5 Mistakes Consumers Make When Dealing with Debt Collectors

Debt collectors have a seemingly unending bag of tricks when trying to get payment from consumers.  Most consumers, on the other hand, have little if any experience dealing with debt collectors.  Generally, consumers commonly make one or more of 5 mistakes when confronted by a debt collector.  These include (1) Failing to Get Debt Validation; (2) Failing to Find Out When the Last Payment on the Debt was Made: (3) Agreeing to a Payment Plan; (4) Not Registering Their Cell Phone on the National Do Not Call Registry: and (5) Not Seeking Legal Counsel.

1.  Failing to Get Debt Validation

Getting debt validation is almost always a good idea.  It is possible that the debt may not be yours.  In addition you may not recall the debt or the original creditor.  The debt collector may also be trying to recover unlawful interest.  The list goes on and on.

2.  Failing to Find Out When the Last Payment on the Debt was Made

Finding out when the last payment on the debt was made is critical because this tells us when the statute of limitations clock started ticking.  For instance, in Kentucky the statute of limitations is 5 years from the date of the last payment (default), and in Tennessee the SOL is 6 years.  Statutes of limitations vary from state-to-state, but nearly all run from the date of the last payment.

If the statute of limitations has expired, then the debt collector cannot file suit to recover the debt, and if it does, it violates the Fair Debt Collection Practices Act.

3.  Agreeing to a Payment Plan

Many times a debt collector will seem willing to work with a consumer to establish a payment plan.  Often, this is because the statute of limitations has expired, and when the consumer enters into a payment agreement with the debt collector, the SOL is reset.  Then if the consumer defaults on the payment plan, the debt collector can sue on the entire debt.

4.  Not Registering Their Cell Phone on the National Do Not Call Registry

If a consumer registers his cell phone on the National Do Not Call Registry and a debt collector calls, the debt collector has violated the Telephone Consumer Protection Act and the Fair Debt Collection Practices Act.  The statutory damages under the TCPA are $500 to $1500 per call.  And, the statutory damages under the FDCPA are up to $1000 or actual damages plus attorney fees.

5.  Not Seeking Legal Counsel

Most, if not all, consumer lawyers do not charge for an initial consultation,  So, why not take advantage if you think your rights under the TCPA or the FDCPA have been violated?

Debt collectors have a range of tricks and tactics to separate consumers from their money.  Be smart and don't make the 5 common mistakes above.

www.debt-relief-law.com

866-279-9721

Telemarketer and Debt Collector Statistics

According to the United States Department of Labor Bureau of Labor Statistics, there are 234,520 individuals employed in the telemarketing industry in the United States.  These individuals earn an average annual salary of $28,500.  Over half of these telemarketers work in call centers.

Florida has the most telemarketers (26,940) followed by Texas (24,010), Ohio (18,460), California (16,380), and Arizona (11,330).

There are 346,960 individuals employed as debt collectors according the Bureau of Labor Statistics. Their median pay is $35,540 per year.  Employment projections show that this area will experience a 15% growth between 2012 and 2022, which is faster than the overall national average.

California has the most debt collectors (38,660) followed by Texas (38,010), Florida (22,740), New York (21,360), and Ohio (15,920).

So with over 600,000 people engaged in either telemarketing or debt collection, is it any wonder why our dinner is interrupted on a regular basis?

Thankfully Congress passed the Telephone Consumer Protection Act (TCPA) which prohibits telemarketer or debt collector calls from automated telephone equipment to your cell phone or any service for which you are charged for the call.  It also prohibits voicemails using artificial or prerecorded messages.  And, even better, it prohibits calls to any phone on the "Do Not Call Registry."

As punishment for violating the TCPA consumers may receive $500 per call, and if a court finds the calls are willful violations, up to $1500 per call.  This statute is a powerful tool to address a national epidemic.  

If you have been a victim of telemarketer or debt collector calls, contact a knowledgeable consumer law attorney to determine if you are entitled to damages for violation of the TCPA.

www.henry-legal.com

866-279-9721

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

www.debt-relief-law.com

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