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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.

 

Foreclosure Fraud

Foreclosure Fraud – Are They Ripping You Off?

As I have argued a number of times, banks seeking foreclosure have been hampered by the “alphabet derivatives” known as “MBS’s” (mortgage backed securities). Often, banks seeking to foreclose on allegedly defaulted mortgages do not own the title to the property in dispute and cannot find it, and therefore cannot (legitimately) pursue their foreclosure actions. It seems that some lenders may have found a convenient way past this objection: systematic fraud.

Fraud in New York

On August 17, 2010, a federal class action suit was filed on behalf of tens of thousands of New York State homeowners who lost their homes to an alleged foreclosure fraud orchestrated for years by a  “foreclosure mill” attorney and major mortgage companies. The case is “Connie Campbell vs. Steven Baum, MERSCORP, Inc, et al.”, Case #10CV3800, filed in the U.S. District Court for the Eastern District of New York. It claims there were various lending and Fair Debt Collection Practices Act (FDCPA) violations and that homeowners paid inflated foreclosure and other fees made up by Mr. Baum on behalf of his clients, the lending institutions.

The alleged foreclosure scheme came to light after the class plaintiff lost her home to a foreclosure filed by Baum for HSBC even though the loan had never been assigned to HSBC. A “Satisfaction of Mortgage” was eventually filed by a company named MERS,  showing that HSBC never owned the loan, and the foreclosure complaint should have never been filed in the first place.

Perhaps tens of thousands of New Yorkers alone have been thrown out of their homes into the street through fraudulent foreclosure actions. As investigations have continued, it has become increasingly clear that the foreclosure violations are rampant and nationwide.

Just Who Are the Barbarians at the Gates of Rome?

Some time ago a prominent social commentator likened people opting out of their non-recourse loans to “barbarians at the gates of Rome.” And last year there was a lot of argument about the morality of individuals pursuing this right for which they had negotiated and paid. Supposedly, these people were taking unconscionable advantage of the poor lenders.

As I pointed out at the time, for people to exercise the rights which they negotiated for against well-heeled and sophisticated lenders was hardly a sign of the “break down” of law and order. It was, in fact, simply the legal process working as it should. In this case in favor of the homeowner rather than the banks, for a change. All the morality talk was designed to hoodwink the public into blaming the homeowners rather than the banks, who for years deliberately fostered lax lending practices as a way to inflate prices and increase their profits.

The Sound of Silence

Let’s just say the silence of these self-appointed guardians of morality about the revealed practices of the lenders affecting tens of thousands at least, and possibly many millions of homeowners defrauded and rendered homeless is positively deafening.

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.

What if I Think I Owe the Money?

What if I Really Owe the Money – or Think I Do?

What if you think you really owe the money? Should you defend yourself? Here’s why you must defend yourself. If you don’t you run the risk of having to pay twice. And if you do defend yourself, you probably won’t have to pay. If that bothers you, give the money to somebody who really needs it.

Most People Being Sued Actually DO Owe Someone Some Money

If you’re being sued by a debt collector, you probably think you owe them the money, although it’s surprising how often people who do NOT owe anybody any money get sued. If that’s you – you still need to fight the case, it won’t go away by itself. But if you actually do owe somebody the money for which you are being sued, you still need to be careful.

And you should still defend yourself as well as you can.

You must make the debt collector prove every part of its case – not only that you owe the money, but that you owe it to them. And exactly how much you supposedly owe. That’s because old debts get sold – often more than once – and if you don’t make the debt collector prove it owns the debt, you may pay the wrong person. And then you might have to pay again if you get sued by the person that actually owns the debt.

In addition, most people who get sued for debts do not owe what the debt collectors are trying to collect. They routinely add fees and interest they should not, and consumer protections agencies and organizations routinely estimate that almost all debt collection suits include extra charges – and many of them are for far more than is owed.

“Double-Banging”

Because of the extremely lax regulation of debt collectors, and the frequent erosion of those regulations that do exist, debt collectors develop many dirty tricks. One of the dirtiest is known as “double-banging.” This is the repeated collection of the same debt by the same debt collector.  You may wonder how such a thing is possible, and it would be difficult, no doubt, if these double-bangers didn’t have a couple of things going for them.

One thing that makes double-banging easier is “spoofing.” That’s a technology that allows debt collectors to cause your phone to think the phone call is coming from another number, usually a local exchange. Thus, while your phone tells you the call is from your own telephone area code, it’s actually originating far away. And of course the debt collectors often change their names – not just the people calling, but the companies they’re supposedly representing. So you are receiving a call from a company that already collected from you, and now it is collecting the same debt again under another name. And they don’t necessarily wait till you have paid the debt off the first time, either. In one known case, a debt collector collected the same debt TEN times.

And that was without even suing the victim. They can do that, too.

Ultimately, what makes all this possible is that people let it happen. That is, they get scared, or feel guilty, or get angry… any number of feelings cause you to relax your guard, and then they get you. Instead of requiring them to provide proof, you’re asking how to pay.

And once they get you, you go on a “sucker list.” That’s just what you probably think it is – a list of people who will fall for various scams. Debt collectors sometimes trade these sucker lists to each other, so after one of them has collected as much as possible, they trade your name to another who will do the same thing.

The Good News

The good news about debt collectors is that they usually CANNOT prove their cases if you make put them to the test. The whole process by which they get these debts is so sloppy and careless that they usually cannot find or obtain the proof that they need to win their case. IF you defend yourself.

Protect Your Rights

Our mission is to protect people from the debt collection process. If you are being sued by debt collectors, or if you are being harassed for money, you need to take action to defend what’s yours. For much more information on defending yourself, go to Fast Track to Debt Defense.