Articles Posted in Debt Buyer Collection Lawsuits

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breaking bad
Useful information can be obtained from the Consent Orders relating to improper debt collection activities obtained by the Consumer Financial Protection Bureau.  Recent orders applicable to Fred Hanna, Encore Capital Group, Inc., Midland Funding, LLC, Midland Credit Management, Inc., Asset Acceptance Capital Corp., PRA, LLC, Porfolio Recovery Associates, Chase Bankcard Services, Santander Bank, N.A., Solomon & Solomon P.C., Westlake and Wilshire etc. can be found here on the CFPB site. (searchable filters).

Debt collectors are not permitted to provide false or deceptive information to you in their attempts to collect a debt.  This may include the things they can do to you if you do not pay (such as take your home, sue you etc.).  This may include who they are affiliated with.  We are evaluating a case right now where the debt collector is private company.  But they’ve told my client that they are the Department of Education.  This is contrary to their website which we noted states no affiliation with the DOE.  Basically, our marching orders are if what they say is not the whole truth and nothing but the truth, they run the risk of violating the law.  This means if they try to explain your options, but leave perhaps the best one out – this would be a violation of the FDCPA, FCCPA and perhaps even unlicensed practice of law.  All these consumer law violations give us excellent leverage to negotiate lower balances, better payment plans and sometimes even a write off of the entire debt.

This applies to all consumer debt.  Auto finance, second mortgages, credit cards, signature loans and best of all student loan debt.  When we are hired to settle any kind of debt we first take the time to educate our client on their consumer rights, what kinds of behavior can lead to violations and we have them document any phone calls they are receiving.  Then we use all this to settle the debt.

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expiredIf a creditor waits too long to sue, the creditor can be barred from ever bringing suit.  The purpose of having a statute of limitations is so that lawsuits are brought when the matter is still fresh:  before documents are destroyed and memories fade.  If they can no longer bring a lawsuit, then there is no way to legally enforce the debt.  Each state has their own laws as to how long the statute of limitations is and it varies tremendously by state and also by the type of action.  In Florida, the statute lasts five years for a written contract and four years for a credit card account.  While this seems simple, it is often amazingly difficult for a lay person to analyze because a contract may provide that a different state law applies, even a state that neither party has anything to do with.  The answer may also vary depending upon whether it is a procedural or substantive question of law or how complete the writing was.  The Florida Statute of Limitations on this is contained in Section 95.11:

Actions other than for recovery of real property shall be commenced as follows:

(2) Within five years.–

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debt erased
How many consumers are sued every day by a debt buyer they’ve never heard from in the past?  This is extremely common and presents an excellent defense for those knowledgeable enough to use it.

One of the best tools we have as a consumer lawyer fighting collection actions brought by companies such as Cach, Asset Acceptance, Sherman Financial Group etc. is Florida Statute Section 559.715.  It requires notification of any assignment of the right to bill and collect the debt be given to the consumer prior to filing a lawsuit in an attempt to collect the debt.  It acts as a condition precedent to filing suit and requires a case to be dismissed if properly asserted.

A case we had last week is a perfect example.  Our client was sued by Cach LLC for an old credit card debt and she represented herself for two years.  Not much was done other than an answer was filed.  However, the debt buyer recently started working on the file again and a motion for summary judgment was filed.  Our client hired us in February of this year to fight that MFSJ.  Once we reviewed the file, we determined that we could file our own Motion for Summary Judgment for failure of the debt buyer to send the notice required by Florida Statute Section 559.715.  We did and we won.   Case dismissed.  The Plaintiff’s Motion for Summary Judgment hearing already set a couple weeks later was removed from the calendar as the case was now over.  The statute of limitations was still open for the debt buyer to re-file for a few more months.  So we next offered to waive our entitlement to attorney’s fees in exchange for the debt buyer releasing their claims against my client.  They agreed.  Problem solved.  No low hanging fruit here Cach decided and they moved on.

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student loan bubble.jpgEarlier this year, total student loan debt surpassed credit card debt for the first time ever. Student loan debt and the resulting high tuition are without a doubt in a huge bubble after having raised 800 percent in the past few years. After graduation, students are presented with the bill and most have no idea how it got that high.

Why is this? The cause of this student loan bubble is not unlike the mortgage crisis. The initial theory was to expand homeownership to the masses. Thereafter, lax lending standards allowed more and more people to buy homes. More buyers led to higher prices. The mortgage loans were securitized on Wall Street to unidentified investors. As the demand for these investments grew, the need for more questionable loans grew. People began to fear being left behind, if they didn’t buy now, they would be priced out of a home forever. It was actually cheaper to buy a home than it was to rent one with first month, last month and security deposit required in cash. Who cared if the loan couldn’t later be repaid when it was determined that the homeowner didn’t actually have a job that paid $200,000, but instead worked as a gardener for $20,000. Turns out that kind of thing really matters now that our housing market tanked 50% or more across the board as a direct result of this chain of events. Poorly run mortgage servicers or those with their own agenda has multiplied the number of foreclosures. The resulting crash hurt everyone, even people who could normally afford their home payments but god forbid lost their job or had to move.

Feeding the securitization beast was a common problem among mortgage brokers and investment banks. They had to create product to sell to the securitization machine. Kinda like making meth in large quantities in the popular show Breaking Bad that I am now hooked on and spent half of this past Labor Day weekend watching.

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courthouse.jpgUnder Florida law, a creditor has up to twenty years to try and collect a judgment. That’s an intimidating number, two whole decades. Something not to take lightly. To become a lien on real estate, a certified copy of a final judgment must be recorded in the public records in the county in which the real property is located.

Once recorded, Florida law provides that the judgment acts as a lien on non-homestead real property for an initial period of ten years. See Florida Statute Section 55.10. The judgment can be re-recorded and act as a lien for an additional ten years. Prior to 2004, a recorded judgment acted as a lien for only seven years, but could be re-recorded up to two additional times for a total of twenty years.

In comparison, a bankruptcy remains on someone’s credit report for 10 years. However, the last 18 months is the most important time period in anyone’s credit history and often the bankruptcy after it gets old enough is considered irrelevant.

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lawsuit.jpgIn Florida, typically someone who is sued is served with the lawsuit and given 20 or sometimes 30 days to file a response. If the lawsuit was filed in small claims court, you are given a date to appear at a pretrial conference instead of filing a written response.

The most important thing is: Don’t ignore the deadline. It doesn’t matter that you think you might be able to work it out or that you called the attorney’s office who filed the lawsuit. If you don’t file a timely written response with the court, or attend the pretrial conference, a default will be entered against you. A default judgment can last up to 20 years in Florida and is very hard to challenge.

Before the deadline expires, please see an attorney. Many attorneys, including our office offer a free consultation for foreclosure defense or debt collection matters.

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What if I’ve co-signed my children’s student loan debt that is now in default?

Here in Tampa, Florida, I just read an outrageous story today in Nation of Change that exemplifies the problems in the world of student loans. Basically, shortly out of college, this man’s son was killed in a car accident. Most of his student loans were private and co-signed by his father who makes $21,000 a year as a gardener. Private loans survive someone’s disability or death.

The debt (over six figures) has changed hands many times and has been wrung through the Wall Street securitization process. He doesn’t know the exact amount or who is owed. But the debt collectors are all over this poor guy.

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creditcards.bmpAll this talk about a foreclosure plaintiff needing to have proper standing, chain of title and assignment records reminds us that the same is required, but often overlooked, in credit card lawsuits.

In Florida, debt collectors bringing lawsuits for unpaid credit card balances are required pursuant to Florida Statute Section 559.715 to show that any assignment of consumer debts is done with “written notice of such assignment within 30 days after the assignment”. If the creditor cannot produce evidence of the notice, the case should be dismissed. See LVNV Funding, LLC v. Harris (Fla. Miami Dade Cty. Ct. June 24, 2009). Also the courts regularly require documentation of the assignment by an authorized representative of the original creditor before a third party is allowed to obtain a judgment against the consumer.

Increasingly, evidence has appeared that shows debt buyers do not actually own the debt they are suing to recover. Large portfolios of accounts are divided and subdivided and sold to multiple buyers. Sometimes the debt buyer fails to pay in full for the accounts, and the right to collect is returned to the original creditor. More layers of complexity are added if the debt was pooled as part of a securitization. The debt collector will rarely reveal the existence of the trust even though it is the true owner of the debt.
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Debt buyers pay pennies on the dollar for the right to collect delinquent credit card balances and other consumer debt, but they do not often pay the creditor for the back-up documentation. After a lawsuit is filed in Florida, if the consumer’s attorney requests that such documentation be produced, and the debt buyer fails to do so, the lawsuit can be dismissed. In Florida, documentation upon which the claim relies must be attached to the initial Complaint but it often is missing. Since most cases go unchallenged, the debt buyer gets a judgment without having proved its case.

However, more consumers are recognizing that hiring an attorney to defend a debt buyer’s lawsuit can help. As a result there is an uptick in dismissals is resulting from the assembly line debt buyer lawsuits. One of the frequent approaches taken by consumer’s counsel is that they ask for the affidavits upon which the debt buyers rely to prove up the debt be stricken when the supporting documentation is not provided. In Florida, all affidavits used in connection with summary judgment must attach the books and records upon which the affiant reviewed and relied. In some cases, the documentation is contracdictory such as in an alleged assignment of the debt where the assignment does not exist or it is faulty. Riddle v. Unifund CCR Partners, 298 S.W. 3d 780 (Tex. Ct. App. 2009).

Affidavits can also be challenged for admissibility when the business records exception to hearsay is found to not apply. Many counsel skip over challenging the application of the business records exception, but it can be a very valuable tool. For instance a Missouri appellate decision in Asset Acceptance v. Lodge, 2010 WL 3759538 (Mo. Ct. App. Sept. 28, 2010), stated:

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