Archive for the ‘Harassment by Collectors’ Category

Should I file bankruptcy to stop end my student loans and daily debt collection calls?

Wednesday, May 8th, 2013

Question: I am unemployed, owe a fortune in student loans, and $2000 in credit cards with two debt collection agencies. I live rent free with my family. There is no way that I can pay $100 per month to settle one of the debts, which is what they want from me to stop calling. Other debt collectors also call me every day. I don’t have the $2000 that a Bankruptcy attorney quoted me.

My response:
Bankruptcy court will approve the discharge of student loans only if you satisfy the “undue hardship” standard, which requires a special procedure to be filed in Bankruptcy Court. That can be expensive and there is no assurance of a favorable outcome. For a large amount of student loans, however, it may be worthwhile if you hire an experienced Bankruptcy Attorney, who evaluates your case and determines that you will likely prevail at such a hearing.

Many federally guaranteed student loans can be discharged in other ways that may have a more favorable standard depending on the circumstances and type of loans. For instance, if you are disabled and the loans are either FFELs, direct, or Perkins loans, you may be qualify for a disability discharge, which merely requires you to file the form, signed by a physician, that you qualify for total and permanent disability, including the medical diagnosis and why this prevents the borrower from working. There is no cost for this application. More information is available online from Student Loan Borrower Assistance and the U.S. Department of Education. There are other statutory loan discharges, such as for a closed school or if the school falsified eligibility. If a statutory discharge is sought and fails, perhaps bankruptcy can be a backup plan.

I have seen debt collection lawsuits filed against my clients for with under $1,000 in principal balance due. I would not assume that this debt collection agency will not sue to enforce either or both of these debts. However, why would they sue you if you are not working and have no assets or income? To file a debt collection lawsuit in California, the debt collection agency must hire a licensed California debt collection attorney, then pay the court’s filing fee and pay to have a process server deliver the documents to each defendant. These costs and fees can be added to the total debt, but if a collection lawsuit pushes the debtor to file bankruptcy or if the debtor is long-term unable to pay, then the debt collection agency has made a poor business decision to invest money on a debt that will not be recovered.

If the debt collection agency waits too long to file a collection lawsuit, then the debt becomes time-barred by the statute of limitations. From that point on, the debt collection agency cannot file a debt collection lawsuit, without risking having the case dismissed as untimely and risking being sued for violating the Fair Debt Collection Practices Act (FDCPA).  The debt collector may not even threaten to file a lawsuit on a time-barred debt, without violating the FDCPA.  Thus, please read my prior blog posting on the “Don’t Pay A Dime Strategy” as an alternative to bankruptcy.

Robert Stempler
Twitter @RStempler


Can a Judgment Lien Stop the Escrow of My House?

Monday, March 11th, 2013

Question: I sold my home and it is now in escrow with the buyers. I just learned from the escrow company that an old judgment that I discovered on my credit report years ago must be paid in full with interest, because of a lien that they filed against my house. Is this true and is it legal?

My response:
When a plaintiff wins a judgment for money, such as an unpaid credit card debt, against the defendant, if the judgment is not fully satisfied very soon after entry of judgment, then the judgment creditor’s attorney usually obtains an “Abstract of Judgment,” which is California Judicial Council Enforcement Form # EJ-001 (“Abstract”).

When the Abstract is recorded with the County Recorder or County Clerk’s office, a lien exists over all real property in that county, including a residence. From that point forward (excluding bankruptcy discharge, in many instances), until the judgment is satisfied in full or the judgment creditor records a release of lien, any sale of real property or attempt to refinance property in the name of the judgment debtor(s) becomes an opportunity for the judgment creditor to be paid.

I know of no title company that would insure the title to a property (which is required by the bank for financing a purchase or refinancing), unless all Abstracts that name any of sellers involved are satisfied in full or a release of lien recorded. Buyers also may be unable to obtain real property financing, if they have an outstanding recorded Abstract. Escrow companies facilitate this payoff process by contacting the judgment creditor’s collection attorney for a written payoff demand. When the collection attorney receives this request, they are supposed to compute how much is due and send a letter of the correct amount, including costs and accrued interest. The escrow company then will deduct the appropriate amount and pay this to the creditor’s attorney, who must provide the documentation that can be recorded to show the judgment has been fully satisfied and the Abstract released.

There are some exceptions to this rule, such as the homestead exemption amount ($75,000 or more, depending on the situation of the occupants and owners, such as age or disability). The homestead exemption protects equity when applied towards purchase of another home within six months. See Cal. Code of Civil Procedure, Section 704.720. My blog posting explains the homestead declaration and links to a sample homestead form.

One point about this process is that there is often abuse by the judgment creditor’s attorney.  In particular, there is the temptation to inflate the amount, such as by improperly adding attorney’s fees, demanding excessive fees and costs, and other such nonsense. This might be considered a violation of the Fair Debt Collection Practices Act (FDCPA). Obviously, the damages would be the inflated amount, as this is an attempt to collect more than the amount allowed by law. However, inflating the amount could also make it impossible for the Abstract to be satisfied in full, if the amount is so high that the transaction cannot be closed and the judgment creditor is not willing to sign a release of lien. Thus, damages could also be claimed for preventing the sale or refinancing from being completed.

While you might not have time to consider trying to vacate and set aside an old default judgment, especially if you are in the middle of escrow and need to complete that promptly, please read my blog postings about setting aside a default judgement. If the summons and complaint were not properly served on the defendants, the court lacked jurisdiction over the defendant(s), and even an old default judgment can be set aside by a special type of complaint in equity. Here’s one blog posting in particular, that concerns an old default judgment.

Robert Stempler
Twitter @RStempler


Calls for an Unpaid Medical Debt by CMRE, but Physician’s Office Said No Outstanding Bills

Thursday, February 14th, 2013

Question: I started receiving calls on an unpaid medical debt. The caller ID shows CMRE, which I found online as a debt collection agency in California that collects medical bills for hospitals and physicians. I did not receive anything in writing from them and when I get one of these calls, they immediately ask for my SSN, then hang up when I refused. I have now learned that CMRE shows on my credit report for a few hundred dollars. What can I do to get the calls to stop and the item off my credit, as I have perfect credit? Can I ever get my good credit restored?

My response:
CMRE is a large debt collection agency that collects unpaid medical bills, either because the bill was not covered by the patient’s insurance, the unpaid insurance co-pay, or the patient had no insurance coverage and did not qualify for indigent care. I have dealt with this debt collection agency’s collection efforts against my clients and sometimes had to defend my clients in court from a debt collection lawsuit filed by CMRE’s attorneys.

As a consumer, never reveal your SSN, DOB, or DLN to anyone who calls you, not even to your own bank or broker, because there is too much identity theft and you don’t want to add yourself as another victim of a phone scam. Caller ID’s are convenient, but they do not guarantee the identity of the caller, because identity thieves and other hackers know how to spoof a caller ID. Even hackers may use a caller ID of the police, sheriff, IRS or FBI. The agencies will not call you and ask for your SSN or other information. If you are called and asked to give out your personal numbers, you should check independently that this is a representative of the company that you are doing business with, such as by hanging up, then calling their legitimate number and getting to the extension of the representative.

Start by sending a letter by U.S. Certified Mail to both the physician’s office and CMRE, which address should appear on your credit report. Your letter should be in the form of my free sample letter #1.1, Notice of Dispute and Request for Verification, which I’d send to the debt collection agency. The CMRE letter should state that you never received anything in writing from them.

Your Certified letter to the physician’s office should confirm the conversation that you had with the office manager or billing assistant that they saw no outstanding bills under your name and add a sentence asking that they send you a copy of the bill that they assigned to CMRE. Also, ask them why the bill was not submitted to your insurance company or what the status of the insurance payment is. Be sure to keep a photocopy of the signed letters.

Your dispute letters serve several purposes, including forcing CMRE to indicate the account is disputed with the credit reporting agencies, which should exclude the account from affecting your credit scores. If CMRE does not verify the debt in writing, then they should also stop reporting the account to the credit reporting agencies, or be at risk for violating your rights as a consumer under the Fair Debt Collection Practices Act (FDCPA). Such violations can result in damages and your attorney’s fees being awarded, if you prevail in court.

Your letters also make it clear that their failure to send you the letter required by law does not mean that you will wait for it to arrive some day and not proactively document the situation to protect your rights. In my years of dealing with debt collection agencies, if they fail to provide you with documentation promptly, either they are trying to get you to pay money on an account where there is a problem or their records are so badly screwed up that you will not know if they do anything correctly. Either way, the consumer should not tolerate their credit being harmed and annoying phone calls. Putting your position in writing, with the use of my sample letters, will let you sleep better now that you have firmly put the burden on them to respond in writing and provide you with written documentation.

Robert Stempler
Twitter @RStempler


Collection Call from Out Of The Blue for a Credit Card Not Paid In Five Years

Saturday, February 2nd, 2013

Question: Is there any chance that I can be prosecuted for not paying credit card from five years ago? I have been clean and on probation and received a call out of the blue that they have sued me for $2000. Help, I need to stay out of jail. They said they would not dismiss until I make a large down payment and sign an agreement for monthly payment until paid in full, but I cannot afford this.

My Response:
I am very suspicious when a consumer gets phone calls from collectors from out of the blue. If I read your question correctly, you have not heard from these people, never received any collection letters from them, and you were not served with the summons and complaint. Though you did not pay this debt in almost five years, there are those debt collection agencies which prey on consumers for old debt that are expired, because of the statute of limitations.

In California, a debt not paid in more than four years is almost always past the statute of limitations, provided that a debt collection lawsuit was not filed within the correct limitations period for the particular account. Thus, the filing of an untimely lawsuit or threatening to sue you for an expired debt also violates the Fair Debt Collection Practices Act (FDCPA) for harassment and misrepresentations. FDCPA violations can allow the consumer-victim to recover in court his or her actual damages, statutory damages, court costs, and attorney’s fees.

Since you have not received anything in writing from this collection agency, please advise this collector that you need something in writing and to send you the required initial letter, which contains the mini-Miranda statement, required by the FDCPA, for initial contacts of a consumer regarding collection of a debt. Verify that they have your correct mailing address. I do not believe that you should give them your cell phone number or email address, to protect your privacy, but you regular mailing address should be fine. You really don’t want them to contact you in too many ways, regular mail and regular phone calls at home are more than sufficient.

Assuming that they did file a debt collection lawsuit within the proper statute of limitations period, you need to get a copy of the lawsuit and understand your options. The first video of my website’s home page is “Understanding Your Options” when sued on a credit card debt. Please watch my video and a few of my blog postings, such as “Next Steps,” which explains what steps to take and the timing involved, so that you will understand the deadlines that are coming up for you. Please consult with a debt collection defense attorney to ensure that you have covered your bases.

The short answer to your question about going to jail for a probation violation is that our society does not have “debtors prisons.” We did away with that at the time we founded this Country. I would want to review the terms of your probation, but it is doubtful that missing payments on a debt or being sued for an unpaid debt would violate probation. Also, I would not tell the debt collection agent about your probation, as it is none of their business. If you discuss this, I can assure you that they will make all sorts of statement to belittle you. If they threaten you with trying to use this to get you in trouble criminally, that may also be a violation of the FDCPA.

Until you verify whether or not a debt collection lawsuit has been filed, I would ask for the documentation of this lawsuit, the debt collection letter, and check with the court’s online to see if you can determine if the documentation is genuine. Also, reviewing your own personal credit reports may help yield information about this debt collection agency and if there are outstanding judgments against you. I have a legal guide on that help people navigate case information that they can get for free or almost free online. Otherwise, you may need to take a trip to the local Superior Courthouse to ask of any civil cases have been filed against you.

When a debt collection agency calls out of the blue, be ready to ask for everything in writing and refuse to give in to their demands for your credit card number or banking information so that they can take your money over the phone. Until you have verified everything, you don’t know if the person on the phone is a scam debt collector or worse: an identity thief, who will take your credit card number to charge your credit to the max and your bank account information to clean out your account. Also, don’t provide this person with your SSN, DOB or DLN. All of these are private and should not be disclosed by phone from someone who happens to call you, even if they appear to know so much about a particular debt or other credit information about you.

A regular debt collection agent will understand and want to ensure that you get the information verified and in writing. A scam artist or identity thief wants you to give them the money now, right now, without anything in writing. Do not give into high-pressure tactics and risk becoming another victim of identity theft or bogus debt collection operations, collecting on time-barred debts.  Verify everything and consult with a lawyer. You could be waiving many rights by agreeing to pay on a time-barred debt from a high-pressure phone call.

Robert Stempler
Twitter @RStempler


Disabled Army Veteran Alleges Collector Said he “should have died!”

Monday, October 15th, 2012

In my 20 years of practicing law and 15 years handling debt collection cases for consumers, I have had the distinct pleasure and honor of working with veterans and current service members of our armed forces. I have also had the pleasure of getting to know members of our armed forces from my experiences in Toastmasters (Palm Springs Toastmasters, Club # 8396), especially when I was an Area Governor, which Area included the U.S. Marine Base in 29 Palms, CA.

After 15 years of clients and others telling me what debt collectors have said during debt collection calls, debt collectors rarely surprise me.  However, when I was directed to this particular headline on, I felt compelled to blog about it here, so others can weigh in with their views on the alleged mistreatment.  This should be told and retold, until our members of Congress take immediate action to hold hearings and amend the law.

The article’s title summarized it well: “You should’ve served US better and died!’ Debt collector berates disabled veteran.”  This and other offensive things were allegedly said by a debt collector to a 100% disabled Army vet.

Why do debt collectors believe that they can get away with making such statements? Because it is their word against the word of the consumer, who often has not paid a debt. The he-said, she-said argument.  Also, defense attorneys for the debt collector regularly try to use the unpaid debt as a negotiation tool, if sued for collection harassment, under the Fair Debt Collection Practices Act (the FDCPA), which is stated 15 U.S.C. § 1692.  In particular, section 1692d prohibits debt collection efforts which harass, oppress or abuse any person, such as the debtor.

If Congress added to the FDCPA a provision that requires debt collection agencies to record every call and to securely store such recordings for at least two years (well beyond the one year statute of limitations period), that would be a great way to eliminate the he-said, she-said argument.  In adding a recording requirement, Congress should add to the FDCPA a provision that if the debt collector fails to make or save such recordings, then the burden of proof shifts to the debt collector defendant to show that the consumer’s allegations are untrue.

If Congress someday amends the FDCPA, I would also like to see a rule that prohibits settlements from having terms that attempt to restrict the free speech rights of the settling consumer or their attorneys.  In my experience settling debt collection cases, many debt collection agencies and their legal defense teams insist that the consumers and their lawyers sign a settlement agreement that prohibits them from talking to anyone or posting about the illegal collection acts on the Internet or social media.  If debt collectors can deny the general public from knowing the collection industry’s dirty tricks and practices, how can voters and government officials know when abuses are taking place, to ensure that the laws and law enforcement are keeping pace?

Robert Stempler
Twitter @RStempler

Are Capital One’s debt collection lawyers playing fast and loose against consumers?

Friday, September 28th, 2012

Question: I heard that a big lawsuit was filed recently in New York (ABC News), because Capital One’s debt collection lawyers were illegally harassing people for the money, allegedly.  Is this also happening in California, from what you’ve heard?

My response:
Yes, I have been counsel in a fair number of cases recently in which California collection law firms contacts were harassing of the consumer.  In particular, my clients complained of receiving many calls at work, though the employer prohibits personal calls and the consumer told the collection agent to stop.  Also, too many and too much harassing calls to the consumer, by the in-house collectors. Another complaint I have seen is filing lawsuits after the statute of limitations has expired, which I discuss in other blog postings, because they fail to find out when the period expires.

I have also seen debt collection law firms jump the gun in trying to get a default judgment. Many debt collection law firms find that they’d much rather try to enforce a default judgment, than have a defendant who opposes the lawsuit. Thus, the firm may try to file the request for entry of default as soon as possible, to be within a day or two of expiration of the consumer’s time to file a response to the credit card lawsuit. Perhaps the papers cross in the mail, but for a debt collection law firm to be this eager–in my mind–reflects a disregard for the consumer’s rights, under California procedural law and the Fair Debt Collection Practices Act (FDCPA). It also is a violation, because the collection agency ends up contacting my clients directly, which violates the FDCPA and the Rules of Professional Conduct.

Clearly, these collection law firms must adopt better procedures, so that these violations do not occur. Sadly, the economic downturn has created a more aggressive debt collection environment and attracted inexperienced lawyers into serving as debt collectors, without having the minimum procedures to comply with the FDCPA. Thus, violations of the FDCPA are more likely to occur.

There is one bright spot in all of this and that is the increased use of recording and monitoring debt collection calls. If more calls are recorded and monitored, then at least there is a better chance that a harassing collection agent can be disciplined or fired, before their victims are ready to file a class action lawsuit against the debt collection lawyer.

Robert Stempler
Twitter @RStempler

How do I know that I have received a legitimate offer to settle my debt?

Tuesday, August 28th, 2012

I received a debt collection letter from a company that is out of state.  The web contains many complaints against this company that it commits fraud.  I know that I did not pay this credit card a couple of years ago, so I would like to settle this, so that I would never be sued.  How do I know that if I accept their settlement offer, that they will stop bothering me and that I will not hear from any other company about this debt in the future? No debt collection lawsuit has been filed, as far as I know, but I am worried about all that I read on the web.

My response:
Unfortunately, whether you have a formal, written settlement agreement or simply a letter offering to settle and proof that you accepted the settlement and paid the amount demanded, there exists a few debt collection agencies which do nothing, but defraud money from unsuspecting victims without any finality on the debt.

A false debt collection agency, such as the one from Tracy, CA described by the Contra Costa Times on 8/27/2012, which called consumers threatening to arrest them, might have learned of an unpaid debt of the consumer in an illegal way, such as electronic dumpster diving or special websites maintained by credit thieves.  Then they place harassing collection calls from a boiler room to squeeze funds from many consumers, before the local authorities crack down.  A letter from such thieves is really no more assurance of getting the real debt settled than the collection calls, though a paper trail by mail may feel more reassuring.  However, this type of operation does not even rise to the level of a debt collection agency, if it is collecting debts that it does not have the right to control and settle.

It may also be that these very low life collection agencies are simply proposing a settlement offer as a bait and switch to try to get more, even after the full agreed settlement has been received.  These sorts of agencies prey on their victims by not putting anything in writing, then claiming that the settlement was not satisfied, and demand more. Another ruse used is that they make an offer, accept the settlement money, then sell the debt to another company, not mentioning the settlement to the buyer, which tries to collect the full balance.

Unfortunately, researching the web about the company contacting you, will only make you believe that every debt collection agency is low life and/or unscrupulous.  There are so many consumer complaints against most if not all debt collection agencies, that it is a daunting task to try to decide the category of the agency contacting you, so you know how to proceed.

One source of guidance is to see if this company is regulated in the state where they say they are located, although California does not license debt collection agencies anymore.  States such as Oregon, Texas, and Connecticut require every debt collection agency to register, to be allowed to collect debts from consumers within that state or face stiff penalties. A licensed debt collector in one or all three of these data bases is meaningful, though still no guarantee that that the agency will always behave honestly and with integrity.

Robert Stempler

Contempt Against a Debtor Who Has Not Paid?

Monday, November 7th, 2011

Can the court hold me in contempt or put me in jail if I have not paid a money judgment on a credit card lawsuit?

My response:

There are a handful of stories circulating in the media and on the internet about debt collectors getting orders to hold a non-paying judgment debtor in contempt.  A California Superior court would only issue a contempt order, if the judgment debtor fails to obey an order of the court, after being properly notified of such order. For instance, after being served with an order to appear to appear for an examination of their finances, the court may request the sheriff to bring the person who failed to appear into court for contempt of the order to appear.

Some people confuse court documents and jargon, which results in missing important deadlines and mandatory court appearances.  My firm’s web site has PDFs of sample documents, so people can see what are typical documents used in Superior Court cases to collect a credit card debt, by some of the debt collection law firms in California.  Here’s the link to these documents directly: Sample Court Documents

There are a few other instances in which consumer run afoul of court rules that can add to the total amount due on a debt collection judgment, which is the reason the web site’s video on the “Six Options” tries to discourage people from trying to represent themselves, as there are ways to make matters worse in a case.

Robert Stempler, Attorney at Law

Complaining to BBB About Debt Collection Harassment

Saturday, June 18th, 2011

I don’t want to sue in court, but my family and I have been harassed by a debt collector and I don’t want to let them get away with it. Should I complain to the Better Business Bureau (BBB)?

No, I don’t see that as getting what you want, which is to not let them “get away with it.”  Debt collectors are looking to collect as much money as they can on the debts they are responsible to enforce.  They maximize recovery by filing lawsuits, reporting the accounts to the credit reporting agencies, and making calls.  They know that people pay more when they are afraid and not thinking clearly, than if the situation is calmly presented without any stress from imposing phone calls, fear of a lawsuit, or adverse credit reporting hanging over the debtor.

Logically, debt collectors have no concern over their ratings with people who are the subject of their collection calls.  There are several debt collectors who boast about such things, such as having web sites that emphasize how ruthless they are towards the debtors and how they can get money from them, almost no matter the circumstances.  The BBB rates people who are comparing services, but debtors have no choice as to who a company hires to perform collection and many collection companies collect their own debts, which they purchased from other companies.

Finally, the BBB’s ratings have become almost meaningless, in my opinion.  A report by ABC News in 2010 found that the BBB rating system had been rigged by highly-compensated BBB local managers to increase “membership” fees and membership numbers.  BBB dues-paying members received a superior score. Companies that failed to pay dues to the BBB fees were downgraded, often substantially.  ABC News’s investigation found business that members received top ratings simply for joining, while non-members (such as the well respected Ritz Carlton Hotel in Boston) received bottom ratings when they did not join.

In any event, at some point debt collection agencies who are not paid will likely file a debt collection lawsuit in court against the debtor, which will force the consumer to play defense against the debt.  If you are harassed by the collection agency, it may be smart to consider taking the first move, rather than sitting back and waiting. Also, the statute of limitations period could work against you by waiting, because you have one year to sue them for collection harassment, but they have several years (depending on the debt and when it went into default and was last paid) to file a debt collection lawsuit, so they have the luxury of time that you may not have. See my blog posting on default judgments, linked here: Default Blog Posting.

Also, sometimes these debt collectors file a lawsuit, but fail to deliver the papers to you, as required by Due Process. When that happens, the court may mistakenly enter a default judgment against you, because the process server falsely stated that they gave you the papers. Thus, if you don’t wait for a default judgment, perhaps you can prevent a debt collection lawsuit and default judgment by hiring counsel and taking on the debt collector for harassment.

Robert Stempler

The “Deadbeat” Misnomer

Monday, December 13th, 2010

In the fourteen years that I have been representing consumers against financial institutions and debt collectors, I have met only one person whom I believe obtained debts for non-essential items that he knew he would not be able to pay, when the debt came due. That’s how I would define a “deadbeat,” although the term is often applied to a spouse who has the money, but refuses to pay court-ordered child support.

In this difficult economic period, I have noticed fewer debt collection attorneys referring to debtors as “deadbeats.” A few years ago, it was not unusual for the creditor or debt collector’s attorney to use the term, when referring to my client. I cannot recall the last time I heard it spoken. More often, I hear the other side refer to “hardship cases.”

This may not be good news for our economy, but not hearing this term is a welcome development. Over the years, I have heard many reasons that people fell behind on credit cards and other debts. Examples that I recall most: job loss, medical bills, child care, disability, unexpected automobile repairs, death in the family, identity theft, mistaken identity, false charges, and dealership fraud.

I have been honored to represent many consumers, as they struggle to keep their family together on a tightening budget, with fewer ways to save for emergency needs and special situations that arise. I am proud that my clients are not “deadbeats.”

Robert Stempler