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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.

 

Understanding the Petition in a Debt Lawsuit

Understanding the Petition in a Debt Lawsuit

For a copy of this article in PDF form, click here: Understanding the Petition

If you are being sued by a debt collector, the first step in defending yourself is knowing who is suing you and what you are being sued for. You’ll want to know what facts the plaintiff thinks it can and needs to prove, and you’ll want to look for initial weaknesses in the case. In all of these things, you will need to understand how to read the petition and understand what it is doing.

Below, you will find a sample petition. The petition (also called “complaint” in some jurisdictions – the terms refer to the same thing) is in black, and my comments about what the petition is doing is in red ink. You will see that every part of the petition has its purpose and function.

For purposes of this article, I will refer only to a few parts of the case, as these areas are often discussed in the teleconference calls and people have shown that they do not understand them. But if you look at the annotated sample petition, you will see much more. Knowing what things are called is an important part of the process of understanding what they are and do and an important first step in defending your rights.

Caption

The caption of the case is the part where it says “Debt Collector vs You” and also the name of the court and jurisdiction. Although it has come up, very rarely, that the named plaintiff may not, actually, be the plaintiff (see our article and video on assignment in the glossary), normally the person named as plaintiff is the plaintiff.

In plain English, that means that if First National Bank is named as plaintiff, that’s the person suing you and not a debt buyer. If you have any reason to doubt that, you will want to use the discovery process to pry the truth loose.

And you are the defendant along with anyone else named as defendant in the caption.

The jurisdiction is also important, as this will either tell you that the court has dollar limits to its jurisdiction or not. At a minimum, you can use this part of the caption to find out whether the court does, indeed, have such limits. In general, if it does, the lower the limits, the less likely the court is to follow the rules of evidence rigorously. We usually want the highest court possible because it is critical to debt defense that the rules should be followed.

Title Heading of Suit

The title headings in a lawsuit are not formally treated as part of the lawsuit but are, instead, guidance. But what you need to know is that if you have different “counts” of the lawsuit there will be either more than one set of facts involved or, much more likely, more than one legal theory involved. If Count One is breach of contract, and Count Two is for Account Stated, you know you are being sued under two laws. In order to win your case, you will have to win on every count.

If you have no heading, or no heading that refers to counts, you are being sued based on one law (almost certainly), although it isn’t always perfectly clear from the petition what that is.

Wherefore Clause

This is the part of the suit that says, “wherefore, plaintiff requests…” In other words, it’s the part of the lawsuit that says what the plaintiff wants. If you want to know how much they’re suing you for, this is the place to look.

The wherefore clause is usually the last paragraph of a count. If your suit has more than one count, it will have more than one wherefore clause, one at the end of each count. If it does not have more than one count, it will probably be the last paragraph of the petition.

You need to know what the debt collector is suing you for. This is where you find that.

Sample Petition for Money Owed

 

IN THE ASSOCIATE CIRCUIT COURT        “Associate” means limited jurisdiction
OF THE COUNTY OF XXXXX                        County or city jurisdiction
STATE OF XXXX

DEBT COLLECTOR COMPANY, LLC,                     This is the “Caption,” This name is the
ASSIGNEE OF CC COMPANY (Mastercard),          plaintiff [the lawyer signing is not
Plaintiff,                                                                          plaintiff, nor is Mastercard]

vs.

JOHN Q. PUBLIC,
Defendant.

COUNT ONE – SUIT ON MONEY OWED   [Title. “Count One” indicates this claim has more than one legal basis. Lots of suits are brought on only one basis and don’t have “Count __” in them]

Comes Now Plaintiff and for its cause of action against the Defendant states as follows: [Intro, sometimes much longer]

  1. Plaintiff is a limited liability company duly organized and existing under law and is the lawful assignee of this debt. [Paragraph allegations – you have to respond to each paragraph – this one identifies the plaintiff and alleges it was assigned the debt.]
  2. That defendant is a resident of xx county, state of x. [paragraph establishing court’s jurisdiction over defendant, so important – don’t admit if wrong]
  3. That defendant is in default under the terms of the documentation attached hereto, incorporated herein and marked Plaintiff’s Exhibits A and B in the amount of $1,332.14. [This is ‘breach of contract” language, often more involved than this, including claims of issuing cards or credit, etc.]
  4. That plaintiff has performed all conditions on its part required to be performed. [Establishing right to remedy – plaintiff did not breach contract]
  5. That demand for payment has been made and payment refused. [Formality, sometimes but not usually required, usually included though]

Wherefore, plaintiff prays judgment against defendant in the principal amount of $1,332.14 together with interest of 39% per annum from December 7, 2005, and for costs and attorneys fees herein. [the “Wherefore clause.” Says what the plaintiff wants. Usually if it does not say “attorney’s fees,” they won’t be able to get them if they win]

COUNT TWO – ACCOUNT STATED      [second claim, this one under law of account stated]

  1. Plaintiff realleges and incorporates paragraphs 1-5 of this petition as if fully stated herein. [“reincorporation clause” – standard. You will simply reallege your previous responses in the same way]
  2. Plaintiff had a regular billing arrangement with Defendant whereby each month Plaintiff would send Defendant an accounting of money due and owing either as a result of new charges made by Defendant or for charges based upon an existing balance. [necessary to show that bills, or “accounting,” were a regular thing, expected by defendant]
  3. Plaintiff sent Defendant a bill showing a charge of $1,332.14 due immediately on X date.[the “new contract,” because it was actually or “impliedly accepted”]
  4. Defendant did not dispute this bill showing a balance of $1,332.14 and accordingly accepted it. [Your supposed agreement]
  5. Defendant did not pay the amount due and is thereby in violation of the law. [The “breach” of the contract created by accepting the accounting – note that new agreement does not have any terms other than the money allegedly owed]

Wherefore, plaintiff prays judgment against defendant in the amount of $1,332.14 together with costs of this action and such other relief as this court deems appropriate under the law. [The “wherefore clause” for the account stated – note that it should not include attorney’s fees or (probably) interest]

Collection Law Firm [law firm’s signature, usually illegible. Both the named lawyer and the firm are representing plaintiff (but are NOT plaintiff) and would be on the hook for possible violations of FDCPA]

______________________

Collection lawyer,
Law Firm

Address

[There is usually some sort of affidavit to the effect that the defendant is not in active military service – if you are not, this is purely a formality. If you are in active military service, special rules apply to your case]

Answer and Counterclaim

It is very helpful to have a counterclaim if you’re being sued by a debt collector. In this article we’ll discuss a few mechanics – things that are obvious to lawyers but might not be so obvious to people representing themselves.

What is a Counterclaim?

First of all, what is a counterclaim? Very simply, a counterclaim is a lawsuit you file in the same court against someone who is already suing you. That is, it is any lawsuit you file, whether or not it is related to the suit the other person filed.

The theory is that if two people are already in court for any reason, they may as well get everything done at the same time, but there are certain exceptions in cases where hearing the cases together would be too confusing, or the like. Many counterclaims do not have to be brought – you can wait till the first case is over and then (if time hasn’t run out) bring your case separately as an original suit. On the other hand, sometimes possible claims are so closely related that you are not allowed to wait: these are called “mandatory” counterclaims, and if you fail to bring a mandatory counterclaim as part of the first lawsuit you will lose the right. A classic example of mandatory counterclaims would be claims by both people in a car crash against each other – waiting and filing separately would be a big waste of court time and might also lead to contradictory judgments.

For debt defense, though, you might think of it as a defensive countermeasure. As in judo, they’ve been attacking you, and now you’re going to use what they’ve done against them.

Claims under the Fair Debt Collection Practices Act (FDCPA) can be brought as counterclaims, but they are not mandatory. You could, if you wanted to, bring a claim under the FDCPA in federal court – or even another state court – while a lawsuit against you for the debt was still underway. As a practical matter, when I was still practicing, I never did that, but you could do it.

Sources of Counterclaims

The FDCPA is the most logical source of counterclaims when you are being sued by debt collectors, for several reasons.

For one thing, the law is very broad. Anything that is an “unfair” debt collection practice is illegal under the FDCPA. Although several things are specified in the Act, many other things have been found to violate the law. That allows you to be a little creative.

Secondly, the FDCPA does not require any sort of “intent” to harm you. All you have to do is show that the debt collector did what you say is illegal. And you don’t actually have to have been hurt by what the debt collector did. That means that the unfair collection practice you claim they did does not have to have fooled you or hurt you at all.

In fraud cases, to give an example of a different kind of law, you have to prove that the person you claim defrauded you meant to do it (intent) and that it somehow harmed you (they did fool you, and you lost money). This makes claims under the FDCPA much easier than most other lawsuits. Finally, there is the question of evidence. Many FDCPA claims arise out of the debt collector’s lawsuit against you, and this will be part of the record, but all of the claims will be relatively easy to prove. Here are some articles that discuss some possible claims under the FDCPA:

There are other sources of possible counterclaims, however. There is a law in consumer law that provides that any time you would have a claim or defense against the seller, you also have that claim or defense against someone trying to collect the bill.That means that if you were ripped off by a seller, and then a debt collector comes after you, you can sue the debt collector for that fraud. If you do, you will probably have some significant advantages, as the debt collector probably does not have access, much less inexpensive, convenient access, to the witnesses it would need to defend the case. And there are other possible claims – like defamation or possible violations of the Fair Credit Reporting Act.

What You Actually Do

Assuming you decide to bring a counterclaim, what you actually do is attach it to your Answer. That is, you create your Answer, and then at the end you add allegations that would support your counterclaim. The materials in my Litigation Manual provide you samples of these.

 

The Answer and Some Early Defense of Debt Litigation

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Demanding Verification is NOT a Substitute for an Answer to Lawsuit

Don’t be a Verification Sucker

Demanding verification of your debt will NOT prevent a default judgment if you get sued.

People in debt trouble hear a lot about debt validation, and that is a good thing. I have argued that even though verification requires little from the debt collector, it’s still a good idea to make the demand when you’re first contacted by a debt collector who is trying to harass you into paying. I think that requesting verification sends a signal to the debt collector that you will defend your rights. If you get sued by a debt collector – even if that’s the first you’ve ever heard from them – you must do more. You must answer the lawsuit by filing your answer in court.

Anything short of that allows the debt collector to get a default judgment, and that will effectively end your rights to fight the debt.

Conclusion

When a debt collector (or creditor) files suit against you, you will have to file an answer in court to avoid a default judgment. Many people think all they have to do is “dispute the debt and request verification.” The right to verification, however, applies only to collection efforts that are not part of a lawsuit. Don’t be a verification sucker – file an Answer and defend yourself.

How to Answer a Petition when Sued for Debt

When you’re sued for debt, one of the first things you have to do is write and file an answer. You could lose the case very easily until you do. Luckily, it isn’t hard, and this video will show you how. For more detailed information and help on fighting and winning your suit against the debt collector, get the Debt Defense System. If it hasn’t come to litigation yet and you hope to keep it from doing so, you can get the Debt Negotiation and Settlement System.

 

Answering a petition in a debt law case is actually very simple. Keeping in mind that it is up to the plaintiff to prove its case if you deny a part of the petition, there is little incentive to admit anything. Pro se defendants also quite frequently overestimate the things they should admit. For example, you may know that you borrowed some money or used a credit card, but do you really know how much you borrowed or whether all the charges were legitimate? Do you know for sure that you did not pay some of the debt or that you truly, legally, owed every amount claimed? And do you know with certainty even that the company suing you owes the debt at all?