Posts Tagged ‘statute of limitations’

Living Below Radar, Best Time for Hardship Settlement Offer

Wednesday, September 18th, 2013

Question: I am living below the radar, not paying off any debts. I believe that several debt collection lawsuits have been filed against me, which I have ignored. I am not sure if they have gotten judgments against me or not, but there is nothing in my name and all my transactions are in cash, even my income is entirely cash-based. Is there a good time to come out of the shadows and deal with this and, if there is a good time, when and how? Thanks.

My response:
You appear to be following a mish-mash of (a) my “Don’t Pay a Dime Strategy” in which the debtor does not pay the debts in the hope that the creditor or debt buyer will miss the statute of limitations and (b) some other advice you found somewhere commonly referred to as “Judgment Proof.” I am not a fan of your current strategy, because anyone with a house, bank account, or a job that pays more than the minimum wage in California, would not be judgment proof or would be subjected to massive judgments once they get a job, bank account, or real property.

The result is the debtor ends up overpaying to resolve old debts, because the judgment creditor (the person or entity who has a judgment for money) gets a judgment for the full balance, plus accrued interest, court costs, and sometimes attorney’s fees. Defending my clients from debt collection lawsuits has saved my clients so much in most cases. If you’ve ever experienced a small bulb growing into a large flower, you can relate to how these debts blossom and bloom from a simple credit card balance to a default judgment. For the judgment creditor, it’s a sweet smelling, colorful flower. To the judgment debtor, it’s a Venus fly trap!

I have posted several blogs about timely responding when served with a debt collection lawsuit. I have also explained how default judgments are obtained without the debtor knowing about it and what can be done to resolve those old default judgments. I have blogs and legal guides on Avvo.com that explain how to settle and what documentation is essential. Please review my postings, which are organized by several categories.

Great question on when is a good time to settle old debts, including old default judgments. Of course, right now is a great time to settle old debts, especially if the debtor has no assets and very low or no income. When the judgment creditor is unable to collect most or all of the judgment and the debtor could be a candidate for Bankruptcy Chapter 7, that’s when the debtor can propose a “hardship settlement offer,” because they have an actual financial hardship. The offer works best if the debtor has access to additional funds to make an offer that is greater than what their assets and income can provide. For example, since retirement funds are beyond reach of civil judgments, borrowing from a 401-k, a family member, or on an open line of credit, are ways to get the funds for a hardship settlement offer.

How you come out is up to you, but this can be done between the debtor and the debt collection agency directly or the debtor may want to use outside resources. Perhaps there is a family member who is comfortable doing this or hire a debt collection DEFENSE attorney to negotiate. The key is not paying too much for the settlement process, to leave enough to propose an attractive settlement amount. Too little and the debt collector will reject the offer and wait.
Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler
Facebook: www.facebook.com/SoCalConsumerLawyer

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
www.StopCollectionLawsuits.com
Twitter @RStempler

Facebook: www.facebook.com/SoCalConsumerLawyer

I was just served with a credit card collection lawsuit. Now what?

Monday, March 4th, 2013

Question: I stopped paying on my credit card a while back, because I was tired of paying a high interest rate and I did not have enough money to pay it all off. I sort of suspected that this debt would be sold to a debt collection agency for pennies on the dollar, but the papers are asking for me to pay the full balance, plus the high interest rate that I thought I was going to avoid. I contacted the company and they are holding firm on that number. I don’t have the money for this and my income is too high to qualify for a Chapter 7 bankruptcy.

My response:
First, please check out the short videos on my home page. The first video is a quick overview of all options that are possible to the situation of being served with a debt collection lawsuit. That will help you narrow down your options to the one or two that suit your situation and your own preferences. Your posting did not specify what bank had the original credit card or when you last paid it, which will help determine if they filed the lawsuit after the statute of limitations period had expired. That is very important in these cases and makes a big difference.

I’d then suggest reading my blog posting on the defendant’s Next Steps when the consumer has been sued in a debt collection lawsuit on a defaulted credit card. That blog explains how much time is appropriate to avoid a default judgment, as some people confuse a hearing date with the due date for a proper, written response. If you want to defend this lawsuit and have a good chance to settle for much less or possibly get the case dismissed, do not miss the deadline for filing a response or having a lawyer do this for you. It is usually 30 days from the date of being personally served, but please don’t wait for the last minute.

I don’t suggest that consumers or non-litigation attorneys try to handle the lawsuit defense for themselves, as I have seen too many people either pay way more than they should to settle with the debt collection law firm or they file papers with the court, which get stricken as being defective or improperly admit most or all of the debt collection lawsuit. Almost as bad, is when the debt collection lawyers press the case very hard against the defendant, using court procedures and formal discovery requests to overcome the defendant’s attempt to get the case to trial. I have some of these as PDFs on my website, in the Case Examples tab.

To avoid the risk of losing a money judgment for the full balance in the lawsuit plus accrued interest, I urge you to contact an experienced consumer attorney, who regularly handles debt collection lawsuit defense. An experienced attorney should be able to help negotiate a satisfactory settlement or get the case dismissed, depending on the admissible evidence that the debt collection law firm can obtain or not obtain.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

Facebook: www.facebook.com/SoCalConsumerLawyer

Asset Acceptance Did Not Serve Its Debt Collection Lawsuit, Monitoring Online

Friday, October 12th, 2012

Question: Per your fabulous on-line instructions – I looked on-line to find out about a lawsuit against me.  I noticed that Asset Acceptance, LLC filed a collection lawsuit against me to collect a older debt.  Unfortunately, they have not served me. What do you suggest I do? This is in California Superior Court and there is a hearing set in a couple of months. I was thinking of going to the hearing to see what they say.

My response:
First, it is not “unfortunate” that you were not served.  It is actually good news, as your time to respond to a lawsuit does not begin, until you (the defendant) have been served.  See link to my blog on deadlines to respond to a collection lawsuit. Thus, there is due date for you, until you have been served.

Second, I would not do anything. Fly below the radar and wait to see if you are ever served. It that occurs, marke that date on your calendar, so that you know exactly when your response will be due in court.  Until then, let’s just see what progresses and I certainly would not advise you to just show up in court, when you have not filed a formal response in the case.

Third, to be safe, every couple of weeks, I would visit the Court’s web site for this collection case for any activity, such as the filing of a proof of service. If that occurs, then you need to take action, even if no one has really come to serve you, because that is a formal representation to the court (though false) stating that the process server had served the summons and complaint.  Stay on top of this, because many times the process server states under oath that the defendant was served, when that never took place.  A default judgment may be entered after that, unless you take proper action.

Update:
Congratulations.  I checked online with the Superior Court’s web site. A recent entry shows that Asset Acceptance has dismissed its case against you without prejudice. They never served you, but for whatever reason, they dismissed their collection case.  It is unlikely that they will refile the case, now that they have decided to dismiss.  Thus, in my opinion you have dodged a bullet.

Once again, this proves that staying below radar, such as with my “Don’t Pay a Dime Strategy,” sometimes works and can save thousands of dollars and avoid bankruptcy. Had you been served, you would have contacted me, no doubt. I really appreciate your kind words.

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

Financial Columnist’s Advice on Old Credit Card Debt May Mislead Money Talk Readers

Monday, July 16th, 2012

Q & A Posted on LA Times Money Talk Section on July 15, 2012: Link to Money Talk

My response:
This question concerns a credit card debt that was charged off in 2007. That means that it has not been paid since 2006 or 2007, because banks usually charge off accounts 180 days or earlier, after not receiving any payment.

I agree with the columnist, Liz Weston, that contacting the bank that issued the credit card would not be productive.  Within one year of default and lack of payment, banks almost universally sell the credit card account to a debt buyer or sue in their own name.

However, this debt has not been paid for more than four years, making it almost certain that the debt is well beyond the statute of limitations, thus discharged under California law.  See my blog on the Don’t Pay a Dime Strategy, using California law at this DPAD Link.

Ms. Weston’s response should have explained that the debt is most likely discharged, because the statute of limitations had long since expired, so that the consumer has the upper hand on this and should not offer to pay much at all and should be clear in his or her communications that this debt is discharged by the already-expired limitations period.

My concern is that the consumer may contact the debt collector and offer in writing to pay the debt. Some debt collectors may potentially try to use this written offer or actual payment to claim that the consumer has revived the statute of limitations period on the unpaid balance, giving them another four years to file a debt collection lawsuit. I disagree with that possible position.

Some debt collectors incorrectly believe that they can report any payment received as “last activity” on the consumer’s credit, thus renewing the 7.5 year period for credit reporting.  I disagree with that possible position.

Thus, I hope that the LA Times removes this posting, so its readers would not be mislead.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler

No One Appeared for Trial for the Credit Card Bank Suing Me in a Debt Collection Lawsuit

Saturday, May 26th, 2012

Question:
I was at the Superior Court yesterday for the trial.  No one from a large credit card company showed, not even their lawyer, so the judge dismissed the case.  I quickly asked if it could be with prejudice. The judge said no, because there was no trial presentation.  Is there anything that I can do to protect myself from being sued again?

My Response:
The judge is correct. Without the trail starting and the lawyer for the plaintiff credit card bank attempting to present their evidence, the judge is unable to enter dismissal with prejudice.  Please see my blog posting on dismissal with prejudice of a credit card lawsuit.

You should be satisfied that the case was dismissed, because if the debt collection attorney had appeared at the trial with evidence of the credit card account with your name and address, many judges would enter a money judgment for the full amount presented, plus interest, court costs, and attorney’s fees.  Sometimes, the judge decides to not dismiss at trial and asks the clerk to send a written notice to the plaintiff’s attorney, giving them yet another chance to appear and present their case for trial. The result of dismissal is obviously more favorable to you, the defendant, as you need not appear again to see if they will appear.

You are permitted to file a memorandum of costs, to secure the amount that you paid for the filing fee to the clerk of the court. You should file the memorandum of costs with the court within 15 days of being notified that the case has been dismissed.

Because this debt collection lawsuit was dismissed without prejudice, it is possible that another collection lawsuit may be filed on this debt, either by the same company or by another entity, known as a debt buyer. If no other entity files a lawsuit against you on the same debt or if they fail to file within the statute of limitations period, then the debt will be considered discharged by law, once the period of time to file has expired. Please read my blog, explaining the statute of limitations period and what happens if the debt becomes time-barred.

Robert Stempler
www.StopCollectionLawsuits.com
Twitter @RStempler