Things new debt litigants need to know

What to do if you have debt troubles part 1

If your bills are adding up and the bill collectors are beginning to bug you, you need to start taking action to protect yourself.

This video goes through the reasons you should win if you get sued for debt and begins the discussion on how to send the right signals to the debt collectors to leave you alone.

 

Identity Theft Affidavits – Debt Collector Dirty Trick, Part 1

Sometimes debt collectors will attach an “identity theft affidavit” to the discovery they give you and “request” or suggest that you fill it out and file it with authorities. Or they invite you to send it to the debt collector so that it can file it with the authorities. Sometimes they try to get you to believe there is something in the discovery process that forces you to fill out such an affidavit. Sometimes they try to get you to believe they’re “just trying to help.”

They aren’t trying to help, and you don’t have to fill out such an affidavit. They want to make you think that denying you owe them money could turn into or be a crime.

I believe this practice violates the Fair Debt Collection Practices Act (FDCPA) and makes both the debt collector and its attorney liable to you under the Act.

Attaching an Identity Theft Affidavit violates the FDCPA

Attaching the ID theft affidavit violates the FDCPA because it deceptively attempts to create the impression that they can require that such an affidavit be filed. They want you to feel that you must swear – to the police – that your identity has been stolen or give up any claim that it may have been done. It increases the general “pressure” already created by the litigation itself. This exerts improper and unconscionable pressure on the debt defendant to give up on his defense and capitulate to the debt collector.

Let’s Get this Straight

If you allege that your identity has been stolen and maintain this as a defense to the action against you, you will eventually probably have to swear to it under oath. Eventually. If the matter goes to trial.  Doing so falsely could subject you to criminal punishment. But lying in such testimony is probably not as big a deal as lying to law enforcement and filing a false charge. You’re less likely to be caught or punished for “mere” perjury – not that we suggest it, of course. Exerting pressure on you to file such a report is an attempt to raise the stakes of the litigation. Since most people understand that filing a report with the police is serious and could involve repercussions, they are hesitant to do so whether it would be justified or not.

And there are times when someone has stolen your identity in a way which would defeat your liability where you would not want to involve the police. Nor do you have to.

No Right to the Affidavit

The discovery process does not give any party the right to require another party to make a report to any governmental agency. The only way you could be forced to take such an action is by court order (possibly, under certain circumstances unlikely to occur in debt litigation – and certainly not as part of the discovery process). Discovery is a process of asking about and providing answers (or objections) to questions about documents or other information you have in your possession or control. Sometimes – but rarely – this can include making “compilations” of particulary complex data or records. Never can it require you to create or send a report of any sort to someone unrelated to the litigation (i.e., the police).

Deceptive

Knowing that forcing you to make a report on identity theft is far beyond their legitimate powers, the debt collectors will sometimes merely “include” it in their discovery packets – inviting you to draw the conclusion that you must file it with the police. In the case of a represented party against an unrepresented, unsophisticated party, this is probably an unethical practice for the lawyer to engage in. It is deliberately deceptive and blatantly tries to create a false impression on the part of someone vulnerable to misrepresentation.

Attempt to Collect a Debt

The FDCPA makes any debt collector liable when it uses unfair or deceptive techniques in its efforts to collect a debt originally owed to someone else. Simple attaching an ID theft affidavit to discovery is utterly deceptive, as it tries to take advantage of an unsophisticated litigant’s lack of knowledge – and fear – of the legal process to cause it to do something the debt collector has no right to ask. And of course this exerts pressure on the consumer to pay if for any reason he or she cannot truthfully file such a report. Making a false report to the police authorities is a crime. Being unwilling to file one makes no statement about whether or not the debt is legitimate or owed to the debt collector – but it knows that unsophisticated pro se litigants will think that it does. So these litigants will feel pressure to give up their cases – pressure applied under the disguise of the legal process but deriving no actual power from it.

That is the essence of an unfair debt collection practice.

This is Part 1 of this Article. Click here for part 2.

How and why to file counterclaim if you can

There’s a great deal to say about counterclaims in debt law cases, and I suggest you look closely at the text of the Fair Debt Collection Practices Act (FDCPA) itself as you consider what, if any, counterclaims you will bring. In this article, though, I simply want to tell you why counterclaims are so important.

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Why Having a Counterclaim Is So Important?

In most jurisdictions, a plaintiff (the person bringing the lawsuit) is allowed to drop the case (that’s called “dismissing”) virtually at any time it wants to. This isn’t true of federal court, where you have to get permission, but in most state courts it seems to be true. And debt cases are pretty much always brought in state courts.

That means that if you work hard and develop a winning case, the debt collector could just dismiss the case.

That’s just what we want it to do, of course.

However, if the debt collector simply dismisses your case, it could also sue you again later or sell the debt to someone else who would sue you later, and that means you would still be vulnerable to debt collectors. It would also mean you could receive more annoying calls and letters, and would have to put credit repair on hold. Making them dismiss – under any circumstances – is a victory, but you need the case dismissed “with prejudice” to keep it from coming back.

Counterclaims Stop Them from Suing You Again

So how do you keep them from dismissing the suit and refiling the suit later? You do this by filing a counterclaim against them. A plaintiff can dismiss its own lawsuit, but not your claim against it. So if they want to dismiss the case against you either because your claims are good or because they don’t want to spend the money chasing you, they either have to settle the case with you, or they’re still left defending against your counterclaim. They never do that, because then they’d be bound to lose money one way or another. They’d either have to pay you or their lawyers (or both), — without the chance of collecting anything from you. That’s the worst of all worlds for them, and they won’t do it. Instead, they’ll settle the whole case with you.

So a counterclaim gives you power over the plaintiff and lets you keep it around till they agree to destroy (or “extinguish”) the debt. And then not only can you rest easy about the debt, but you can also begin the process or rebuilding your credit report.

Counterclaims Have Value

Sometimes your counterclaim can be worth a lot more than their lawsuit against you was in the first place.

Actually, it is not rare at all for a debt defendant’s counterclaim to be worth more than the claim brought by the debt collector, and this is so for several reasons. First, as I often point out, debt collectors generally bring their claims without any real evidence in their possession – and without the ability to get the evidence cheaply enough to be worth doing. That means that the debt collectors’ claims against defendants will, eventually, be worthless if you just keep fighting enough.

On the other hand, a counterclaim under the FDCPA is usually the result of either something the debt collector did as part of bringing its lawsuit (i.e., bogus notice of right to seek verification, false or deceptive affidavit, etc.) or (by definition) of some other part of the debt collection practice – usually some action involving you personally. Where the violation is part of the lawsuit, there is simply no evidentiary issue at all. The facts are in the file – put their by the debt collector and its lawyers. And where the counterclaim involves some other action against you personally, you should be able to testify. Thus you will rarely have an evidence issue – the hurdle which usually kills debt cases.

Should you try to hide evidence from the debt collector?

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Making excuses loses cases

No Free Lunches, Ever

For a free copy of this article in pdf form, click here: Making Excuses

There is, in the world, what some people call the “iron law of cause and effect.” What this means is that, for every action, something always happens as a result. No matter why it happened, if it does happen, there are consequences. In plain English, you say it this way: There are no free lunches, ever.

In reality, all of life is like this, even when we don’t think about it.

We pretend the iron law of cause and effect does not apply to us all the time. If we’re late, we apologize, and that’s usually enough to get past the other person’s anger or hurt feelings. If we apologize sincerely enough or give enough good reasons for something we did, it seems like we get away with it. But it isn’t called the “iron law” for nothing. Even if the other person excuses us, he or she thinks we are less dependable. And even if the other person doesn’t think that, we think of it ourselves. We know it. No free lunches.

Sincerity vs. Integrity

Sincerity means not intending to do harm – trying to do the right thing. Integrity means not doing harm, and doing the right thing. Naturally, it is much, much harder to have integrity than to be sincere.

Defending yourself pro se requires integrity.

Substantive Law of Debt

If a debt collector can prove (or if you don’t make them prove) that you borrowed money and didn’t pay it back, it will be entitled to a judgment against you. It’s as simple as that, no ifs, ands or buts. There are events that can destroy the debt – showing payment, that it was based on fraud, or settlement to name a few. But if the debt isn’t destroyed, no amount of sincerity (desire to pay or legitimate inability to pay) will get you off the hook. You will still owe the money, and the judge will still give the debt collector its judgment if it proves its case.

It’s surprising how often people get mad at debt collectors for trying to collect debts they (the people involved) owe but can’t afford to pay. They often feel like the debt collector has done them wrong to think they should pay. But remember this: just because the debt collector has a ton of money and you’re poor, that doesn’t mean they won’t get a judgment against you. Don’t think that way. And a judgment gives them the power to take from you. They will use that power.

Instead, fight and make them prove their case if they can. Require them to prove the debt and their right to it. Luckily, they aren’t so good at that, and if you fight, you have an excellent chance to win – that’s why we’re here, after all.

Excuses in Litigation

We’ve been talking about the substantive law of debt, which is almost absolute. It’s a little murkier in litigation, where excuses CAN make a difference – sometimes. If you make a mistake in doing something, or if you fail to do something you should have done, this can sometimes be excused. If you do make a mistake, you should certainly try to get it excused. The sincerity of your excuse will matter then, so make it good and say it with feeling. And you might get away with it.

But even if you do “get away with it,” every mistake has consequences. As a pro se defendant, you work mighty hard to get the judge to take you and your words seriously. You want the judge to apply the law fairly and consistently – that’s really all you need in most debt cases to win. Any time you ask the judge for something special or make some kind of excuse, you will hurt your chances of that. And all too often, the court will not give you the break it probably should.

Always work your hardest and do your very best to understand the law and rules of your court. As much as possible, you NEVER want to ask the judge for anything she isn’t supposed to do. If possible, you never want to ask the judge to excuse some failure or to cut you any sort of unusual break.

And to get your best, you must give your best. Never make excuses for yourself, and never accept them from yourself. It’s impossible to be perfect, but try not to make any mistakes you don’t have to make. And that is not a “platitude” or boring old saying – it’s encouragement to you to work very hard. The only way to avoid making mistakes is by figuring out things ahead of time and always going the extra mile. You can get away with less in some parts of your life, but you often cannot in litigation.

We have a rule at Your Legal Leg Up. When you’re faced with a question (which happens almost constantly), you must ask yourself whether it’s possible to get a clear, certain answer. If that isn’t clear, then find out – with certainty – whether it is possible to get a clear, certain answer. If it is, FIND that answer. Nothing less will do when certainty is possible. If it is NOT possible, then find out with certainty all the things that matter in determining the issue. You understand? Wherever it is possible to know a thing, you must know it. Never ever guess when you could know.

That’s the difference between sincerity and integrity in debt defense.

Research is Key

Maybe it sounds easy to find certainty when it’s there. If it sounds easy to you, you probably haven’t been working on your case very long, or you’ve been taking shortcuts without even realizing it. You would be amazed, maybe, at how often people do take shortcuts. It is a rare teleconference where someone doesn’t admit to not knowing something they need to know but don’t. And they always have a good reason for it, too. It’s hard – but remember the iron rule of cause and effect. You know something or you don’t; you know you’re doing what you should, or you’re guessing and hoping either that you are or that it won’t matter. And it always matters.

Do your research and find out for sure the things you need to know. Then do the work and make sure you’re doing the thing you must do.

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.

 

Protect rights under fdcpa – Do not call debt collectors

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Requiring Validation – A Consumer’s “Secret Weapon”

In my opinion, requiring that a debt collector validate or verify your debt when they first contact you is underused as a weapon. It’s easy and free for you to do (and isn’t hard for them to answer, either), but surprisingly often it can lead to the debt collector walking away and leaving you alone.

The Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act (FDCPA) gives someone being harassed by debt collectors several useful tools. One of the best of these tools is requiring verification.

A “Secret”(?) Weapon

There’s nothing secret about requiring verification, but in my opinion consumers don’t use this one often enough. It costs nothing to use, takes very little time, and often, all by itself, is enough to convince them to leave you alone and look somewhere else for their victims.

The Right to Verification

Under the FDCPA, the first written communication from a debt collector must inform the consumer of his right to require verification of the debt (if the request is made within 30 days). Verification, or validation requires the collection company to go back to its source, the original creditor, and make sure that the consumer being contacted is the correct person and the debt is valid. Until the debt is validated, the collector may not take any further action on collecting the debt, and at least all the cases I’ve seen have included within that restriction any reporting of the debt to the credit reporting agencies. If the debt collector proceeds without verifying the debt first, you have a right to sue it.

The Requirement Is Absurdly Easy to Fulfill

The obligation is not very significant-a phone call will do, perhaps even as little as a checking of the computer tape or digital record. And yet even this minor obstacle will make the collection company go away surprisingly often. Perhaps the debt collectors view the early assertion of consumer rights as a warning of trouble to come.

Forming Good Habits Early On

And for the consumer, forming the habit of asserting legal rights seems to be an important step in bringing the whole debt situation under control. Out of this small acorn can grow a strong tree of financial security.

How to Require Validation

The way to require verification is very simple. When you receive a debt collection letter you simply write back to the debt collector and tell it you dispute the debt and request immediate verification. No special wording is required–nor is any special delivery (like registered mail), but I always suggest that you in fact send the request by registered mail, return receipt requested, so you will be able to prove that you wrote the letter, sent it, and that it was received by the debt collector. It is also a good idea to keep a copy of the actual letter that you send, too.

What If They’re Just Calling You?

But what happens if you’re just being telephoned by the debt collector? Under the FDCPA, a phone collector is required, within five days of the first contact, to send you, in writing, a notice of your right to dispute the debt and request verification. Failure to do so is a violation of the FDCPA that gives you the right to sue the company. And note that every communication from the debt collector should also have what we call the “mini-Miranda” disclosure, that “this communication is from a debt collector and any information you give may be used to collect a debt.”

Require Verification from EVERY Debt Collector

Every debt collector is different, and each one is required by law to provide you the right to dispute the debt and require verification. But by “debt collector” I mean the company that is harassing you, not the individual who happens to be calling you for that company.

Get in the habit of standing up for your rights, starting with the right to seek verification. Debt collectors are looking for the easiest way to make their profit, and standing up for your rights lets them know you won’t be easy.

What to Do Now

You will find information on many issues that come up in debt litigation and materials you can use to defend yourself here at our site. But for much more help, you should consider joining us.

 

Defending Yourself against a Debt Collector

Modern Debtor Prison – States Do Dirty Work for Debt Collectors

Sometimes there are traps for regular people set by predatory debt collectors. This is one of them.

Scam Alert

There is a disturbing trend in debt collection these days: getting the state to do the dirty work of intimidation and collection. In some jurisdictions, notably Illinois, debt collectors are actually managing to get people who supposedly owe them money thrown into jail. This is obviously a dirty trick and happens primarily because the debt collectors are managing to set cases for trial where attendance in mandatory; whereas in most civil cases failure to show up for trial results in a default judgment, in these cases the judge issues a warrant for arrest.

The subject of our Scam Alert today, however, is a little different. A scam involves trickery and deception, and that is what is happening in Missouri and elsewhere. In some places, Payday loan companies and other vulture companies are issuing short-term loans. What they do is require a post-dated check for the repayment.

Of course if you have a job – and keep it – and the post-dated check is made with that in mind, then when the money rolls in, you just pay off the debt. Of course you do it at heart-breaking interest rates, but at least theoretically that is what you bargained for, and there’s no real confusion about what the deal is costing. The problem comes in if something keeps you from getting that money you expected. In most loans, if you fail to make a payment you can be sued, and generally it is not a fun thing to be sued. If you have written a post-dated check, however, if you fail to make the payment (and cover the check), you are immediately subject to a civil penalty doubling the value of the check (in Missouri), and you may also be prosecuted to passing “bad checks.” Many lawmen are willingly allowing themselves to become the hitmen for these loan companies.

This is a “scam” because no one tells the people borrowing the money that failure to pay could result in an instant doubling of the loan or criminal prosecution, so payday loans, which charge such a high rate to account for the fact that people so often cannot make the payments, gets an extra level of security against default. And foists the risk of criminal enforcement onto people who don’t know what is happening.

It is also a perversion of the law. Bad check laws were created to protect people who trusted the people writing them checks – writing a check is, legally, a sort of guarantee that the check-writer has the money to pay for the check in the bank at the moment the check is written. Writing a check without the money in the bank is a type of fraud. But when a payday loan company accepts a post-dated check in exchange for a loan, they know the money is not there. There is no fraud when the check is written – and fraud requires that the intent to rip off the victim be present at the time the action which does rip them off (writing the check) is done. What’s happening here is that people who made a mistake about having money at a certain point in the future are being thrown into jail for that mistake. And the people on the other side of the transaction – the payday lenders – are perfectly aware that their customers have trouble with money – that’s who they target.

It is morally totally wrong for this to happen. But it is happening. So the lesson is, never pay for a loan – any loan under any circumstances – with a post-dated check. If the money isn’t in the bank, do not use a check.