it never happened that way if you think about it, but they’re hoping you won’t think about it at all.
What typically happens is that some debt collector bought the debt from somebody claiming you owed them money. As part of that purchase, they may have obtained a few electronic copies of statements and a computer record claiming you owe the money. This isn’t nearly enough to prove you owe them the money, and they want you to think that they have all the records because “they” lent you the money. They will often take it another step and actually submit affidavits claiming that you borrowed money from them (they say, “plaintiff” rather than their name, since that would reveal the deception). Or they will send you requests for admissions asking you to admit borrowing money from them—again, they say “plaintiff,” to hide the fact that they’re asking you to admit you borrowed money directly from them.
This is outright deceit, and it ought to offend anyone’s sense of fair play. But when you claim, rightly in my opinion, that this is an unfair debt collection practice under the Fair Debt Collection Practices Act (FDCPA), the debt collector argues vehemently that it has a right to make these claims because when it bought the debt it “stepped into the shoes” of the original creditor.
Nonsense.
The Grain of Truth behind Debt Collector’s Deception
The grain of truth behind the debt collectors’ deception is that a company collecting another’s debt generally has all the same rights to collect the money as the original creditor did. Debts are transferable in most cases, in other words, and the person assigned the debt has the same right to collect as the person transferring the debt.
But debt collectors do not “become” the original creditor (their buying the debt, after all, is what made them a “debt collector”), and claiming to be the original creditor is patently deceptive. Under the Fair Debt Collection Practices Act, a person (including companies) that routinely buys debts for the purposes of collecting on them is considered a “debt collector.” Essentially all of the provisions of the FDCPA apply to debt collectors, and foremost among these are the provisions against “deceptive” or unfair debt collection practices. These provisions apply to debt collectors but in general do not apply to original creditors. Thus the debt collector’s claim to stand in the shoes of the original creditor is, regarding their collection efforts, absolutely untrue.
Make them Pay with the FDCPA
As mentioned above, the debt collectors often send you discovery materials (i.e., requests for admissions, interrogatories, requests for documents) which use the word “plaintiff” instead of the company that you theoretically borrowed money from. What would prevent you from reading the word literally? They ask you to admit borrowing money from them—and you know you never did. Or they ask you for all the documents reflecting your account with them, and you know you never had an account with them. Why not simply deny it? That would be the literal truth, and in the legal process you are held to the literal truth.
As I have argued above, the claim that the debts were originally owed to the debt collector are false and deceptive. They misstate the law and are designed to make you believe that the debt collector is more able to collect the debt than it actually is. If you are looking for a counterclaim—and I have often pointed out that counterclaims can give you important power in a lawsuit by a debt collector—you might consider this an opportunity to make a counterclaim. You might consider this tactic, regardless of where it comes up in the litigation, as an unfair debt collection practice.
Kicking Debt Collectors out of Court – Jurisdictional Issues
We discussed two kinds of jurisdictional issues in a recent teleconference – two different issues that call for very different responses.
In this video we’ll discuss what happens when the debt collector doesn’t show its ownership of the debt and when you are not properly served with the lawsuit.
– Jurisdictional Issues in Debt Law
Ownership of the Debt
When debt buyers bring a lawsuit, their ownership of the debt is always in question. It won’t be their name on the debt instrument or contract, and they will have purchased the debt – gotten it on “assignment.”
There is nothing wrong with that, let me emphasize. Most debts are freely transferrable (unless either a contract or law says they can’t be transferred) – so in most cases this will not be an issue. But what is an issue is proof of ownership. Only the true owner of a debt is permitted to bring a lawsuit. In a way that’s a no-brainer, isn’t it? If I happen to hear that someone owes you money, I can’t sue them for it can I?
No – if I want to sue, I must prove that I am the “true party in interest.”
Without the true party in interest’s participation, the court does not really have jurisdiction over the subject matter of the case. If I bring suit on a debt someone else owes you, and that person gets around to pointing out that I don’t own the debt, the case should be dismissed immediately – without prejudice. If the person being sued does show that the plaintiff cannot prove ownership, the proper response by the court is to dismiss immediately without taking any other action – it can’t make a judgment about the validity of the debt without the real owner being present.
You can attack ownership of the debt at any time, and in a debt case you should always contest the issue not only because you might win, but also because debt collectors actually try to collect debts that don’t belong to them fairly often. You should always make them prove it.
In the case of the big junk debt buyers, they often will have a so-called “bill of sale” between the original creditor and the junk debt buyer. It will say that the creditor is selling and assigning umpteen million dollars worth of debts to the debt collector. It will mention an attachment with the numbers of the accounts sold.
And it will often not have that attachment or anything else linking your account to that sale. That is inadequate proof of ownership. It is no proof of ownership. If you attack the case on that basis it should be dismissed – unless the debt collector can supply the information. For some reason,they often cannot.
You can make this argument at any time.It isn’t waived by you participating in the case. Any time you can prove the debt ownership isn’t established, the case should go away.
Sewer Service
Sewer service is different. In this situation, the process server threw the summons into the ditch while the defendant was watching and then swore to having given the summons to the defendant. In that situation, the defendant is forced into a choice: attack the court’s jurisdiction immediately by motion to quash, wait and attack jurisdiction, or defend. If you take actions to defend on the merits of the case – you say you don’t owe the money – you will likely be “waiving” or letting go your attack on the court’s jurisdiction.
If there is anything suspicious to you about the way you were served, or if the language of the petition filed against you is not clear or understandable, you need to look at your rules of civil procedure – under the “pleadings” section – before you file an answer. Otherwise you risk waiving your attack and “consenting” to whatever was wrong. Sometimes you can lose your best defenses if you do this.
What if they Accuse you of a Frivolous Defense to the Debt
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Arguing Motions in Court
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How Ability to Pay Affects Debt Defense