Sixth Circuit: No Interest for Debt Collectors

In a decision that has far-reaching implications, the Sixth Circuit Court of Appeals has held that debt collectors are not entitled to interest on charged off credit card debt.  In Dede Stratton v. Portfolio Recovery Associates, LLC the court examined the intersection of Kentucky's usury statute, contractual vs. statutory interest, and charged off credit card debt.  Judge Stranch, writing for the court, said: "Under Kentucky law a party has no right to statutory interest if it has waived the right to collect contractual interest. And any attempt to collect statutory interest when it is 'not permitted by law' violates the FDCPA."

The basis of the ruling was that when the credit card company charged off the debt, it forfeited its right to charge contractually agreed upon interest.  The court reasoned that because Ms. Stratton had agreed to pay the contractual interest, when the credit card company charged off the debt it also forfeited the right to charge statutory interest pursuant to the Kentucky usury statute.  PRA had stated in its complaint filed in Kentucky state court that Ms. Stratton owed it 8% interest from the time of charge off.  The court disagreed and held that this was a violation of the FDCPA.

This ruling goes on to state that a debt collector could collect prejudgment interest, but only when the court awards it after a judgment is obtained.

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866-279-9721

Charging a Percentage Fee for Medical Bills Violates FDCPA

The 11th Circuit held that a debt collector that added a percentage that was equivalent to its fee to a medical bill assigned to it for collection violated the FDCPA.  In Bradley v. Franklin Collection Services, Inc. the court held that Franklin violated 15 U.S.C. § 1692f(1), including any interest, fee, charge, or expense incidental to the principal obligation unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

Franklin added 33.33% to Bradley's bill assigned to it for collection.  This was the fee Franklin would collect for payment of the bill.  But Bradley signed an agreement with his medical provider in which he agreed to pay the costs of collection.  In reaching its decision, the court reasoned that the costs of collection do not include the fee paid to the debt collector.

The lesson is that whenever you get a bill from a debt collector for an unpaid healthcare bill, you should closely scrutinize the bill for extra fees and costs.  In addition, you should demand in writing that the collector validate the debt including itemization of the amount it seeks to collect.

www.debt-relief-law.com

(866) 279-9721

Demand Debt Validation

The very first time a debt collector contacts you in an attempt to collect a debt, you should demand in writing that the debt collector validate the debt.  You have 30 days after the first contact to do this, and the debt collector has to stop all efforts to collect the debt until it validates the debt.

Why should you do this?  First, there are times when a debt collector simply can't validate the debt.  If it can't, then it cannot sue you in court to collect the debt.  Second, if it can't, you won't hear from the debt collector again.  If you do, then contact a consumer law attorney because the debt collector has violated the Fair Debt Collection Practices Act (FDCPA).

Many times a debt collector will make a written offer to settle a debt, but the offer will expire before 30 days.  We have successfully sued several collectors for this practice because it makes it appear that the consumer would have to either take the offer or demand validation.  This is an attempt by the debt collector to skirt the validation process, and it should be a tip that the debt collector likely can't validate the debt.  If you get a settlement demand in a first contact get in touch with a consumer law attorney because this is also a violation of the FDCPA.

www.debt-relief-law.com

866-279-9721

Stop Unwanted Collection Calls with the TCPA

The Telephone Consumer Protection Act (47 U.S. Code § 227) is a powerful federal law to protect consumers from unwanted collection calls.  The Act was originally aimed at stopping robo calls (computer generated calls) marketing products and services to cell phones, home phones, and fax machines.  It has been expanded now to debt collection calls.

If you have not given prior consent to receive robo calls, the statute provides a penalty of $500 for each call the debt collector makes, and if the violation is willful, the court can grant $1500 per call!  Think about that... 4 willful calls in violation of the TCPA would cost the debt collector $6,000.  Sweet!

The law also applies if you have told a debt collector to stop calling you, but it continues to call.

In order to be successful in a claim under the TCPA you need to document each call robo from a debt collector.  Take a picture of your caller ID.  Save all voicemails.  And, call an attorney that practices consumer law.  Turn the tables on these debt collectors who violate the law!

www.debt-relief-law.com

(866) 279-9721

Licensed in Kentucky and Tennessee

You May be Able to Avoid Bankruptcy

If your debt is overwhelming you to the point that you are considering bankruptcy, take the time to make an appointment with a consumer law practitioner and go through your credit report thoroughly. If the bulk of your debt is credit card debt that has been charged off and sold to a debt collector, then it is likely that you have some options under the Fair Debt Collection Practices Act (FDCPA).  Many times debt collectors add interest to your account that they are not entitled to, and that is a violation of the FDCPA if they try to collect this added interest from you.

Debt collectors often try to collect on debt that is so old that it is outside the statute of limitations, meaning they can't sue you to collect.  They will try to get you to enter into an agreement to repay the debt, which basically resets the statute of limitations clock.  Certainly, it is not advisable to enter into any payment agreement with a debt collector without consulting an attorney.

One benefit of consulting an attorney for a credit report review is that you may be able to actually sue the debt collector for violations of the FDCPA.  You could collect up to $1000 in damages and often negotiate debt forgiveness along with removal of negative information on your credit report.  And, the debt collector will pay your attorney fees if the case is successful.  Our clients never owe us a fee if we take an FDCPA case.

In short, consult with an attorney to thoroughly review your credit report before going the bankruptcy route.

www.debt-relief-law.com    866-279-9721

Stop Debt Collector Calls

Debt collectors call at the most inconvenient times, it seems.  Or, they seem to call incessantly.  Sometimes the person on the other end of the call is less than polite.  All you want is to make the calls stop.  You can do that.

Debt collectors (companies collecting debt owed to another or collecting debt they have purchased from the original creditor) must stop contacting you if you tell them to stop.  Do this in writing via a letter in which you inform the debt collector to cease and desist in contacting you about the debt.  If they contact you afterwards, then they have violated the Fair Debt Collection Practices Act (FDCPA), and you can sue them for the violation.

This strategy is best applied when a debt collector is trying to collect on a time-barred debt (one that is so old the statute of limitations has expired and you can't be sued on it).  If you tell the debt collector to stop contacting you about a debt that is not time-barred, you can still be sued on the debt, but the calls will stop.

     www.debt-relief-law.com

     866-279-9721

Monthly Reflections

As August comes to a close, looking back over the month reveals that we once again settled over 10 FDCPA cases for our clients.  In most every case our clients received monetary damages from the debt collectors who violated the law.  And in every case our clients' debt was forgiven, negative trade lines removed from their credit reports, and the debt collectors agreed not to sell the debt.

I truly enjoy helping people who have gotten behind because of a bad break, the economy, or any number of other reasons.  We settled FDCPA cases this month for:

• Attempting collect unlawful interest and fees;
• Threatening criminal charges;
• Threatening to sue when the statute of limitations had passed;
• Suing when the statute of limitations had passed; and 
• Contacting a client after the debt collector had been informed that the client was represent by a lawyer.

We look forward to continuing the fight for consumers in the coming months.

 

    www.debt-relief-law.com

Payday Loan Scam is Alive and Well

If you are receiving threatening calls about a payday loan, please read the FBI release in link below.  DO NOT give these jackals any personal information or agree to pay them.

http://www.fbi.gov/news/pressrel/press-releases/paydayloanscam_120710

     www.debt-relief-law.com

The Statute of Limitations and Charged Off Debt

If you have been contacted by a debt collector on a debt that is past the statute of limitations, there are several ways to deal with the situation.  The statue of limitations is the time within which a lawsuit must be filed.  In Kentucky, for instance, the statute of limitations on credit card debt is 5 years from the time the last payment was made.  

There are also statutes, called borrowing statutes, that allow the borrowing of a shorter statute of limitations if that would be of benefit to the state's citizen.  For example, if your payment was to be made in Virginia where the statute of limitations on credit card debt is 3 years, then you may be able to apply that shorter statute of limitations to your charged off credit card debt.

One thing you should never do is enter into an agreement to make payments to a debt collector, particularly one in writing.  When you do this you create a new contract that is enforceable under your state's contract statute of limitations (in Kentucky 15 years for a written contract).

If your debt is outside the statute of limitations, you can tell the debt collector to stop contacting you.  If the debt collector continues to contact you, it violates the Fair Debt Collection Practices Act (FDCPA), and you can file suit to collect $1000 statutory damages.  In addition, the debt collector would have to pay your attorney fees and costs for filing the suit.

Also, if your debt is outside the statute of limitations, and the debt collector threatens to file a lawsuit to collect on the debt, it violates the FDCPA as well.  Again, you can sue the debt collector and collect $1000 statutory damages, attorney fees, and costs.

If you are dealing with a debt collector contact a lawyer.  Many will offer a free consultation and, if you have a case, take the case at no cost to you.

     www.debt-relief-law.com

     866-279-9721

Sixth Circuit Broadens FDCPA Debt Validation Requirement

In the case of Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC the Sixth Circuit Court of Appeals  gave more detailed guidance on what information debt collectors must provide when validating a debt after a debtor has requested such validation in writing.  In reaching its holding the Court said: “the verification provision must be interpreted to provide the consumer with notice of how and when the debt was originally incurred or other sufficient notice from which the consumer could sufficiently dispute the payment obligation.”


This standard goes beyond what other circuits have required.  Most have merely required that the debt collector state in writing that the amount being sought is the amount the debt collector claims is owed.  The new requirement is clearly a victory for consumers and gives consumer rights attorneys another arrow in their quiver with which to fight debt collectors.

      www.debt-relief-law.com

Filing Proof of Claim in Bankruptcy May Violate FDCPA

The Eleventh Circuit Court of Appeals has held that filing a proof of claim on a time-barred debt violated the Fair Debt Collection Practices Act (FDCPA) in the case of Crawford v. LVNV Funding, LLC.  LVNV filed a proof of claim in Crawford's bankruptcy case on a debt for which the statute of limitations had passed.  Crawford then filed an adversary proceeding against LVNV in which Mr. Crawford alleged LVNV filed proofs of claim routinely on time-barred debts and that such acts violated the FDCPA.

The Bankruptcy Court held against Mr. Crawford, and the U.S. District Court affirmed the Bankruptcy Court on appeal.  However, the Eleventh Circuit reversed and held that such acts violated the FDCPA's prohibition on unlawful direct and indirect attempts to collect a debt.  The Court analogized to filing suit on time-barred debt, which is a violation of the FDCPA.

This is an important ruling in favor of consumers, and further protects them from debt collectors attempting to skirt the law.  It will be interesting if other circuits follow the lead of the Eleventh Circuit. 

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866-279-9721

Mitchell's Story

Mitchell (the name is changed to protect our client's privacy) came to us for a Chapter 7 bankruptcy consultation. When we went over his credit report, we noticed several blatant violations of the Fair Debt Collection Practices Act (FDCPA), a powerful federal law that prohibits debt collectors from using unfair or abusive practices to collect debts.

The primary violation we found on Mitchell's credit report was the addition of interest to his credit card debts by debt collectors who purchased the debts that had been charged off by the credit card companies. These debt collectors purchase charged off debt for pennies on the dollar and then attempt to collect the entire amount of the debt, and in many instances, add unlawful interest to the amount.

We also collected damages for Mitchell from two law firms that also violated the FDCPA. One of them filed suit after the statute of limitations (the date by which suit has to be filed) had expired. The other misrepresented the nature of the debt they were trying to collect.

We were able to stop a garnishment that had been issued by a Florida court against Mitchell for another debt. And, Mitchell got back the money garnished from his paycheck.

So, what did our fight with five debt collectors and two law firms cost Mitchell? Not one red cent. We collected our fees from the debt collectors and the law firms. In the end, Mitchell had nearly all of his debt forgiven, negative information regarding the debts removed from his credit report, and several thousand dollars in damages in his pocket. And, to think he came in to declare bankruptcy!

Your situation may be different than Mitchell's, and your outcome could also vary. But, you have absolutely nothing to lose by letting us take a look to see if we can help. Call for a free consultation at (502) 245-9100 or toll free at (866) 279-9721. Or, if you prefer, email us at info@debt-relief-law.com.

Collector Abuse--Fight Back

Debt collectors can't use abusive tactics to try to extract money from you.  For instance, they can't continually call you in an attempt to harass you into paying them.  They can't call you at work if you inform them that your employer doesn't allow such calls.  And, if they continue to do this, they have violated the Fair Debt Collection Practices Act (FDCPA).  If this happens to you, call us or any qualified lawyer who can sue the debt collector under the FDCPA.  We have had great success for our clients, for example, we most often (1) get their debt forgiven never to be sold to another collector, (2) negative information pertaining to the debt removed from their credit report, (3) $1000 in statutory damages or their actual damages if greater, and (4) our attorney fees paid.

You don't have to take it.  You can fight back.  And remember, even if you owe the money, debt collectors can't violate the law to collect from you.

www.debt-relief-law.com

Fight Debt Collectors

Many people get lawsuit papers from a debt collector and never respond.  THIS IS A HUGE MISTAKE!  You likely have defenses that can protect you from these debt collectors.  The best defense is requiring the debt collector to prove that it owns the debt.  If it can't prove its ownership, then it can't file suit against you.

In addition, many times debt collectors violate the federal Fair Debt Collection Practices Act.  If they have, you can actually turn the tables on the debt collector.  If you are successful, you could get statutory damages in the amount of $1,000.  If the debt collector has caused you more than $1,000 in damages, you could collect that amount from the debt collector.  We have also most often negotiated debt forgiveness and removal of negative credit report information for our clients.

Even if you owe the money, contact a lawyer, even if it isn't us.  The debt collectors cannot violate the law to get your money.

www.debt-relief-law.com