California Debt Blog

FAQ: What is a debt collector forbidden from doing?

Question: I think my debt collector is harassing me. What is the debt collector legally forbidden from doing to collect the debt?

 

Answer:  The Federal Trade Commission publishes a guide for consumers that details exactly what debt collectors can and cannot do under the Fair Debt Collection Practices Act (FDCPA) when they are attempting to collect the debt. The FDCPA applies to most consumer debts except those incurred in running a business.

 

Collectors may not:

• contact you at inconvenient times or places (such as early in the morning or late at night);
• harass you with threats of harm or obscene language;
• lie to you, such as about the amount you owe;
• tell you you’ll go to jail if you don’t pay;
• tack on extra interest that is not allowed under law;
• contact you at work if you’ve told them not to;debt co
• discuss your debt with anyone other than you, your spouse, or your attorney;

 

If a debt collector has violated the law, you can sue the collector in state or federal court within one year of the alleged violation. You can be compensated for any damages the debt collector’s actions caused, and you can also be awarded court costs, attorney’s fees, and $1,000.

And remember that California's Rosenthal Act applies many of these same rules to the original creditor.

Supreme Court Ruling Helps Protect Consumers from Debt Collectors

On April 21 the U.S. Supreme Court issued a ruling in favor of debtors who are subject to abuses at the hands of debt collectors.

 

In Jerman v. Carlisle, the Court ruled that if a debt collector makes an incorrect statement of law during communications with a debtor, in violation of the Fair Debt Collection Practices Act (FDCPA), the debt collector cannot claim they merely misinterpreted the FDCPA in order to shield themselves from a lawsuit. The Court reasoned that ignorance of the law is no excuse when it comes to unfair debt collection tactics.

 

The case arose when Carlisle, a Cleveland law firm, filed a foreclosure action on behalf of Countrywide against Karen Jerman. However, Jerman had already paid off the mortgage on her home. When Jerman protested, an attorney for Carlisle told her that she must dispute the debt in writing, which is not true. Carlisle admitted the mistake but claimed it should not be liable for legal mistakes. The Court disagreed.

 

This ruling is a win for debtors who have been subject to abuses by the debt collection industry. The case should result in fewer debt collector misstatements of the law, since they can’t claim those incorrect statements were merely a mistake.

Do Not Call List Basics

Question:  If I place my name on the Do Not Call Registry, will it stop my creditors from calling me?

 

Answer: No.

The Do Not Call Registry will prevent telemarketers from calling your home or cell phone. Once you have been on the list for 31 days, telemarketers are no longer permitted to call you. If they do, you can file a complaint. There are some exceptions for charities, political organizations, surveys, and companies with which you have an existing business relationship.

 

However, if you owe a debt, creditors have the right to call you. However, there are limits on the tactics creditors can use to collect from you. Under the Fair Debt Collection Practices Act (FDCPA), creditors cannot use abusive, unfair or deceptive practices to collect. The FDCPA covers many types of debts, including personal debts, mortgages, medical debts, car loans, and medical bills, among others. The FDCPA does not cover loans to start a business.

 

So how do you get a creditor to stop contacting you? Notify them in writing, using certified mail with a return receipt requested. Once receiving your letter, a creditor is not allowed to contact you again, except to let you know there will be no further contact, or to let you know they will be taking specific action, such as filing a lawsuit against you.

Don't let bill collectors bite

I wish I could claim credit for the creative title, but I am borrowing it from the Dallas Morning News and Pamela Yip. Ms. Yip has a great column on making sure you don't let debt collectors bite, even though they are getting more aggressive.

Her tips include:

1. Don't ignore calls or letters;
2. Make the debt collector prove the debt;
3. If the collector calls on a bill you have already paid, show proof that you paid it;
4. Don't tolerate abuse from debt collectors;
5. Take action if the debt collector breaks the law.

Regular readers of my blog know that I have been advocating this for years. It is nice to see the media get involved. Remember, I offer you a free debt validation letter at this website. Use it, especially if you receive a call from Brachfeld and Associates. Most debt collectors will go away once you follow step 2 of Ms. Yip's advice.

Sample Validation Letter to Debt Collector

I have had a lot of people calling lately asking what to do when a debt collector sends the first letter. By law, you have 30 days to dispute the debt and ask for validation of the debt. You should put your request in writing to the debt collector, preferably by certified mail, return receipt requested. This way you have proof of receipt.

I am providing an updated validation letter to use when you are contacted by a debt collector.

Debt Collector
12345 Difficult Street
Very Difficult, CA 90015

Re: Account Number

Dear Debt Collector:

I am in receipt of your letter of July 1, 2009. Please note that I dispute the above-referenced debt. Therefore, please verify this debt as required by the Fair Debt Collection Practices Act and the Rosenthal Act. 

While this debt is being disputed, you cannot report this debt to the credit reporting agencies. If you have already reported it the credit reporting agencies, please contact the credit reporting agencies, inform them that the debt is disputed, and ask them to delete it from my credit report.

As you know, reporting information that you know to be inaccurate, or failing to report information correctly, is a violation of the Fair Credit Reporting Act and other applicable laws.

Sincerely,

Mr. (or Mrs.) Consumer

Upon receiving this, the debt collector must stop all collection activity until they can validate the debt. Once the debt is validated, they can continue with their collection efforts. But, many debt collectors cannot validate the debt.

More on Erica Brachfeld and Brachfeld and Associates

One concern for attorneys, especially attorney bloggers, is how much you can write about existing cases. Obviously, I cannot list my client names or violate the attorney client privilege. But, I can write about things that happen in cases.

I have a half dozen or so cases with Erica Brachfeld. I called on Friday to her office at Brachfeld and Associates. I asked for her, but alas, she was not in - again. Interestingly, she has never been in  when I have called. But I spoke to a collector.

I asked the collector where my money was from the three sanctions awards I have against them. He said he did not know but would take a message. I asked when I could expect my money. He said "Good luck with collecting from us." Really? Good luck?

Am I the only one who finds it ironic that a debt collector, or in this case, a debt collection attorney, does not pay its own bills? Ms. Brachfeld takes an aggressive approach in trying to collect money from people, whether it is owed or not, but she will not pay court ordered awards.

If you have been sued by Ms. Brachfeld or her firm, Brachfeld and Associates, or even if you have just received a letter from them about a debt, call me. Or, better yet - email me at debt@jonathangstein.com for a free consultation and 1 hour free work if you retain me.

FAQ: Where can I be sued?

I have a credit card debt. The debt collection company is located across the country and told me they are suing me there. Can the debt collector sue me somewhere other than where I live?

A: This question deals with venue. Venue is the legal issue of where a lawsuit can be brought. So, the question is what is the proper venue for a debt collection lawsuit?

Under the Rosenthal Act, or the California Fair Debt Collection Practices Act, proper venue is under Civil Code 1788.15. That section states that a debt collector can sue in the county where the debtor lives at the time of the filing of the lawsuit or in the county where the debt was incurred.

Under the FDCPA, the Fair Debt Collection Practices Act, the debt collector can sue where the debtor lives at the time of the filing of the lawsuit or where the consumer signed the contract. Since most debt collectors do not know where the contract was signed, this only leaves the place where the defendant lives.

This is important because the debt collector may not want to sue you where you live. If they sue you in the wrong county, you have a complaint against the debt collector for violating the FDCPA and the Rosenthal Act.

You should immediately contact an attorney to review the situation if you are sued by a debt collector.

New Survey Results Show Most Consumers Do Not Understand FDCPA

A new KGTV 10News Survey USA Poll shows that most consumers do not know their rights under state and federal debt collection law. The poll showed the following:

• Only 25% of respondents were familiar with the FDCPA;
• 10% of respondents think that consumers have too much protection;
• Over 40% of respondents had been contacted by a debt collector in the past 5 years;
• Almost 90% of respondents said that the debt collector did not inform them of their rights;
• Only a quarter of respondents were treated respectfully by the debt collector;
• Almost half of the people said that they were threatened in some way by the collector;
• More than three quarters of people were contacted by the collector after telling the collector not to call them.

The results are not surprising.Remember, once a collector is told not to call you, they must stop calling you. And if you are threatened, that is a debt collection violation.

Debt collectors, not all of them, but a large number, do not seem to care about the law. The reasons: it is hard for the government to enforce and few individuals want to enforce their rights. They are usually intimidated and pushed into letting the debt collector run roughshod over them.

The important thing is that consumers need to learn their rights under the FDPCA (Fair Debt Collection Practices Act) and the Rosenthal FDCPA, also called the Rosenthal Act.

Debt Collection: Fatal Attraction Style

Talking Points Memo has an interesting article on the alleged fatal attraction style of collection by Auto Financing Network. According to the lawsuit filed by Jennifer Dicks "AFN registered the URL to Dicks' name and created a site titled 'Jennifer Dicks isn't paying for her Cavalier!'"

Now that is bad. But then "that's when the relentless text message campaign of shame began." One text message reads "All you do is lie. It isn't registered to you so call again. I wish you died when you fell off the roof. If ur not married good. He can do soooo much better."

Now these are some nice collection methods. (Please note the sarcasm.) First, text someone. Then set up a website that says she does not pay for her car. Is it amazing that people do not like debt collectors?  

By the way, these are all Rosenthal Act violations and FDCPA violations. 

Zombie Debt: A real life story

I have written before about zombie debt. This is a debt that is not owed but debt collectors try to collect on. Here is a story from an emailer about her zombie debt:

I owed money to a Macy's card that had 2 accounts on it. When the account went in to collection, the two accounts were merged and collected under 1 reference number, and was being collected by NCO Financial Systems Inc.  I settled the debt in July 2008 with NCO and I have a letter from them stating that my account has been settled.

In Nov 2008 a new collection agency, Allied Data Corporation started trying to collect the difference of the balance claimed by the creditor and the settlement amount, to the cent.  I called several times stating the account was not valid, without any response from the collection agency who said over the phone I had not settled the account. I have sent the letter stating the account is settled and the payment receipt via fax to Allied Data Corp. I called to follow up and they said my account was no longer with their office, and I thought that was the end of it.

I recently received another letter dated April 6th offering to settle for 55% of the total balance due from an agency called FMS Inc. I spoke with them on 4/20/09 and they said they will send me some paperwork asking for proof of prior payment and they said I can send the settlement letter.  As of today, I have still not received the paperwork they said they sent last week. 

From me: This is another sad commentary about the debt collection industry. The debt is not owed, but in an effort to generate revenue, the debt is sold and sold and sold and each time this nice emailer must respond to the debt collector wasting her time and effort.

If you are being pursued over a zombie debt, please let me know.