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Difference between Original Creditors and Debt Collectors

Debt Collector or Original Creditor

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We used to face a simple either/or question in debt defense. Were you being harassed or sued by the original creditor? That’s the person who allegedly lent you the money in the first place. If so, you were dealing with a person who had better rights against you – but some concerns over public perception that could help you. If it was a “debt collector” who had bought the debt from someone else and had nothing else to do with you, you had better rights and a better chance of winning.

Various things have blurred the line somewhat, but it is still worth keeping the distinctions in mind. There are now really three important categories to consider: original creditors, debt buyers, and “debt collectors,” and the last two categories overlap to some extent.

How Debt Arises

Debt can arise in a number of ways. If you buy a club membership, for example, and then stop paying on it, the club is the original creditor. If you stop paying, the club will bug you for a while, and then they may send the account to a debt collector to bug you some more. Eventually, they may sue you or sell the debt to another company. Whatever they do directly to you, however, they must worry about their reputation in the community, and harsh collections might reduce their sales.

This concern, that they needed to have – about reputation, was considered a check on their debt collection practices. The legislature thought that was enough protection against the worst abuses.

Debt Collectors

Debt collectors, by contrast, lack that relationship with the consumer. Their only client is the creditor company or, if they have purchased the debt for themselves, their only loyalty is to their own bottom line. Thus that protection from abusive collection practices was not there, and the FDCPA was designed to put it there.

The emphasis was on how the debt originated and how it came into the possession of the person bugging you. Thus for a long time we simply considered anyone who bought debts as a “debt collector.” Such people or companies had no need to protect their relationship with the public, and so the public needed protection from them.

Supreme Court

The Supreme Court has made things a little tougher for debt defendants by holding that debt buyers are not, by that fact alone, now defined as “debt collectors” under the Fair Debt Collection Practices Act. Legally, a company can be a “debt collector” under the FDCPA if its “principle business” is the collection of debts. But otherwise a debt buyer isn’t necessarily a debt collector.

This will protect some very bad people from consequences for some of their actions, and it will prevent many people from being able to get lawyers to protect themselves from debt lawsuits.

It will also complicate the way you handle your lawsuit against someone who may be a debt collector, since you will have to try to prove the company bugging or suing you is a debt collector. We have changed our model discovery to address that new reality, and if you’re being sued, you will need to take it into account.

New Reality

Unfortunate as the Supreme Court decision was, it’s now the law until and unless it gets changed. In the current political climate, that seems unlikely. So you must bear in mind some practical distinctions.

Debt buyers, whether or not they are “debt collectors” under the FDCPA, will have difficulty getting or using certain evidence in court. The distinction is very important in assessing your defenses against a lawsuit for debt. Debt buyers will likely face major hurdles from the hearsay law, and they won’t have the same records as an original creditor.

You will have more and easier counterclaims against those who are defined as “debt collectors” under the law, but you will need to conduct discovery specifically to prove that they are, in fact, debt collectors.

Original creditors will probably have fewer issues with hearsay and may or may not have many records. They seem to have fewer records and less control over their files than they used to, for whatever reason, so you will need to explore this in your discovery and defense strategy. And you will have a better chance defending against an original creditor than used to be the case.

Difficulty of Defense

It is not more difficult to defend yourself from one group than another. The legal process itself is basically the same. You have to do all the same things to defend yourself, from answering the petition to showing up in court, responding to discovery, and going to trial if necessary. But the content of the discovery as well as the process of the suit, will likely be different. The original creditors will be more reluctant to sue you, but will have more materials to support the suit. The debt buyers will be more willing to sue, but have less material to support their claim, and if you  can prove the other side is a debt collector, you’ll probably have a counterclaim.

Whichever you’re facing, you should defend yourself. We suggest our materials and membership if you’re ready to do that on your own.

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.

The Best Defense is a Good Offense

Debt Law and Motions for Summary Judgment

Get a copy of this article in PDF format: Sometimes the Best Defense is a Good Offense article

If you’re being sued for debt, your case is going to head for a show-down on a couple of main issues. These will probably involve some billing records or some record-keepers wanting to testify. And these are primarily “legal” issues – that is, the facts may be clear and undisputed, and the judge might be able to make the important decisions in the case. When a judge does that by motion and before trial, it’s called a “summary judgment,” and the parties ask for that by filing a “motion for summary judgment.” You will want to consider trying this.

Before we get deeply into motions for summary judgment, let’s discuss the way cases develop, go away, or are decided. It’s really just one process after the case is filed and you’ve answered.

The Way Debt Cases Develop

First, the parties conduct discovery which aims to find out what facts are, indeed, uncontested, which ones are disputed, and what evidence there is in support of them. What this really means is, discovery looks for what you can prove about your case or their case. In debt law, you either want to prove it was all a horrible mistake (if that’s what’s going on) or that the debt collector cannot prove its case. Since most debt cases come from what were at one time legitimate debts, most debt defense boils down to an attack on the debt collector’s case. And you will have an excellent chance of winning.

In your discovery, you will probe for what evidence they have and how they plan to get it “into evidence,” i.e., into the court’s consideration at trial. (Incidentally, our Discovery Pack is designed to help you do this.)

As facts emerge, and as work happens and becomes necessary, the debt collector might decide to drop the case. In fact that often happens, and of course it often doesn’t, too. Sometimes the debt collector will try to shorten things up by motion for summary judgment, but more usually they just want to get to trial as quickly as possible. If they do either one of these things before you have conducted your discovery, there’s a good chance you will be snowed under. Thus you should do your discovery quickly.

You want to aim for the motion for summary judgment right from the time you file your answer. If it doesn’t work, well, you’re halfway to being ready for trial anyway, and you will have started talking to the judge about the issues that matter.

Now to talk more specifically about motions for summary judgment.

Motions for Summary Judgment

A “motion” is just the formal way you ask the court to issue a ruling of some sort. A motion for summary judgment is asking the court to find that all the necessary facts for a ruling in your favor have been established, and to grant you a judgment as to them. It’s possible to get a summary judgment about some parts of a case but not others (a “partial summary judgment” in legalese).  To end the case, you have to get a judgment on all of the claims.

What to Do

If you are being sued, you need to begin with the ending in mind. That is, right from the beginning you should think long and hard about what it takes to win your case. In debt law, the first big challenge most defendants face is to answer the petition – just to take that first step in defending yourself. If you’ve managed that, congratulations. Just by doing that you’ve given yourself a better chance to win than approximately 90% of the other people being sued. And in some cases, to be sure, that’s all you need – the debt collector may walk away right now. But in most cases they won’t.

So your next specific step is to start discovery – the sooner the better. And you should start discovery with the firm goal of finding and proving the things you need to win. We have a product that can help with that, but this video is about the next step following discovery: the motion for summary judgment.

In a way, it’s simple, although this is one time you should never confuse “simple” with “easy.” If they’re alleging a breach of contract, for example, you will discover that they must prove the existence of a valid contract, its breach (failure to pay as agreed), and damages. The burden of proof is on the debt collector as to each of these things, and they have to show it using admissible evidence.

In your discovery, you should have narrowed down exactly what they have to offer as proof. In the case of a debt collector this is usually documents created by some other person, usually the original creditor. And they may have documents or testimony by some of their own employees as well. This material is generally intended to try either to fool the court into believing the other evidence is admissible, or to pull it within the rules of evidence.

Your job will be to look at each bit of evidence and show why it cannot do what the debt collectors want it to do.

Filing a Motion for Summary Judgment

Of course this isn’t very easy, and there are significant procedural requirements, but going through this process increases your chances of winning dramatically in three important ways. First, if you can show your right to a summary judgment, you should win the motion and get the case kicked out. Before that happens, though, you will be putting the plaintiff to the expense and effort of responding, and if they think they will lose (and often even if they think they will win), they’d rather just drop the case than keep going. And finally, even if the court does not rule, or rules against you, you will have learned a tremendous amount about the law and begun the process of teaching the judge what he or she needs to know, improving your chances of winning at trial a lot.

There’s every reason to do it. You just need the energy and courage to try. We can help.

Product Information

Because much of this article involves taking action and creating legal document, we include an addendum of the products we have that can help. First, if you are at the beginning stages of your case and needing to answer (or otherwise respond to) the petition, our First Response Kit is designed to help with that. If you have already answered and need to start (or restart) conducting discovery, our Discovery Pack will help. The Discovery Pack is included within the First Response Kit, so don’t get both. If you are trying to force the debt collector to respond to your discovery, you may want our Motion to Compel Pack.

If they’re filing a motion for summary judgment and you are not ready to file a motion for summary judgment yourself, our Motion for Summary Judgment Defense Pack could help. But if you want to respond to theirs and file one of your own, you will want our Cross-Motion  for Summary Judgment Pack. And if they haven’t file a motion for summary judgment but you want to, that would be our Motion for Summary Judgment Offense Pack. Don’t get more than one of the MSJ packs.

Memberships

Members get discounts on all products as well as unlimited opportunities to join our regularly scheduled teleconferences. This gives invaluable real-time assistance, answers to questions, help with strategies, and encouragement. You also get the Litigation Manual for free with membership. Find out about memberships by clicking the “About Memberships” link in the menu at the top of the page.

Sign Up for More Information

You can sign up for free information from us by clicking here and following the instructions.

If you sign up, you will receive a series of videos and articles over the next few days designed to help you get a grip on debt litigation. Then we will occasionally send you information on new materials we have added to the site. This is rarely products and almost always new publicly available articles. You will not receive sales messages regarding other products, nor will we sell your information to any third party.

If They Never Have Evidence Why Do Discovery

People ask me why they should do discovery in debt cases when everybody knows the debt collectors don’t have any evidence. The answer to that question might seem obvious once you’ve been around, but it’s a critical part of defending yourself from the debt collectors.

As we point out in The Most Dangerous Myth, you can’t depend on anybody to do anything for you. You can’t depend on the courts to get rid of debt cases that don’t have evidence. If they did that, they’d get rid of most of them, but that isn’t their job. It’s going to be up to you.

There are a couple of fundamental reasons to do discovery as soon as possible. You have to make them show you what they have or admit what they don’t have. And the process of discovery costs the debt collectors money and often drives them away by itself. In addition, conducting discovery will likely make the judge and the other side take you more seriously and be more cooperative when you need it.

Make them Admit what they Have or Don’t Have

The first, legally-based reason, for pushing discovery despite all their objections and BS is that to win the case you must PROVE they have nothing. Or rather, you must prove that what they have, if anything, is not enough for them to win.

Ideally you could do that by motion for summary judgment, which would spare you the risk and effort of trial.

If you can’t do that, then you must prepare to win at trial.

On the other hand if they do have things, you need to know about it so you can prepare for them.

Now, to be clear, debt collectors, who are always represented by lawyers (they have to be), start with the advantage of the court’s attention and respect. You, on the other hand, as a non-lawyer, will have to earn the court’s respect. Maybe it’s not fair, but that’s just the way it is.

And one result of this is that you simply cannot count on the court to pay close enough attention to any arguments you make unless you give it time. A motion for summary judgment – win or lose – is the best way to present your arguments about the debt collector’s evidence to the court.

In order to do that, you must know, in detail, what that evidence is and where it comes from.

Discovery is Expensive for Debt Collectors

The debt collector is almost certainly going to object to every single request or interrogatory you give it. They can’t help themselves, and it’s usually a good tactic because it drives so many defendants into submission. But it’s a two-edged sword, and when you’re pro se and determined, their objections will be a large advantage for you.

Part of filing a motion to compel answers is an “informal conference” and attempt to negotiate discovery disputes. You will have to call the other side’s lawyer up, ask him or her why she objects to each item of discovery, tell her why you want it, and argue each objection. And their objections will be numerous, absurd, and repetitive. They’ll object, for example, to your request for information about the alleged purchase of your debt on the basis of attorney-client privilege. In all likelihood no lawyer will have been involved – or it will be strictly in an arms-length transaction where no attorney-client privilege ever applies. And they’ll make many other absurd arguments.

Take your time. Take their time. And know that it’s costing them about $200 per hour for you to do so.

Find out whether they actually have anything they aren’t giving you. If they say they don’t, then once you confirm the message you’ll have what you need for the summary judgment motion. If they say they do, keep fighting until you know exactly what it is. Again, all this is costing them a LOT of money.

And nothing makes a debt collector rethink the wisdom of suing you more than having to spend money. Not even it looking like you can win the case outright.

Conclusion

So go through the process. Chances are good that they’ll either give up or you will have what you need to win by the time you get through. And there’s no other way to get to that point.

 

Ending the Debt Nightmare Pt 3

This was originally part of a promotional series. In that series we discuss the way people often run into debt trouble. It starts with some difficulty – often medical bills or a lost job (or both, obviously). Then is spirals out of control because the bills don’t stop coming even if you’re having trouble paying them.

The banks are often only too willing to lend to people having trouble paying debts. In fact, they target people like that because one of their main sources of income is the exorbitant fees they charge for anything that goes wrong.

And then the debt collectors get involved…

Ending the Debt Nightmare Part 3

Sometimes a Raindance is just a Dance 2

Sometimes a Rain Dance is Just a Dance – – and it Rains (Pt. 2)

This is part two of this video and article. In the first part we talked about how some people do a bunch of things which may or may not be effective, and win their cases. Sometimes this is from sheer amount of effort, which causes the debt collector to think the whole thing will be more trouble than it’s worth. Sometimes it’s from doing something right (among all the things that are done). Sometimes it’s just from doing ANYTHING at all.

The point is, just because someone wins a case doesn’t necessarily mean that any one thing he or she did “worked.” Sometimes you just get lucky.

There is some (essentially random) luck, but most luck comes from doing the right things. Knowing how to do these things the right way gives you your best chance to win. Our materials help you figure out how to do the right things.

How Debt Lawsuits begin

A debt lawsuit starts with a “petition” (although it is sometimes called a “complaint,” and there may be other names for it, too). This is the statement that you supposedly owe the debt collector money, some legal reasons why the court should order you to pay, and a “request for relief” (also known as the “wherefore clause”). The debt collector can file this petition with the court without any permission from the court. When they file it, the also get a summons.

Some courts let the debt collectors write up and send the summons, too, although technically it comes from the court. The debt lawyer, as an “officer of the court,” writes it up, a clerk stamps it (or they may come pre-stamped), and the power of the court – over the case and over you – has been invoked. The summons tells you when to be at court and what to expect (“default judgment for the amount sued upon”) if you fail to show up. In all courts of which I am aware, proper service of the summons, which can happen in several ways, is necessary for the court to have jurisdiction over you. It is a constitutional requirement, but just what the constitution requires isn’t always clear, whereas the rules usually are.

What the debt collectors know is that somewhere between 80 and 95% of people who are served will not show up in court. If you do show up, and the other side does not, you should immediately ask that the case be dismissed, and many courts (perhaps most) will grant that motion. That would be lucky – but only if you were there and knew enough to request the court to dismiss the case, as absent the request the courts will often simply continue (postpone) the case until the next court date.

Assuming the other side actually appears for court as scheduled, your next step is (a) either to move to dismiss the case or (b) answer the petition. Check your rules to see what the rules of pleading are, and if the plaintiff’s case does not comply with those rules – and they almost never do in Pennsylvania, for example – you might file a motion to dismiss or its equivalent (Preliminary Objections in PA). Often enough they don’t comply in whatever jurisdiction you may be in, and a motion to dismiss can be a quick way out of the lawsuit. Or you may file an Answer. Whichever action you take, the debt collector might choose to walk away from the suit at this point. As I have often pointed out, there are a lot easier people to chase than those who file bothersome Motions to Dismiss or Answers.

Often the debt collector will not walk away at this point, thought, so the next thing you must do is both serve discovery on it and answer discovery if they serve it on you. It is important for anybody to serve discovery on the other side first, but especially for pro se debt defendants. You would never believe the games the debt lawyers play if you don’t see it, and you want to see those games in action before you start responding to their discovery.

Sometimes the mere service of discovery drives the debt collectors away, but most often, of course, it does not. You will receive vague and unresponsive “answers” like “pursuant to national banking regulation, credit card applications need not be retained beyond a period of two years” (What does that say, anyway?) or “Plaintiff is conducting a search for records and will make them available to defendant as they come into Plaintiff’s possession.” It is the task of the pro se defendant to push past these objections and vague statements to discover what, if anything the debt collector has, and to force it to admit it has nothing more. This, of course, is the reason for a motion to compel. If you do that appropriately, the chance of the debt collector dropping the case is actually pretty good.

Not Bad Faith or Frivolous

Performing legal actions with no reason other than to increase the cost and effort the other side must undertake in order to win its case is “bad faith” in litigation. An action with no reasonable basis in law or fact is “frivolous.” Both of these sorts of forbidden actions and motives can create significant problems for a person caught doing them. None of the actions listed above, however, come anywhere close to these forbidden zones: they all accomplish purposes for which the discovery and pleading rules were designed. The motions seek to weed out unwinnable claims, and the discovery probes the other side to find out what, if anything, they have in support of their claims. Following this broad pattern, you are not only increasing the chances that they will walk away at any point leading up to trial, but you also increasing your chances of winning if the matter does go to trial.

Good Luck

Lawyers are constantly performing a balancing act, always deciding whether it is potentially more profitable to act in one way rather than another. This is not because lawyers are greedy – although many of them are, of course – but is in fact part of their ethical responsibility to act in ways which promote their clients’ interests. These interests are virtually always financial, and thus as you continue to defend yourself with skill, you raise the issue more and more insistently that the lawyer would be better off pursuing other claims.

When your skill has actually pushed the lawyer to take the step of cutting you loose, you are “lucky,” and the debt collector drops its suit. If you have a pending counterclaim at this point, you can force the debt collector to dismiss your case “with prejudice,” which it means no one could ever sue you again for the same debt.

Being Sued for Debt

Being Sued for Debt

If you’re already being sued for debt – that is, they’ve filed suit against you and served you (or you have found out in some other way) – you have an immediate decision to make. You could give up and let them get a judgment and take your money if they can find it. Or you could defend yourself.

It makes all the sense in the world to defend yourself.

You may think that lawyers wouldn’t file a law suit if they didn’t have the evidence to prove it, and in most kinds of cases that would be correct. Lawyers don’t want to waste their time on bad lawsuits. But in debt law it’s different. In debt law, the debt collectors take hundreds of alleged debts and file suit in all of them (if they want to) without ever looking to see whether they have any evidence that’s any good. They do that – and you might even say the HAVE to do that – because they know that almost all of the people they manage to get served with the lawsuit will give up. When you never have to fight to win, making sure you could win the suit is a waste of time. So they don’t.

As a matter of fact, you have an excellent chance of winning if you fight the debt collectors, and you can do that in one of two ways. You can either hire a lawyer or represent yourself (this is called “pro se” representation).

Going “Pro Se”

While I have always considered hiring a lawyer who understands debt law and will be aggressively on your side as the best way to defend yourself if you can afford it, there are two problems with it. First, it is almost always pretty expensive, and it can be very expensive sometimes, And secondly, it can be difficult to find the right lawyer – and it isn’t always easy to tell who is the wrong lawyer.

It can make sense to represent yourself. This type of law is not extremely complicated, and the debt collectors are often lazy or simply do not have and cannot get what they need, to beat you. If you want to take this route, then I suggest that you get one of our memberships. That will give you information and backing you can use all the way through your defense.

Hiring a Lawyer

I have always considered hiring a lawyer who knows debt law as the best option when you’re sued for debt if you can afford it. As I mention above, the challenge can be finding a lawyer who is experienced in debt law defense and who is not too expensive. I believe I have found a good option for that – a prepaid legal plan specializing in debt defense. If you think you would like to hear about this plan, check out our information on prepaid law.

You Will Probably Win if you Fight Debt Collectors

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

 

Defending Yourself against Debt Collectors Isn’t That Hard

 

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

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

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

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

Discovery – Starting to Win your Case

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

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Push or Be Pushed – Get that Discovery Started

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

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

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

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

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

Preparing for Mediation Pro Se

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

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

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

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

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

Mediation is Rigged

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

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

Lawyers Trust Lawyers

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

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

No matter what the evidence shows.

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

Your Advantages Could Get Forgotten

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

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

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

Mediation Can be Intimidating

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

What You Must Remember

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

Don’t Forget Collection Risk

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

Your Advantages

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

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

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.