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Debt Collectors

How To Use The Fair Debt Collection Practice Act To Deal With Debt Collectors (Consumer-SOS)
Notes from a lawyer continuing education seminar on how to use the FDCPA, especially once you've been sued.  Even if you haven't been sued, you can use this information to scare off debt collectors who don't have their papers in order.  Includes how to challenge the debt based on ownership and amount, poking holes in the collector's documents and showing their documents are unreliable under hearsay rules on business records. Covers credit card debts, statutes of limitation, student loan debts, a little on auto and mortgage debts, and your rights when the debt is a federal or private student loan.  AND FOR LAWYERS: it has questions to ask your client and how to negotiate so the lawsuit stays off their credit report.

Settling Debt With Collection Agencies-When And How To Do It
Advice From Someone Who works For A Consumer Credit Counseling Agency.

Debt Collection FAQs (Nolo.com)
Property than can't be seized, debt and marriage, dealing with collection agencies and more.

What Happens When I Fail To Pay My Bills (Nolo.com)
Short takes on student loans, mortgages, utilities, car payments, etc.

Can A Debt Collector Restart The Clock On My Old Debt?
The clock can reset from the moment you pay part of it, or even if you say the wrong thing over the phone such as "Yes, I can't pay it, but I agree I owe it." The statute of limitations on collection will usually vary depending on whether the account is considered a contract, negotiable instrument or an account. Every state's laws are different.

Time Limit On Negative Info, Time Period To Collect A Debt & The Maximum Amount You Can Be Charged (Consumer-SOS)
Links on statutes of limitations, how long negative info remains on your report and answers to other frequently asked questions.

Frequently Asked Questions on Owing Money & Debt Collection (Google)
Can a credit card company or the IRS can force the sale of your home in order to pay your bill? And what to do if you think a debt collector has violated the law?

Get Debt Collectors To Be Nice Over The Phone By Asking Them Permission To Record The Call (& Which States Don't Require Permission)
Just asking for permission should make them extra nice, as they have no idea if you're recording them anyway. Learn when you can record a phone conversation which can later be used in an FDCPA lawsuit for unfair debt collection practices.

Divorcees and Survivors of Deceased Spouses: Are You Wrongly Being Held Responsible for A Credit Card Debt? (Consumer-SOS)

Credit Repair (Consumer-SOS)

Options, Tips & Advice (Consumer-SOS)
Negotiating your debt, credit counseling, bills to pay off first, etc.

Where To Go For Help (Consumer-SOS)
Getting help from the government, non-profits and the media.

Debt Collectors/Your Rights/Form Letters 

Fair Debt Collection Practices Act (Regulates Debt Collectors)
Describes what debt collectors may and may not do if you owe money. It applies only to third party debt collectors (i.e., collection agencies), or those who use a name other than their own in collecting consumer debts. Very few commercial banks, savings banks, savings and loan associations, or credit unions are covered by this Act, since they usually collect only their own debts. Complaints concerning debt collection practices, such as harassment or abuse, should generally be filed with the Federal Trade Commission.

Using The Fair Debt Collection Practices Act Debt Collection Letter
Use this letter to ask collection agencies to provide you with information concerning their basis for claiming that you owe a debt ("verification of the debt") and also ask them to stop contacting you. This only applies to collection agencies, not to creditors who directly sold you goods or gave you credit or loaned you money.

The Fair Debt Collection Practices Act Letter
If you're not from GA, address your letter to the Federal Trade Commission Nearest You

Fair Credit Reporting Act
Establishes procedures for correcting mistakes on an individual's credit record. A credit record may be retained seven years for judgments, liens, suits and other adverse information except for bankruptcies, which may be retained ten years. If a consumer has been denied credit, a free credit report may be requested within 30 days of denial.

Fair Credit Billing Act
Establishes procedures for the prompt correction of errors on open-end credit accounts. It also protects a consumer's credit rating while the consumer is settling a dispute.

State & Federal Laws Governing Credit Matters (All 50 States)
Select your state and see what additional protections your state offers in addition to federal law. For federal laws, scroll down to their federal section and click on the link of your choice.

Bad Check Laws (State By State Statutes For Each Crime)

Using the Fair Debt Collection Practice Act To Deal With Debt Collectors-Especially When You've Been Sued (CLE Seminar)

Consumer Debt & Credit CLE March 10, 2015 (Atlanta Bar/Saturday Lawyer Program: My Notes)

Bullet Point Takeaways Negotiating With Debt Collectors
FDCPA-3rd Parties/Typical Violations & Remedies Lawyers: What To Ask Your Client
Challenge Debt Ownership & Debt Amount Lawyers: Answering A Lawsuit (What To Deny)
Key Dates (SOL, Default & Debt Selling) Lawyers: Challenging Business Records
Student Loans: Public v. Private, Default, Reinstatement Garnishment Limitations
Credit Report CleanUp Mortgage, Auto, Medical Debts, Cout Fees...

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Bullet Point Takeaways

  1. Scope of FDCPA: It keeps 3rd party collectors from harassing you, contacting others about your debt, or making legal threats they can't or don't intend to act on.  Debt Collectors can be fined $1000, plus damages, plus costs, plus attorney fees!  Proving a violation won't cancel the debt but it could scare them off or help you when negotiating with them. Don't forget: The FDCPA is the floor; your state law is the ceiling. Look to it for additional protection if the FDCPA does not cover your issue.

  2. Challenge Debt Ownership & Amount: Collectors must prove they have the right to collect the debt (show proof they own it and proof of the amount owed).  Demand their paperwork and challenge their chain of title and debt amounts, especially if something looks fishy. This can scare off shady collectors that don't really own the debt or can't prove the amount they say you owe.

  3. Statutes of Limitations: If Non Federal debt is past the SOL, debt collectors can't haul you into court or even threaten court action.  For private loans, this means that they can't get a court order to garnish your wages or seize your bank accounts.  Federal loans don't have a statute of limitations. And they can garnish your wages administratively even without a court order!  But you can still always challenge your debt amount.

  4. Key Dates: 3-10 years after default (SOL for each state is different but most are <11 years...means they can no longer sue or garnish unless a federal debt), 180 days (bad debt written off by original creditor and sold to collector, usually sold for pennies on the dollar=room to negotiate with debtor since they paid so little for it) 270 days= Student Loan Default and triggers right to seek regular and administrative garnishment: They can now wage garnish your wages, take Social Security benefits and intercept tax returns.  They can’t garnish before then.

  5. Negotiations: Debt Buyers (Debt Collectors) can negotiate with you more so than the original creditor because they buy the debt for pennies on the dollar.  Also negotiate how your settlement is listed so the lawsuit stays off your credit report.  Ask for a consent ORDER rather than a Consent Judgment. 

  6. Defenses For Lawyers: Can challenge Collector's "Business Records" under Federal Hearsay/Your State's Hearsay Rules.

  7. Defenses For Lawyers: In Answering a complaint, always plead the real party in interest, preserve your defenses, deny alleged ownership of debt when you don't have enough information, and scrutinize the bill of sale they attached to the complaint (always challenge ownership and amount, if applicable). (Recomended in GA CLE Seminar but probably a good practice everywhere)

  8. Student Loans: If private, can challenge the same way as credit card debt and with same SOL. So it's important to know if your debt is public or private. Ways to rehabilitate loan to avoid being garnished.

Back To Seminar On FDCPA


FDCPA-Who It Covers/Typical Violations & Remedies

FAIR DEBT COLLECTION PRACTICES ACT (Strict Liability Statute)
If a Debt collector is liable under the FDCPA, it doesn’t cancel the debt. But it allows for statutory damages up to $1000 per defendant.  And you can also sue for actual damages, attorneys fees and costs, in addition to the statutory damages. Normally, the FDCPA applies only to thrid party debt collecltors and not to the original creditor. But there are some exceptions.  For additional protection not covered under the FDCPA, don't forget also to look to your state consumer protection laws.

For example: A violation of the FDCPA may also be a violation of your state's fair debt collecton laws, some of which may help you even against direct creditors. Further, every state has it's own Deceptive Business Practice Act. In Georgia a violation of the DFCPA also = a violation of their GA Fair Business Practice Act. So check out this possibility within your state.

If you plan to file a complaint alleging a violation of both state and federal law, the best practice is to file in federal court to prevent removal.  Federal Court is much more rule intensive than state court. So read up on the federal rules of Civil procedure for your fed district court and talk to the court clerk.

Who The FDCPA Covers and Doesn’t

1.   Is this person a debt collector other than the creditor? (a direct creditor is also under the FDCPA if they use a different name!)

2.   Is it in regards to a consumer debt? (does not apply to business debt or commercial line of credit)  Primarily for personal, family or household services. 

3.   Does their Business have the principal purpose to collect debts, i.e. includes attorneys who regularly collect debts. (see Heintz v. Jenkins, 514 U.S. 291 (1995)).

4.   If Government Collecting, no FDCPA.

Typical FDCPA Violations

  1. Contacting a Coworker or Neighbor

  2. Falsifying the amount, or legal character of debt,( saying they'll garnish wages on a private debt when they have yet to file suit or win a judgment. Same goes with filing a lawsuit when such is past the 6 year statute of limitations to collect).

  3. Calling excessively per day (8 times a day...lots of hang-ups-get evidence from your cell phone records).

  4. Voicemails-deemed as a communication so they must reveal they're a debt collector. Yet if they do, it could violate your privacy if heard by a 3rd person!  So if you're a debt collector, it's a good practice not to leave messages.  This is why lawyers collecting debts don’t leave voicemails!!! It's not cause they’re nasty.

  5. Failure to communicate a debt is disputed or putting false info on credit report.


Harassment & Abuse Includes:

  • False or Deceptive Misleading info about what they can do to you (garnish when SOL expired, or before they've won the case, etc.)

  • Lots of hang-ups to drive you nuts

  • Foul language

Note: threats a sophisticated person would see as harmless won't stop a FDCPA violation. The standard is based on the least sophisticated consumer.  So if the collector sends a loosely worded garnishment that's in any way misleading, they could get in trouble for falsifying the legal character of the debt, i.e. making false threats as to what will happen to the debtor.

Collector Defenses

Bonified Error Defense (1692(k)(c)
Business must have procedures in place to avoid this error.

Back To Seminar On FDCPA


Two Issues: Challenge Debt Ownership; Challenge Debt Amount

Debt Ownership
To collect on a debt, the debt collector must first prove they own it.  This is trickier than it seems because often the debt is sold over and over again.  So upon demand, the collector must show a chain of title proving how this debt got from point A to point C.  The FDCPA allows you to challenge the debt, and the collector must respond or back off.  Demand their paper trail and look for gaps. 

See Sample Letter To Debt Collector (Consumer-SOS)

Common Mistakes In Collector Paperwork Include:

  1. Collector Shows Transfer of Your Debt But Not How They Legally Acquired It.  For instance, say the debt collector "Bob Jones Co." says you owe them $3K for an agreement originally between you and Sam's Club.  As proof, they show your credit card agreement with Sam's Club and that it was sold to Adco Collection Agency.  THIS IS NOT ENOUGH. This may show how Adco got the debt.  But it doesn't show how Bob Jones Co. did.  Demand they show the paper work that clearly identifies not just your loan, but how they got it, i.e. a transfer from Adco to Bob Jones Co.  Otherwise, you could be paying someone who doesn't lawfully own the debt!  And worse, you may have to pay it again when the true debt owner comes after you.

  2. Collector Shows A Debt But Without Enough Info To Determine It's Yours.  For example: say their "purchase account" paperwork shows a date only, but is missing the client’s name or account#?  So what proves this is really your account?  The test is a common sense one.  For example: At least as far as who owns the debt, a Georgia court found it was sufficient for the collector to provide the client’s name, account #, date of sale, but with a redacted amount.  Between the proper companies, this chain of title was sufficient. Rutledge v. Gemini Capital Group (Georgia Court of Appeals, 2014). But you can still challenge the amount.

  3. Amount Much Higher Than Original And With No Explanation

  4. Attached Documents Are Inconsistent In Naming The Proper Companies

If you're in doubt, make it hard on the collector.  Ask them for a list of all assignments.  Scrutinize what the assignments actually say.  Are there holes or gaps? For example: Don't be fooled by companies that sound similar.  GE Capital ≠GE Management. If GE Management shows only that your debt was assigned to GE Capital but no proof how it got to GE Management, CHALLENGE THEM ON IT.

Debt Amount
Upon demand, a debt collector must also show proof they're entitled to the claimed amount.  When in doubt, make them show the amount is accurate. Dispute excessive interest, double charges, ambiguous charges, etc.

Check the Bill of Sale If Attached/Demand They Send You Proof They Acquired This Debt
Often, there are many errors and inconsistencies you can spot to show it's not clear who owns the debt or what the debt amount is. When pressed, the collector will provide some paperwork showing a debt was sold. The test is what a judge can tell from this information. If the debt amount is roughly in the ballpark of your original debt, don't expect much in challenging it.

See Sample Letter To Debt Collector (Consumer-SOS)

Back To Seminar On FDCPA


Key Dates: x years after default (Your state's Statute of Limitations on contract matters such as credit card debt, private student loans...means they can't sue you or garnish unless a federal debt), 180 days (bad debt written off by original creditor and sold to collector, so probably sold for pennies on the dollar=room to negotiate with debtor since they paid so little for it) 270 days= Student Loan Default: triggers right to seek regular and administrative garnishment (the latter is for fed loans only). They can now wage garnish your wages, take Social Security benefits and intercept tax returns.  They can’t garnish before then.

See Time Limit On Negative Info, Time Period To Collect A Debt & The Maximum Amount You Can Be Charged (Consumer-SOS)
Links on statutes of limitations, how long negative info remains on your credit report and answers to other frequently asked questions.

Back To Seminar On FDCPA
 

TIPS For Lawyers And Questions For Your Client Who Has Just Been Sued By A Collector
Question For Your Client:

  1. Do you recognize this debt?  Is it you?  Is it ID theft?  Mistaken Identity?  If they say no, pull their credit report, and see if it's mistaken there too. NOTE: The debtor might not always know who the creditor is. For example: Best Buy card could be owned by HSBS or GE Money Bank.  Target has their own bank but Wal-Mart doesn’t.  So expect another creditor behind it and don’t be quick to assume it’s bogus if the client doesn’t recognize them.

  2. Is this the first interaction you’ve had with creditor before they sued you?  When was the last time you made a payment?  (statute of limitations on credit card debt =x years from the date of default.)  Was that the date of your last payment?  Date of last payment prior to the charge-off date?

  3. Example of why last payment made could be important.  Analysis is using GA law. GA SOL for Credit cards=6 years from date of when the contract becomes due and payable (but that’s unclear). So when does the GA statutes of limitation start running, so that after 6 years, the debtor can no longer be sued or garnished? Does it start on the first month they didn’t make a payment and never made a payment again? i.e. the time when the creditor could technically accelerate all payments in full? Or does it reset if the debtor is allowed to make another payment and the debtor does so, even though they missed 3 months in between?  You can look at the credit card agreement to see when default is.  Use contract law/check language of credit card agreement for what constitutes default. Then argue for the earliest date possible if such means the 6 years has already passed.

  4. Never advise clients to make a payment to a collection agency (aside from law firms which can sue you if you don’t pay).  If the client's original creditor is still calling, make a deal with them.  Assuming the account is still with the original creditor and hasn't been sold.

  5. How Was the Client Served? Sewer service? (sloppy service from people who serve 20k people a month?)

  6. Client in Active Military when went into default-Service Member Civil Relief Act

  7. Is this the client's only debt?  Don’t file bankruptcy when one or two cards owned by debt buyers. Negotiate with them-they buy the debt cheaply so they can still make a profit.

  8. What Is Your Clients Goal? Settlement, Dismissal, Go For Broke?

Back To Seminar On FDCPA
 

ANSWERING THE LAWSUIT
Must answer within 30 days or in default.  You can open the default within 15 days after that, by filing answer and paying court costs, but the best practice is to file a motion to reopen the case.  You have an automatic right to open until after that 45 days. Then you must file a motion and rely on the court to decide.

Preserve Defenses
Always plead the real party of interest (don’t take the word of the debt buyer).   You have to deny something in the complaint or the court will simply deal with a motion for judgment based on uncontested pleadings. damages.   Besides, the burden of proof is on this third party to prove they own the debt.  Same goes with the amount, unless the amount is exactly what you believe you owe.

Check the Bill of Sale Attached
Purchase account files show a date only but what about client’s name or account?  What proves it’s the client’s account?  Sometimes it does have the client’s name account date of sale, but with a redacted amount.  In Georgia, the latter “chain of Title” is sufficient.  Rutledge v. Gemini Capital Group (Georgia Court of Appeals, 2014)

Look at the Exhibits attached to complaint.  Is it the same company as the collector?  Does it show a chain of title? Does it show client name or other identifying info?  The chain of title should show client’s account part of this transaction and that this chain leads to the company suing you.  Look at the Assignments-What do the assignments actually say. Holes in assignments? GE Capital ≠GE Management.  Need to show chain of transfer of account.  If various exhibits and affidavits are not consistent, can argue inadmissible/untrustworthy see below.

Challenging Their Business Records
Don't forget to use your state's hearsay/evidence code to exclude unreliable evidence.  Here is an example of how to do so based on the GA heaarsy rules that apply to business records. I've put this in red so lay people know not to rely on GA law unless GA law clearly applies.

GEORGIA BUSINESS RECORDS-NEW 2013 EVIDENCE CODE

Now more in line with the Federal rules of Evidence.

Business records are usually admissible unless untrustworthy, or not made at or near the time of the acts, was it made by a person with personal knowledge, was it a regular practice of the business?  Difference is now the new law does not require someone to testify to authenticity and allows self-authentication via an affidavit.  Probably they’ll have a custodian of records recite these things.

Argue it’s not their own business records regarding the accounts but that of the debt seller they bought it from!  Maybe Company A passed spreadsheet to Company B and so Company B didn’t compile at all, didn’t have personal knowledge of how the sheet was made, and wasn’t at the time of the event…They’re just reciting the hearsay exception! Make them prove what they're saying.

But new company can testify I HAVE PERSONAL KNOWLEDGE THAT THIS IS THE ACCOUNT I BOUGHT FROM COMPANY A and we keep it in our business records. (Says Creditor Atty. in CLE)

CHALLENGING THE AFFIDAVITS ATTACHED
A business record affidavit has to have attached to it the actual business records.  ARE THESE ATTACHED as required?  So argue portions of affidavit referring to these business records must be stricken!  It’s inadmissible evidence.  Affidavit is no good when it does not reference the business records attached.  Get these thrown out as inadmissible.

Party intending to offer a business record must send sufficient notice in writing OCGA 24-9-902
Typically opposing counsel may call you and ask to make a deal, and you can say "show me more paperwork if we're to pay anything."  If they can't they'll probably dismiss case.

ASK THEM FOR FULL PURCHASE AND SALE AGREEMENT (they don’t want to divulge this and you may need to file a motion to compel)

Back To Seminar On FDCPA


Student Loans:

Federal Loans Are Tougher to Challenge Than Private Loans
Federal student loans have no statute of limitations.  And, unlike private loans, your wages can be garnished without taking you to court.  Garnishment can be done by sending you an administrative wage garnishment letter within 30 days.  At that point, you can request a hearing .  This will temporarily stay the garnishment, but the hearings are a sham!   Private lenders, however,  must file in court like everybody else.  They can’t just garnish, they have to sue you.  Also, the six year Georgia statute of limitations applies to private loans just like it does to credit cards. So if you stopped paying 7 years ago, they can't sue you now. And if they can't sue, they can't garnish either.

Default (270 days delinquent)
For Federal Loans: 270 days= default, which means they can wage garnish wages, take Social Security benefits and intercept tax returns.  It’s tax payer money that was loaned so they can get it back! But they can’t garnish before then.

Is My Loan Public Or Private?
If there's a cosigner, it's a private loan. (Federal loans don’t require a cosigner.) And if they're suing you, it’s almost certainly a private loan. (why sue on a  federal loan when you can garnish administratively?)  But you can always call your lender or pull up your credit report to see if it's a federal loan.  Still not sure? Google the name of the lender on your credit report or see the link below.

Just Who Owns My Loans And What Types Do I Have-Federal or Private? 800-433-3243
If you don't know who your lender is or aren’t sure what kind of loans you have, visit the National Student Loan Database System for Students and select “Financial Aid Review” for a list of all federal loans made to you. (Enter in your Social Security # and your PIN issued by the Dept of Education-you may need to get a new PIN) Click each individual loan to see who the servicer is for that loan (this is the company that collects payments from you). It’s very important to know your servicer. This might be a different company from the original lender. If you can't find this info on line, call their helpline and ask for the name and # for your Lender or Guarantor. Then contact your lender directly for more guidance.

Private Student Loans
Challenge ownership and amount just like credit cards.  Often a Wall Street Investment trust now owns it. Can they produce an unbroken custody of title to show they truly own your loan? Demand such.  Remember, there's the same statute of limitation on Private loans. Even if it's still on your credit report for longer, if the SOL has run, they can't sue or garnish your wages.

Debt collectors violate the FDCPA if they claim you can't discharge your student loan debt. (mischaracterizing your debt is a no no).  They may be 90 percent correct but sometimes this debt can be discharged.  So what they're saying is FALSE and therefore could be a FDCPA violation. The standard for mischaracterizing debt is a low one (how their words would be perceived by the least sophisticated consumer.)

Rehabilitation and Consolidation of Student Loans
Rehabilitation gets you out of default. (in default they already tack on 20% collection fee to your balance!)  After nine or ten months of regular payments, your loan will be refinanced by another lender and now you’re out of default and such will show on your credit report. Aside from good credit, why rehabilitate you ask?  Answer: 270 days= default which means they can wage garnish, take SS benefits, and intercept your tax returns.  It’s tax payer money that was loaned so they can get it back! They can’t garnish before then. And for private loans, they still have to sue you to do any of these things.

Undue Hardship
Test is your burden to pay now or in the foreseeable future. Works when you become disabled. Otherwise, it's very hard to prove.

Back To Seminar On FDCPA


Negotiating With Debt Collectors
Collection agencies can’t file a lawsuit like a lawfirm, or stop your account.  Be protective about your information, never verify your last 4 digits of your social security #.  (They are fishing for ways to collect your money in the event they win in a law suit against you).  Don’t give out your debt card info. just because they verbally told you they'll only charge you $20 a month.  Even if honest, if the debt sold again, this verbal agreement may be lost or not honored. GET THEIR PROMISE IN WRITING BEFORE YOU GIVE THEM ANYTHING OF THIS SORT.

If you have already been sued, try to get a consent ORDER rather than a Consent Judgment. (Applies to GA and may apply to other states)  Judges are  more likely to sign off on it if the payment can be made within a year.  This creates a public record only that lawsuit was filed and then dismissed.  So it won’t show up in a credit report .  But if you agree to a consent Judgment, even when it's dismissed, the credit report will show a judgment! 

Debt Buyers
Chances are your debt collector is a debt buyer, i.e. those who buy off bad debt that has been unpaid for 180 or more days. (This is debt the original creditor charged off their account and resells).

So after 180 days, the credit card issuer sells huge bundles of these accounts to a debt buyer.  When dealing with a debt buyer you have a lot more flexibility to negotiate as a debt buyer has invested less money than the original creditor.  In other words, Chase, who lost the full amount when you didn't pay, is less likely to negotiate than the debt buyer who bought your debt at just 5 to 10 cents on the dollar.

Example:
The more a debt buyer paid for your debt, the less room they have to negotiate. But even If you had a good credit score and a good wealthy zip code, they may have spent only 10 cents on the dollar.  So if they paid $100 for your $1000 debt, they won't lose out if you negotiate $300.  If you are someone classified as having a low income, and live in a "poor" zip code, your debt may have been sold for 1 cent on the dollar!

Secondary Debt Buyers not happening much anymore. So the debt is not transferred to another debt buyer who then tries to collect.  Usually if the debt buyer can’t collect, they too write it off (recent developments in last 2-3 years).  It used to be that each time your debt was sold down the chain, the debt collector got smaller.  And as they get smaller they’re likely rougher and less professional.  Also, record keeping gets sloppy as it goes from collector to collector. (this means it's easier to challenge them on chain of title, amounts, etc.)

A List of Well Known Debt Buyers
Midland funding
Asset Acceptance
Calvary Portfolio
Arrow Financial Services

See Negotiating With Creditors (Consumer-SOS)

See Settling Debt With Collection Agencies-When And How To Do It (Consumer-SOS)
Advice From Someone Who Works For A Consumer Credit Counseling Agency.

Back To Seminar On FDCPA


Garnishment Limitations
Up to 30 hours of minimum wage is exempt from Garnishments.  So even if the collector has a judgment, they can't garnish, What if the funds are already in my account?  Answer, can probably seize your money but for Social Security.  But Social security funds aren't garnishable and can't be taken once in your account. See Garnishment Limits.

Back To Seminar On FDCPA


Miscellaneous on Mortgage, Auto Debts, Medical Debts and Court Filing Fees

Filing Fees/Where To Sue
The filing fees vary from state to state. Small claims court are cheap to file in and often have no discovery period, but state and superior courts usually cost more.  The benefit there is that they ofoten have a six month discovery period (time to exchange documents, make requests for admission, etc. ).  So suing or being sued there takes longer. But it may be worth it if you know you can't win without first doing some discovery.  Keep in mind that small claims courts cannot hear your case if your complaint is over a specific dollar amount. For example: GA magistrate courts can hear cases for $15K or less.  But even if your case is a small one, if it's complex enough to need discovery, you can also file in state or superior court.

Mortgage Debts
Mortgage Deficiency:  If the debt is based on such, was their a "confirmation of sale" after the foreclosure?  If not, the collector may lose right to collect under FDCPA.

Auto Repo Debts
So your car was repossessed and sold for a fraction of what you owed.  And now a debt collector is dunning you for the difference.  They can't just sell it for any old price and then come after you for the rest. Were you given notice of auction? Was it a commercial reasonable sale?  Make the debt collector furnish proof of these things if you are in doubt. The burden is on them.  (Auto repos almost always = deficiencies, which means it’s turned over to a debt collector.)

Medical Debt Issues:
Is it the hospital or a 3rd party who is collecting on the debt?  If it's the hospital that's collecting, you don't have rights under the FDCPA.  But even then, you can scrutinize the debt line by line and challenge double billings, unnecessary routines or ridiculous expenses, i.e. $50 for a Band-Aid?

Back To Seminar On FDCPA


Cleaning Up Your Credit Reports (Check All Three Reports)
Checking Credit Report for errors in phone number and other things which may show merged credit files by accident. Check for debts that should have been removed (over 10 years old for bankruptcies, over 7 years for most other debt)  Are judgments on public section which you know have been set aside but still listed there?

GA Residents Can Receive 2 Free Annual Credit Reports from Each of the Three Reporting Bureaus
As GA resident you are entitled to 2 free credit reports a year from each of the three reporting agencies (GA Fair business Practices Act).  Federal law allows only 1 so state even more helpful.

See Credit Repair (Consumer-SOS)

See Time Limit On Debt Collection and the Maximum Amount You Can Be Charged (Consumer-SOS)
Links on statutes of limitations, how long negative info remains on your credit report and answers to other frequently asked questions.

Back To Seminar On FDCPA

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Settling Debt With Collection Agencies-When And How To Do It
Collection agencies are 3rd party agencies that buy the bad debt from the original creditor for 1/10th the debt, usually 4-6 months after last full or partial payment was given.  They can be settled for often 30-50 cents on the dollar or ½ to 1/3 what they say you owe.  If you settle an account, get it in writing on the collection agencies business letterhead before you pay anything.   Then forward copies of proof of payment and settlement letter to all 3 credit agencies, certified mail, return receipt.  Never wait for a collection agency to update the credit agencies for most never do so.  And if you don’t, chances are it will still show unpaid on credit reports and that might cost you a loan and or keep your score lowered.  Best time to settle with a collection agency representative is the last week of the month, for it's at the end of the month when they're rated by their superiors for how much money they've collected.

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Divorcees and Survivors of Deceased Spouses: Are You Wrongly Being Held Responsible for A Credit Card Debt?
Being an authorized user on a credit card does not automatically mean you're responsible for the debt.  In fact, unless a court says otherwise, such as in a divorce decree, you're not responsible for a credit card debt unless you signed or co-signed for it.  Only then are you considered a "Joint User" as opposed to an "Authorized user".

Two Situations To Look Out For
1. After a spouse has died, some credit card companies have been known to change the client’s authorized user status (A) on credit report to joint user status (J). Whether this is by accident or intentional, the result is that you're now listed as legally responsible for a debt when you shouldn't have been.

2. Credit card companies have also been known to leave a client as an authorized user, even when they've received a letter informing them of the spouse's death. The deceased person's debt is then sold to a collection agency which claims that you, as the surviving spouse, were a "joint" user and not merely an "authorized" user. 

In other words, based on that "J" notation, they now wrongly claim you're "jointly" responsible for the debt.  So whether you are an (A) or a (J) matters very much.  While morally, you should not be accruing debt you don't intend to pay for, absent fraud on your part, legally you're not responsible for it when you were just an (A).

In case # 2 (when the credit card debt is “written off and sold to a collection agency” (status 5 or 9 on report), you can see what the user status was (A or J) at the time debt was sold.  For once a credit card is written off and sold to collection agency, the status of the account at the time of write off is fixed and cannot be legally changed by a collection agency. This means you have a snapshot of what the status of your debt was before it was wrongly changed by the Debt Collector.

So if a person has, say a Chase account with an “A” next to it and a status 9/sold to collections, and the collection agency falsely claims the debtor is a joint user/responsible for the debt, then that person can use the information on his credit report at the time of discharge to show proof he was merely status “A” (an authorized user) and not status “J” (a joint user). Once you've shown your true status, be sure to send a letter with this proof to all 3 credit agencies.

Spotting Other Inconsistencies To Show Debt Collector Can't Collect
Also, often the written off debt shows a $0 balance but has a 5 or 9 next to it. Yet once under collection, a new agency now shows a balance.  Both cannot be true!  If one contacts the collection agency and confirms it was from lets say the Chase card (that shows authorized user “A”) at the time of discharge, you can make the case that the debt was not legally yours, was written off by the original creditor, and should be removed from all 3 credit reports.

To further show it was not your debt, demand a copy of the signature proof (from the original creditor) showing you signed jointly for a debt. (they won't have it since you never signed as jointly responsible). You can also ask the collection agency to provide proof of your signature.  Under the FDCPA, if you challenge the debt in writing, they must either show proof the debt is legally yours or remove it.  If they don't, they may be subject to court fines and sanctions. See also your rights under the Fair Debt Collections Practice Act.

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Time Limit On Collecting A Debt and the Maximum Amount You Can Be Charged

State by State Statutes of Limitation For Credit Card Debt (50 States & DC)
Collectors have a limited time to file lawsuits over unpaid card debts. They can still "ask" for payment, but after the deadline, they cannot threaten to sue as you have no legal obligation to pay. The chart shows the time limit on written contracts or open-ended, revolving credit accounts such as credit card agreements. Many state laws and codes do not refer specifically to "credit cards" or "credit card agreements." Instead, the statutes may use the general terms "written contracts" or "open accounts."

How Long Do Various Negative Items Stay On Your Bad Credit Report?
Inquiries=2 years, delinquencies=7 years from last payment, unpaid tax liens=15 years, Chapter 7 bankruptcies=10 years, Chapter 13=7 years,
paid tax liens=7 years
.

What state should I use in figuring out the statute of limitations?

According to Ron Opher, of www.ron4law.com: the FDCPA applies when a 3rd party debt collector is involved. Thus, the only relevant jurisdictions are where the consumer signed the loan application and where the consumer currently lives (bank location is irrelevant). If those states are different, I believe the creditor has the choice of where to sue and can select from the state with the longer SOL. There may also be an argument that the contract was signed "under seal" which might lead to a longer Statute of Limitations than an ordinary contract.
 
Note: The FDCPA (Federal Debt Collections Practice Act) applies only to third parties who collect debts for others. This law governs some law firms, debt collectors and collection agencies. It does not govern the actions of the original creditor such as the bank or store who you directly owed the money to. 

Normally credit cards have agreements which state that in the event of a dispute, the laws of State ________ will apply. While the contract may or may not be binding as to which SOL applies, play it safe. Look for the credit laws and SOL in the state listed in your original agreement or loan application.
 

Other Frequently Asked Questions On Debt Collection

Mr. Smith,

From what I understand,

You have a credit card bill that goes back eleven years. Your original bill was for $600.00 and now a collection agency wants 1800.00 from you. You've asked me if there's a limit to how long they can collect on past due bills and if there's a legal limit on what they can charge you.


 
I see three issues here that may relate to your situation.  However, I make no promises I'm right.  I suggest you call your local Federal Trade Commission or Attorney General's Consumer Protection Division to confirm anything I tell you. 
 
ISSUE#1
Can They Charge Me So Much Over the Original Amount of The Bill? My original debt was $600 and they're now asking me for $1800!
The fact is that they can charge anything they want unless they're in violation of the applicable State and Federal Usury Laws (Laws On Charging Excessive Interest Rates).  The real question is whether or not you're required to pay it at all. See Issue #3
 
ISSUE#2
How long can they keep this debt on my credit report?
I believe the answer is only 7 years from the date you stopped making any payments.  Check your credit report and complain to the proper authorities below if it's still being reported past the 7 year date.
See http://mix6.com/credit/ageing for more on the time limits debts can remain on your credit report.
 
ISSUE #3
Even If they can't keep reporting it, can they still sue me?  This is where the state Statute of Limitations comes in. SOL's vary from state to state and are also based on the type of debt you have.
 
Thus, it's important to know which state's SOL applies and whether it's a court judgment, credit card debt, or if you signed a promissory note, etc. Here's what I found at the link below. Please read what it says very carefully and be sure to look at the STATE SOL Chart. It is possible the SOL Chart is outdated and I cannot vouch for the accuracy of any link listed here.  Note: Most credit card debts are considered "OPEN ENDED ACCOUNTS, which is the last column on the chart.

http://www.creditinfocenter.com/rebuild/statuteLimitations.shtml

What state should I use in figuring out the Statute of Limitations?

According to Ron Opher, of www.ron4law.com: the FDCPA applies when a 3rd party debt collector is involved. Thus, the only relevant jurisdictions are where the consumer signed the loan application and where the consumer currently lives (bank location is irrelevant). If those states are different, I believe the creditor has the choice of where to sue and can select from the state with the longer SOL. There may also be an argument that the contract was signed "under seal" which might lead to a longer Statute of Limitations than an ordinary contract.
 
Note: The FDCPA (Federal Debt Collections Practice Act) applies only to third parties who collect debts for others. This law governs some law firms, debt collectors and collection agencies. It does not govern the actions of the original creditor such as the bank or store who you directly owed the money to. 

Normally credit cards have agreements which state that in the event of a dispute, the laws of State ________ will apply. While the contract may or may not be binding as to which SOL applies, play it safe. Look for the credit laws and SOL in the state listed in your original agreement or loan application.

 

Other Credit Laws That May Apply
 

See Credit Laws (Consumer-SOS)

 

Who To Contact For Help

I also suggest you contact your State's Consumer Protection Agency. This could be your State' Attorney General or Your Secretary of State's Office. You may also contact your State or City's Legal Aid Department.

Also See Where To Go For Help (Consumer-SOS)

Divorcees and Survivors of Deceased Spouses: Are You Wrongly Being Held Responsible for A Credit Card Debt?
Being an authorized user on a credit card does not automatically mean you're responsible for the debt.  In fact, unless a court says otherwise, such as in a divorce decree, you're not responsible for a credit card debt unless you signed or co-signed for it.  Only then are you considered a "Joint User" as opposed to an "Authorized user".

Two Situations To Look Out For
1. After a spouse has died, some credit card companies have been known to change the client’s authorized user status (A) on credit report to joint user status (J). Whether this is by accident or intentional, the result is that you're now listed as legally responsible for a debt when you shouldn't have been.

2. Credit card companies have also been known to leave a client as an authorized user, even when they've received a letter informing them of the spouse's death. The deceased person's debt is then sold to a collection agency which claims that you, as the surviving spouse, were a "joint" user and not merely an "authorized" user. 

In other words, based on that "J" notation, they now wrongly claim you're "jointly" responsible for the debt.  So whether you are an (A) or a (J) matters very much.  While morally, you should not be accruing debt you don't intend to pay for, absent fraud on your part, legally you're not responsible for it when you were just an (A).

In case # 2 (when the credit card debt is “written off and sold to a collection agency” (status 5 or 9 on report), you can see what the user status was (A or J) at the time debt was sold. For once a credit card is written off and sold to collection agency, the status of the account at the time of write off is fixed and cannot be legally changed by a collection agency. This means you have a snapshot of what the status of your debt was before it was wrongly changed by the Debt Collector.

So if a person has, say a Chase account with an “A” next to it and a status 9/sold to collections, and the collection agency falsely claims the debtor is a joint user/responsible for the debt, then that person can use the information on his credit report at the time of discharge to show proof he was merely status “A” (an authorized user) and not status “J” (a joint user). Once you've shown your true status, be sure to send a letter with this proof to all 3 credit agencies.

Spotting Other Inconsistencies To Show Debt Collector Can't Collect
Also, often the written off debt shows a $0 balance but has a 5 or 9 next to it.  Yet once under collection, a new agency now shows a balance.  Both cannot be true!  If one contacts the collection agency and confirms it was from lets say the Chase card (that shows authorized user “A”) at the time of discharge, you can make the case that the debt was not legally yours, was written off by the original creditor, and should be removed from all 3 credit reports.

To further show it was not your debt, demand a copy of the signature proof (from the original creditor) showing you signed jointly for a debt. (they won't have it since you never signed as jointly responsible). You can also ask the collection agency to provide proof of your signature.  Under the FDCPA, if you challenge the debt in writing, they must either show proof the debt is legally yours or remove it.  If they don't, they may be subject to court fines and sanctions. See also your rights under the Fair Debt Collections Practice Act.

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