New Telephone Consumer Protection Act (TCPA) Defense Tactic

The Telephone Consumer Protection Act ("TCPA") was enacted to protect consumers from the nagging calls from telemarketers and debt collectors.  The Act provided that suit could be filed in any state court of competent jurisdiction.  On January 18, 2012, the U.S. Supreme Court in Mims v. Arrow Financial Services, LLC held that federal courts could also have jurisdiction over TCPA cases.

Up until the Mims decision, the majority of circuits held that federal courts lacked jurisdiction over TCPA cases.  And attorneys for debt collectors and telemarketers argued that TCPA cases filed in federal court must be dismissed.  Prior to Mims debt collectors and telemarketers removed cases based only on diversity (if the amount in controversy met the threshold) or if the case was filed as a class action and met the requirements of the Class Action Fairness Act.

Now attorneys for debt collectors and telemarketers are removing TCPA cases filed in state court to federal court as a defense tactic.  State courts generally have different pleading requirements than federal courts.  For instance, most state courts require a "barebones" complaint that puts the defendant on notice of the allegations that it will have to defend.  But federal courts apply a heightened standard.  

Two major decisions changed the pleading standard.  In Bell Atlantic v. Twombly in 2007 and Ashcroft v. Iqbal in 2009, the Supreme Court announced a new pleading standard that shook the foundations of federal litigation. The decisions allow district court judges to dismiss a complaint if it does not set out a “plausible” claim—a departure from the rule established in the 1957 case Conley v. Gibson that a court cannot dismiss a complaint unless it is apparent that the plaintiff could prove “no set of facts” that would entitle him to relief.  In short, these decisions empowered district court judges to weigh whether sufficient facts have been pled to support the allegations in the complaint.  And if the judge finds the facts pled insufficient to support the allegations, the complaint can be dismissed.

Defense counsel for debt collectors and telemarketers are now using the combination of federal jurisdiction and its heightened pleading requirement to remove state court TCPA complaints to federal court and then to move to dismiss the complaint because it did not meet the federal pleading standard.  These complaints met the state court pleading requirements where they were filed, but may or may not meet the federal standard.  This is a type of forum shopping that the federal courts should reject.

But, not to be outdone, we have begun addressing the motions to dismiss and simultaneously filing an amended complaint that meets the heightened pleading standard.  At some point we hope to find a federal judge who will see the forum shopping and who will send the case back to state court.  But that hasn't happened yet.

Stay tuned.

www.debt-relief-law.com

866-279-9721

Chapter 7 Bankruptcy Caution

Beware if you have taken a Chapter 7 bankruptcy and did not reaffirm your mortgage and/or second mortgage.  We have found that may times, lenders fail to report that the mortgage account has been closed. In fact, I have just such a case where the bank has failed to change the reporting of the mortgage even though it did change the reporting of the second mortgage of my client who had taken a Chapter 7 and did not reaffirm the debt on the house.

The lesson here is to check your credit report after taking a Chapter 7 to ensure that those lines on your report are accurate.  This is critical to your rebuilding your credit after bankruptcy.

www.henry-legal.com

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866-279-9721

If You Sue Them... They May Stop

Many debt collectors subscribe to a service that tracks FDCPA, FCRA, TCPA, and TILA litigation. According to one of these services, they can provide debt collectors with a frequent litigant report, a report of people who have filed lawsuits in state and federal courts against debt collectors.  The idea is that if a debtor, whose debt was $1000 for example and whose debt the debt collector paid approximately $33, filed suit against a debt collector previously, then that debtor would be more likely to sue again.  Therefore, the debt collector may likely decide not to pursue the debtor to reduce the risk of being sued and to save litigation costs. 

One service also provides debt collectors with telephone numbers associated with FDCPA, FCRA, TCPA, and TILA litigants so that these numbers can be removed from the debt collectors' data bases. 

Why would debt collectors want this information?  According to Webrecon 1129 FDCPA lawsuits, 298 FCRA lawsuits, and 249 TCPA lawsuits were filed in the month of June 2015.  Year-to-date 5823 FDCPA lawsuits have been filed, 1514 FCRA lawsuits have been filed, and 1318 TCPA lawsuits have been filed.

What does this mean for consumers?  The debt collection industry is in the business of making money, not fighting litigation.  Thus, if a consumer takes the debt collector on in court, it may well be that other debt collectors may choose not to pursue the consumer.

www.debt-relief-law.com

866-279-9721

FCC Enacts New Telephone Consumer Protection Act Rule

 In June the Federal Communication Commission enacted new rules based on 21 separate petitions for consideration.  The new rules provide:

•           Telephone service providers can offer robocall blocking technologies to consumers. 


•           Consumers now have the right to revoke their consent to receive calls and text messages sent from autodialers in any reasonable way at any time. 


•           To prevent consent for unwanted calls from a previous subscriber following a reassigned number, callers will be required to stop calling reassigned wireless and wired telephone numbers after a single call. 


•           The TCPA prohibits the use of automatic telephone dialing systems to call wireless phones and to leave prerecorded telemarketing messages on landlines without consent. “Automatic telephone dialing system” is defined as “equipment which has the capacity to (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” The new rule clarifies this definition includes machines with a future capacity to dial randomly, sequentially and even from a list loaded into the dialer. Human intervention — like touch screen dialing button — is not sufficient to overcome ATDS status. 


•           Consent survives when a consumer ports his number from a landline to a wireless phone.


The new rule reaffirms many of the existing FCC and court interpretations of the TCPA:

•           Text messages are calls.


•           Consent must come from the called party, not the intended recipient of the call.


•           The FTC will continue to administer the National Do-Not-Call Registry to prevent unwanted telemarketing calls.


•           Wireless and home phone subscribers can continue to prevent telemarketing robocalls made without prior written consent.


•           Autodialed and prerecorded telemarketing and information calls and text messages to mobile phones will still require prior consent.


•          Political calls will still be subject to restrictions on prerecorded, artificial voice, and autodialed calls to wireless phones, but will continue to not be subject to the National Do-Not-Call Registry because they do not contain telephone solicitations.


•           Consumers will still have a private right of action for violations of the TCPA along with statutory penalties.


These new rules will significantly restrict business’s use of autodialing technologies. Of course, enforcement will be the key to carrying out their effect.

 

www.debt-relief-law.com

866-279-9721

Student Loan Debt and Bankruptcy

A huge amount of the debt Americans carry is from student loans.  That debt today totals a staggering $1.2 trillion!  Often people find that paying back their student loan debt is an impediment to their being able to provide minimal necessities for themselves and their dependents.  Bankruptcy may be an option, but only in limited circumstances.

In order to have student loans discharged in bankruptcy, the debtor must show that it would be an undue hardship to be required to pay them.  Courts will apply various tests to determine if an undue hardship exists.  Regardless of the test applied, most courts are hesitant to discharge student loans, but if the debtor has very low income or incurred student loans from a for-profit school, the odds are better that a discharge will be granted.

One of the tests courts apply is the Brunner test.  In order to discharge student loans under the Brunner test, the debtor must meet 3 criteria:

1. Poverty.  Based upon current income and expenses, the debtor cannot provide a minimum standard of living for himself and his dependents.
2. Persistence.  The debtor's current financial circumstances will likely continue into the future for a significant portion of the student loan repayment period.
3. Good Faith.  The debtor has made a good faith effort to repay his student loans.

Again, if and only if the debtor meets all 3 criteria will the court consider a discharge under this test.

Some courts use a totality of the circumstances test to determine if student loans may be discharged.  In this test the court will look at all relevant factors to determine if an undue hardship exists.

Courts vary on this issue of whether a debtor may discharge only a portion of his student loan debt.  Many view this proposition as an all or nothing situation, i.e., the debtor will be able to discharge all of his student loan debt, or he will be able to discharge none of it.

There is a formal procedure that must be followed in order to discharge student loan debt called a Complaint to Determine Dischargeability.  The burden of proof is on the debtor to show undue hardship.

A good bankruptcy attorney will be able to help with the ins and outs of working through which tests, etc., apply in a particular jurisdiction.

www.debt-relief-law.com

Eight Things Debt Collectors Won't Tell You

Debt collectors call often and many times threaten debtors in an attempt to get them to pay a debt.  However, many of their tactics are nothing more than a smoke screen.  Below, I discuss 8 things debt collectors won't tell you.

1.  Many of Their Threats Are Just Words

"I am going to inform the creditor that you have refused to pay."  I think the creditor may have figured that out since it has referred or sold your account to a debt collector.

"I will have the sherriff arrest you."  This is not going to happen.

They will set deadlines for your payment as a threat to get you to pay.  You can bet they would take your money after the deadline.

2.  They Have to Stop Calling You at Work If You Tell Them To

If you tell a debt collector to stop calling you at work, the FDCPA requires that the calls stop.  Of course, the debt collector wants to keep calling at work because of the potential embarrassment factor.

3.  They Can't Talk to Others About Your Debt

Debt collectors can't talk to your neightbors, your boss, or any other people other than a co-signer, your spouse, or your attorney.  Of course they want you to believe that your neighbors of boss would find out about the debt in hopes you would pay to prevent them from finding out.

4.  Most Debt Collectors Have Quotas

Since they have quotas, it might be better to hold them off for a while.  It could work to get them to accept less money later in the month.

5.  You Can't Be Sued on Your Debt

Many times debt collectors are attempting to collect old debt that is outside the staute of limitations, and as result, they can't sue you to collect the debt.

6.  The Worst Thing They Can Do Is File Suit

Debt collectors won't tell you that the worst thing they can do to you is file a civil suit?  Why?  Because they have to pay attorneys, filing fees, and wait to be paid until the litigation concludes.  And, they also don't want to risk having counterclaims filed against them for violating the FDCPA.

7.  Paying Them Won't Help Your Credit Score

Debt collectors often tell debtors that they will update their credit report if they pay off the debt.  The fact is that the credit report will keep the negative information associated with the account for six years and six months from the date the debtor stopped paying.

8.  You Likely Won't Have to Pay a Dead Relative's Debt

You are not responsible for your relative's debt unless you were a co-signer or your spouse died in a community property state.  The debt collector may file a claim against the estate of the deceased if the deceased left one.  Beware when a debt collector calls to attempt to collect a debt of a dead relative.

www.debt-relief-law.com

866-279-9721

Overshadowing FDCPA Notice Requirement Results in Class Certification

In Roundtree v. Bush Ross, the United States District Court for the Middle District of Florida, Tampa Division, granted class certification based in part on a claim by the Plaintiff that the 30-day validation notice provided by a law firm representing a condo association "overshadowed" the notice by its terms.  The notice at issue stated:

Unless the entire sum is paid within thirty (30) days of your receipt of this letter, we shall proceed with appropriate actions to protect the Association's interests, including, but not limited to the filing of a claim of lien and foreclosure thereon. If a claim of lien is filed against your unit to collect the amounts stated hereinabove, you will be responsible for the cost of recording the lien ($18.50), a title search ($25.00), and certified mail ($5.00 per unit owner per address), plus additional attorney's fees of approximately $200.00.

Roundtree argued that the demand for payment within 30 days would lead the least sophisticated consumer to waive her rights under 15 U.S.C. § 1692g(b), which provides, "Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer's right to dispute the debt or request the name and address of the original creditor."  The court agreed that such language as used by Bush Ross could violated section 1692g(b).

We have encountered numerous communications from debt collectors that overshadow the 30-day notice requirement.  Initial communications that demand payment or offer a settlement before the expiration of the 30 days within which a consumer may request validation most likely violate section 1692g(b) by overshadowing the right to request validation within 30 days of the communication.

www.debt-relief-law.com

866-279-9721