Posts Tagged ‘FDCPA’

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
www.StopCollectionLawsuits.com
Twitter @RStempler

Facebook: www.facebook.com/SoCalConsumerLawyer

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 Avvo.com 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
www.StopCollectionLawsuits.com
Twitter @RStempler

Facebook: www.facebook.com/SoCalConsumerLawyer

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 www.rt.com, 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
www.StopCollectionLawsuits.com
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
www.StopCollectionLawsuits.com
Twitter @RStempler

Can they put me in jail for an unpaid judgment? Is bankruptcy the only option?

Thursday, July 12th, 2012

Question:
I wonder what can happen, if I cannot pay my court-ordered judgment from a credit card debt that I stopped paying?  Can they put me in jail or must I file for bankruptcy?

My response:
There are various options available to the judgment creditor and their lawyers, but jail is not one of them, provided that if you are ordered to appear in court to answer questions, you appear in court and answer the questions truthfully. Also, if the order to appear requires that you bring documents, you bring those documents to the hearing.

The methods that the debt collection agency’s collection lawyers can apply to enforce the default judgment against the debtor are: (a) wage garnishment, (b) levy funds on deposit in a bank account or investment account, (c) record in the county a lien against the debtor’s real property, (d) place a lien against any non-exempt personal property, (e) have the court order other sale of assets or assignment of title to assets, (f) order of the court for the debtor to appear for examination regarding his or her finances, to find other assets and income, (g) get an order to have any company or persons which owes money to the debtor to instead pay the judgment creditor.  Perhaps there are other creative ways to enforce an unpaid judgment that the debt collection attorney has, but jail is not one of them.

My law office’s web site’s home page (linked below) has several short videos. I suggest watching the first video, which explores options when sued, several of which still apply, after a judgment has been entered.  Also, if this was a default judgment, then you may be permitted to set aside the default judgment, if you were not properly served or the default judgment was entered within a certain period of time. Please search my blog postings for more on default judgments.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

You Are Ordered to Appear in Court on a Debt

Thursday, November 11th, 2010

Imagine a sheriff’s deputy coming to your home or workplace, asking for you, and handing you a legal document that summons you to appear in a courtroom on a debt collection lawsuit for a hearing or deposition. You show up at the building at the appointed time, enter the courtroom, and are sworn in by the bailiff. Then the judge or someone else asks you questions about a debt you did not pay and why you have not settled it. You provide your credit card number or sign over title to a vehicle, so that they can settle the debt, then you leave.

It’s all true, except that the sheriff’s deputy, the bailiff, the judge, and others involved are all employed by a debt collection agency, not the government. The courtroom was a mock courtroom in office facilities rented by the same debt collection agency. This happened recently to hundreds of consumers in Erie, Pennsylvania, according to charges brought by the Pennsylvania Attorney General.

The news story and video are at this Pittsburgh News site:

http://www.thepittsburghchannel.com/r/25569199/detail.html

Yet another low for debt collectors trying to collect credit card debts in a tight economy. Who could have expected that they could go any lower than the automated phone calls that debt collectors place day and night to consumers, the calls about the debt to family members and friends, and the over-the-top harassing calls from debt collectors based outside of the United States? But, they managed a new low!

This conduct violates several provisions of the Fair Debt Collection Practices Act and may also violate laws against impersonating an officer or a government official. Don’t let this happen to you. Any document or calls to collect an unpaid debt should be carefully vetted using reliable websites or direct contact with a consumer attorney, with expertise in defending debt collection lawsuits and credit card lawsuits. And, don’t waive your rights. Ask for written verification of the debt in writing, as stated in letter 1.1 at www.StopCollectionHarassment.com .

Robert Stempler

Collection Calls by Second Mortgage Lender After Foreclosure by First Mortgage

Monday, October 11th, 2010

Question:
My home was foreclosed two years ago and the second mortgage lender calls every day.  What should we do?  We don’t want to become two-time losers in declaring bankruptcy a second time.

My response:
Bankruptcy is often the last option a consumer should try, after all other options have been unsuccessful or will clearly not work under the circumstances.  I discuss the options to people with a debt collection lawsuit on the first video at: www.stopcollectionlawsuits.com.

If no payments have been made in over two years, there is a chance that the mortgage lender or loan servicer may determine that you are truly unable to pay.  Thus, they might not bother suing you in a debt collection lawsuit or retain a debt collection lawyer based in California. Once the statute of limitations expires on those mortgage debts (four years from the date of your last payment under California law), you don’t owe it and they may not get a judgment against you on the debt. See my blog entitled, “Bankruptcy Alternative: The Don’t Pay a Dime Strategy.”

I have had one call from a consumer who was being told the debt collector of their second mortgage for $50,000 was willing to settle for $5,000. Once the second or third mortgage is unsecured by foreclosure of the first mortgage, the consumer is likely to be a good candidate for bankruptcy or have a sound defense to the lawsuit, which makes the lender willing to accept a fraction of the total balance owed in many cases.

Also, be sure to keep track of the calls and what is said.  If the calls or their frequency are harassing or abusive, that may violate the Fair Debt Collection Practices Act. The Act provides an award for your damages and attorney’s fees.

No one in these challenging economic times is a loser, if they learn their rights and know what options are available and the pros and cons of each.

Payday Lenders and their Debt Collectors Take Aim at Military Families

Sunday, October 10th, 2010

In September, 2010, the Attorney General of the State of New York announced that the investigation into the Buffalo, New York, debt collection industry has netted some pretty slimy catch: debt collectors aiming at our military families, who were unable to pay the incredibly high fees and interest rates on payday loans. The owner of one of the companies, Stephanie Lowinger, allegedly instructed his employees to threaten to contact and sometimes actually contact the commanding officers of the service members. See: http://www.consumeraffairs.com/news04/2010/09/debt-collectors-harassed-military-families.html.

Threatening to notify one’s employer or commanding officer in the case of a member of our military violates the Fair Debt Collection Practices Act, 15 U.S.C. Sec. 1692 et seq., which severely limits communications by debt collectors to third parties. My firm has prepared a number of complaints filed in Federal District Court for service members here in California, involving similar threats and calls by debt collectors.

Also, I have represented consumers who have experienced debt collectors calling and revealing personal information to neighbors, siblings, parents, employers, coworkers, and children.

If the calls are intentionally placed to third persons who are not liable on the debt, then the only sure way to terminate such illegal collection acts is with a lawyer filing a collection under the Fair Debt Collection Practices Act (FDCPA), which provides for actual damages and attorney’s fees. If it is not clear that these debt collectors intended to reveal personal information to a third person, the consumer should put the debt collector on notice of their correct address and phone number and request that all communications be directed to this correct address and phone number. Such requests are best done in writing by certified mail, with a copy of the letter and postal receipt kept at least one year, which is the statute of limitations for FDCPA claims. Please see the sample letters 1.1 and 1.2 at www.StopCollectionHarassment.com.

I have also had the honor of representing consumers who were sued on payday loans, in debt collection lawsuits. In my experience, the debt collection lawyers don’t sue for the full interest rates specified in the loan, they primarily want to get most of the principal paid back. Besides, the full interest rate would make most people blush, given how high they are and the people who agreed to them so vulnerable, financially.

Dave Ramsey Outs Credit Card Collectors for Over-the-Top Tactics

Sunday, September 26th, 2010

For all consumers who have been victimized by debt collectors and the rest of America who has only heard the stories and were not sure if the victims were exaggerating, you need to watch the Dave Ramsey video on www.YouTube.com at this link:

Mr. Ramsey responds to a letter by the president of a debt collector known as Global Acceptance Credit, located in Arlington, Texas.  In the video, Mr. Ramsey hold no punches as he read and then immediately critiques each line in Global Acceptance’s letter. Mr. Ramsey does this in contest of his 20 year history dealing with debt collectors and numerous victims, some of which are described during the video. The video concludes when Mr. Ramsey states, “credit card collectors are scum.”

Mr. Ramsey also refers to the Fair Debt Collection Practices Act as being violated daily and seriously by debt collectors and asserts that the threat to garnish someone’s wages before a debt collection lawsuit has been filed violates the Act.  I agree that such representation might violate the Act, but not always.

Robert Stempler