We recently had the pleasure of representing Virginia H on an Allegheny County credit card lawsuit.  Virginia was sued by Arrow Financial earlier this year.  She failed to respond to the lawsuit in time, and a default judgment was entered against her.  She called our office and after a quick review of the docket, we noticed that the Important Notice that was sent to her was defective in that it contained additional language.  (An Important Notice must be sent by the debt collector if you fail to respond to the lawsuit within 20 days.  This notice affords you an additional 10 days to respond).  We immediately filed a Motion to Strike the Judgment and argument was held before the Honorable Stanton R. Wettick.  Our argument was that the additional language that the debt collector added to the Important Notice was deceiving in that Virginia thought that a judgment had already been entered against her.  Judge Wettick agreed and struck the judgment.  Shortly thereafter,  the judge scheduled an Arbitration hearing and of course, we won as usual.  The reported opinion can be found at the Pittsburgh Legal Journal

This was a very good week for our firm.  We obtained 4 non-jury verdicts this week on credit card cases.  All of the cases commenced at the Arbitration level of the Court of Common Pleas of Allegheny County. We won all of the hearings at the Arbitration level, and the debt collectors filed appeals on all of the cases. The hearings on these appeals were heard this week and we won every single case! 

To be fair, its really not a suprise when we win a case, it happens so often, but 4 in one week is pretty good!

Our client, Lady Z, received a demand letter from a junk debt buyer.  Lady Z contacted us immediately and we sent out a Validation letter.  A Validation letter is a request to the debt collector to authenticate the debt that they allege is due and owing.  The debt collecter in Lady Z’s case did not respond to our request.  By law, they have 30 days to respond to our Validation request.  If they fail to do so, they may make any further attempts to collect on the debt, and, they must mark the client’s credit record as “disputed”. 

In this matter, the debt collector failed to do anything that it was required to do by law.  After about 45 days, Lady Z reviewed her credit report and discovered that the debt collector was still reporting this debt as valid, with no dispute listed.  We immediately filed a lawsuit against the debt collector in state court. Within a matter of about 3 weeks, debt collector’s attorney contacted us and acknowledged the error.  He was willing to eliminate the underlying debt, remove the adverse credit reporting, pay $1000 in statutory damages and pay our attorney fees.

We hear this one all the time at our office. People call my office because they have been sued by collection agencies or junk debt buyers on old credit card accounts. I tell them that we can defend the case and most likely win. They often say “But, I owe the money” 

My response to that is no, you certainly don’t.  Most people do not realize this, but here’s how it works with a credit card account. You obtain a credit card from the original creditor.  Something happens and you lose your ability to pay so you go into default status. The original creditor waits up to 180 days and then charges off the account. (A charge off is simply an accounting term, it DOES NOT mean that you do not owe the money any longer). At this point, the original creditor has 2 choices.  The first is to try to collect from you by filing a lawsuit; The second is to sell the debt to a junk debt buyer or collection agency.  Often times, the original creditor chooses option 2.

When a credit card account is sold, it is sold not as an individual account, but rather, as part of a group of block of delinquent accounts. Typically, these accounts are sold for mere pennies on the dollar. A group of “good” bad debt (good defined as recently defaulted) may sell for 5 cents on the dollar. It can get sold again and again, each time at lower rates. We have seen instances where $1000 of debt has sold for .25. 

So the purchasing junk debt buyer or collection agency then files a lawsuit against you. This is where “but I owe the money” comes into play.  From my standpoint, you may owe the money to the original creditor at the time that you default. If they lend you money or extend credit to you, you do have an obligation to pay it back so you do “owe the money”. However, once you go into default and they charge it off, they have a choice to make. They can sue you or sell the account to a collection agency. If they sue, then maybe you do “owe  the money”.  But if they sell your account, then I don’t believe that you “owe the money” any longer.

Here is my reasoning. You have a credit account and are extended credit. You certainly owe the original creditor something at that point.  Once you go into default, you still “owe the money” to that creditor. I believe, however, that if they sell the account, then you no longer “owe the money” because they have received adequate compensation for you default. When they sell your account they are saying that they no longer want to deal with you and they would like to be compensated for the default. Collection Agency X comes along and gives the original creditor money for your account.  At that point, the original creditor is out of the picture. They have received what they deemed to be adequate and fair compensation for your default.  They would not have sold it otherwise, right?  So if the original creditor is adequately compensated, then you no longer “owe the money” in my opinion.

This isn’t to say that a legal interest such as a credit card account cannot be bought and sold.  Those transactions are certainly legal. I am simply looking at this from a debtor’s standpoint. If you pay anything to that collection agency, if you believe that you “owe the money” , you are simply paying pure profit to that collection agency. After all, they paid only pennies on the dollar for your account. After the first $30 or so, any money that you pay to them is pure profit.  Do you really “owe the money”?

I have encountered many people who have tried to defend credit card cases themselves in the past few months and am very surprised at some of the defenses that they think will work. The following are a few of the worst defenses that I have seen, and an explanation as to why they are such bad defenses.

I’ve never had an account with you.

This means absolutely nothing in a court of law. The right to sue someone is a legal interest. A legal interest can be sold, at any time, at any price, to anyone.  While it may be true that you did not have an account with the collection agency, that doesn’t mean that they cannot sue you on a delinquent account. (Whether they can prove that they bought the account is another story and is the basis for much of our success in defending collection agency lawsuits).

I tried to pay, but they wouldn’t work with me.

This may be the worst defense ever.   “I tried to pay…”  this is called an admission. Who pays on something that they do not owe?  No one.  The admission here is that you did have an account with someone and that you are in default on that account.  In a nutshell, it means that you lose your lawsuit. To be clear, once you are in default the creditor or collection agency does not have to accept any payment other than payment in full.  You do not get to set the terms of repayment.  Its not up to you to decide how much you can or are willing to pay. In addition, a court typically does not determine payment arrangements. Instead, a court determines if you owe anything and then how much. Repayment afterwards is up to the parties to handle.

My divorce decree says that I don’t have to pay.

This is mixing apples and doritos. A divorce decree or order is issued by a family court. While it has a binding effect between the spouses (ex spouse’s I should say) it does not bind other parties. The credit card company (or collection agency) is not bound by this divorce decree or order because its case is in civil court, which is different. The credit card company can sue the named cardholder only, not anyone else, and the divorce decree will not prevent that. What may happen is that the credit card company sues the cardholder and wins its case. The cardholder could then go to family court and have the other person found in contempt for not handling the account.

I hired a debt settlement company.

Perhaps the second worst defense, and, the absolute worst move that you could make, period. (This author firmly believes that debt settlement companies are useless and clearly not worth the outrageous fees that you pay them). As stated above, a credit card company or collection agency does not have to accept any payment other than payment in full, once you are in default. Debt settlement companies cannot stop lawsuits from occurring and are not equipped to help you respond to a credit card lawsuit. DO NOT TAKE LEGAL ADVICE FROM A DEBT SETTLEMENT COMPANY.  Again, don’t hire them to begin with and you won’t have to worry about heeding their legal advice.

I am amazed at the number of phone calls and emails that I have been receiving regarding this topic.  Many people, perhaps in an effort to save money, have decided that they can file their own response to a credit card or collection agency lawsuit. In almost every case, this is a mistake.

In Pennsylvania, you have 20 days to respond to a lawsuit after it has been served upon you. Your initial response is of the utmost importance, because it determines which defenses you intend to set forth.

There are two choices, either an Answer, which is generally a denial of the factual allegations, or, Objections,which in plain terms allege that the credit card lawsuit is legally defective.  In most instances, Objections are the proper response to a Pennsylvania Credit Card Lawsuit. 

For the most part, Objections are waived if you do not raise them at the proper time.  (Waive means that you lose them). When a person files their own response, it is almost always an Answer, meaning that they have waived various defenses that would be afforded to them if they had filed Objections. This mistake may or may not be fatal to your case, but is that really a chance worth taking? For the most part, legal fees on credit card cases are not as high as you might think.  Generally, depending upon your location, the amount of the lawsuit, who the plaintiff is and who is representing them, your legal fees should only amount to a few hundred dollars.  When you are faced with a $10,000 credit card lawsuit, the fee is always worth the price…

You had better pay this debt you deadbeat! We’re gonna garnish your wages… We’ll press fraud charges against you for failing to pay this debt!

These are some of the more common threats that we see in the credit card cases lawsuits that we defend.  ALL of these threats are illegal. There is a federal law known as the Fair Debt Collection Practices Act (FDCPA for short) that makes these sorts of threats illegal. The FDCPA sets forth that these threats, and others just like them, are against the law AND it also gives you the right to sue the debt collector! Each threat or violation is a possible $1000 fine that you can recover from the collection agency AND you also can obtain your reasonable attorney fees in prosecuting the claim.

In that regard, our firm does not charge an up-front retainer when we take on FDCPA violation cases. We simply handle the case, we have the collection agency pay your claim, and we have them pay our fees as well. 

If a collection agency or debt collector makes any sort of threat to you that sounds illegal, or just plain wrong, then it probably is.  Contact our office for a free, no obligation review of your potential case.

Today was a very good day for our firm.  We were representing an elderly fellow in court in Pittsburgh today.  FIA card services had filed a lawsuit against him on an alleged credit card account with an alleged $18,000 balance.  At the Arbitration hearing, FIA did not have any documentation, evidence, or witnesses, and thus, was unable to  prove its case against my client.  FIA quickly filed an appeal and a bench trial was scheduled before the judge. 

I made several calls to the opposing attorney in an attempt to obtain the documents that they had.  My phone calls were left unreturned.  At trial this morning, FIA had some apparent documentation, which it had never shared with me, but little else.  They failed to provide a witness to authenticate the documents, and because they were not provided to me beforehand, the documents were inadmissable.  Before the hearing even began, I presented a Motion to Dismiss, which was promptly entered by the judge.  The scoreboard today, my client 1, FIA Card Services 0.

Have you been sued by Attorney Apothaker and Associates?  Join the club.  I deal with Attorney Apothaker’s lawsuits on a daily basis, whether its filing a response or simply reviewing the lawsuit to give a potential client some advice.  For the most part, the lawsuits filed by this office are defective.  They are simple, cookie cutter forms that lack the proper information that is required by a Pennsylvania court to move forward.  Our typical response to these lawsuits is to file what are called “Preliminary Objections” which are, in a nutshell, an objection to the numerous legal defects contained in the lawsuit. 

Without fail, the courts will agree with us as to our allegation of defects in these lawsuits.  The courts generally will give Attorney Apothaker the opportunity to “cure” the defects in the lawsuit, but in my experience, his office generally has difficulty in curing the problems.  To be fair, it is not necessarily his office that has the problem, its the clients that he often represents.  These collection agencies, or junk debt buyers, simply do not have enough information to prevail against you in a court of law in most cases.

If you have been sued by Apothaker and Associates, you need to have a knowledgeable consumer attorney review the lawsuit, whether its my office or another consumer attorney.  Again, these lawsuits are generally defective, and there is a very strong possibility that they can be thrown out of court without you having to pay anything other than a small attorney fee.

The collection agency calls and says that you better pay up.  If you don’t pay, then we’ll garnish your wages.  Believe it or not, that can be a great phone call to receive if you live in Pennsylvania.

This is a common threat that is issued by the collecton agencies.  It works very well for them because nobody wants their wages to be garnished.  Unfortunately, it is also an illegal threat. 

Pennsylvania is one of the few states that do not allow creditors to  garnish wages.  There is no exception to that law, at least not when a collection agency or credit card company is involved.  Wage garnishment for credit card debt cannot occur in Pennsylvania, period. 

Regarding the threat, as I said above, it is illegal.  There is a federal law known as the Fair Debt Collection Practices Act (FDCPA for short) that protect consumers.  One of the main components of this law is that a debt collector cannot make a threat that it cannot follow through on, or it can’t make a threat that is illegal.  Since wage garnishment is not permissible, by law, in Pennsylvania, making such a threat is illegal. 

The FDCPA gives you the right to file a lawsuit against a debt collector that makes this sort of illegal threat.  There is a statutory $1000 damage penalty, along with an imposition of reasonable attorney fees.  In that regard, your attorney is free.

Call our office if you have been threatened with wage garnishment in Pennsylvania.