There has been a growing trend with the collection agencies towards filing their credit card lawsuits at the local magistrate or district justice.  My belief is that this is a cost savings measure on their part.  Statistics show that approximately 85% of the people who are sued by collection agencies on credit card debt do not defend themselves.  The cost savings for the collection agencies works like this:  At the DJ level, there is no hearing unless the defendant notifies the court that they intend to defend the case and would like a hearing.  In other words, if the plaintiff (collection agency) files a lawsuit at the local DJ, and the defendant fails to respond, then the DJ automatically enters judgment against the Defendant, without even having a hearing.  The plaintiff company does not need to send a representative/attorney to court in this instance.

Our best advise, obviously, is to have a consumer attorney representing your interests even at the district justice level, whether its our firm or another firm.  As we have mentioned in previous posts, collection agencies are rarely prepared to do battle at the district justice level and our chances of success are extremely high.  If you are facing a collection agency or credit card lawsuit, please contact our office at 412-823-8003 or 1-888-536-6644 for a free case review.

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!

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”?

Bob and Mary (fictitiuous names, of course) had a delinquent account with a major credit card company. The credit card company hired a collection agency to assist in collection of the debt.  The collection agency placed a few calls to Bob and Mary, who chose not to speak with them. Undeterred, the collection agency called Bob and Mary’s neighbor and asked them to hand deliver a note to Bob and Mary.  The collector asked the neighbors to write down the  following message : ” This is Joe from XYZ colleciton agency.  I am troubled to hear that you do not want to take my calls. We really need to settle this debt so call me back right away”.  The neighbor handed the note to Bob and Mary, who fortunately called our office right away.

It is illegal for any debt collector to contact a friend, neighbor, family member or anyone at your place of employment to discuss your debt with them. (They may contact one of these third parties only to locate you, if they have made reasonable efforts at finding you that were not successful). The Fair Debt Collection Practices Act (FDCPA) sets forth many rights that consumer or debtors have in regards to delinquent accounts and collection activities that take place as a result thereof.

My partner, Clay Morrow, contacted the collection agency right away and advised them of our representation of Bob and Mary. Clay advised that the activities were illegal and that we would be bringing a claim against them.  The collection agency knew that their actions were illegal so there wasn’t much of a fight. They do these things because they know that 1) these tactics are often successful and 2) that most people will not bother to consult an attorney.

Within a matter of 10 days, Clay was able to obtain the full amount of the statutory damages ($1000) plus attorney fees for Bob and Mary.  Clay was also able to settle the underlying debt with the original credit card company for a small fraction of the actual debt.  Great job Clay!

We hear about unsavory collection agencies on a daily basis. They either make illegal threats, such as wage garnishment, pressing fraud charges or jail time, or, they harass you by calling you names like deadbeat, ignorant, loser and so forth.  Then, they contact your family and friends to try to get them to pay the debt for you, or, they contact your neighbors and employer with questions about the debt. 

All of the above actions are illegal under the Fair Debt Collection Practices Act. The Fair Debt Collection Practices Act (FDPCA for short) is a federal law that governs what a debt collector may do or say when it is attempting to collect a debt.

A debt collector may not threaten to take any action that is illegal, period. In the above examples, wage garnishment is a big one that we see quite often. To be clear, a debt collector may not garnish your wages in Pennsylvania for a credit card debt. There are no ifs, ands or buts to that statement. Therefore, if a debt collector makes such a threat, it is illegal and you may have a claim against them for their unfair practices.

Again, referring to the above examples, we hear of debt collectors who contact family, friends, employers and neighbors about outstanding debt. This type of activity is usually illegal, but not always.

To explain, generally, a debt collector may not speak with or contact anyone else about your debts. For the most part, an employer may never be contacted about a credit card debt. With regards to friends, family and neighbors, the same is true but with one general exception.

If a debt collector cannot find you, they may contact others to ascertain your location and contact information.  Again, they have this permission only if they cannot find you. They may not speak with others about the nature of their business, they may not tell anyone that you allegedly owe a debt.  Their sole purpose in contacting a friend, neighbor or family member can be only to locate you.  If the debt collector has a valid address and phone number for you, they have no reason or right to contact anyone else about your alleged debt.  Such an action would be illegal.

If one of the above examples should happen to you, please know that you have rights under the FDCPA. Our firm, specifically through my partner, Clay Morrow, can bring a claim against the debt collector for its illegal activities. Generally, you are entitled to a statutory damage amount $1000 AND you receive your reasonable attorney fees for prosecution of the claim. In that regard, we do not charge an up-front fee to pursue these claims on your behalf.

If a debt collector has threatened you, or discussed your alleged debt with someone else, please contact our office right away so that we can begin a claim for you.

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.

As the second largest city in Pennsylvania, Pittsburgh receives hundreds of Credit Card and Collection Agency lawsuits each week.  Because of the high volume of cases, there have been several court rulings regarding these cases, to keep an even flow and to prevent them from clogging the Pittsburgh court system.

The most important rule is the 120 rule issued by Judge Wettick.  This rule applies to credit card or collection agency cases that are defective.  (As per my other posts, almost all of these lawsuits are defective initially).  Judge Wettick’s ruling is essentially that the credit card companies and collection agencies have 120 days to correct the defects inherent within their lawsuits.  If they are unable to correct the defects, the case is dismissed (which means thrown out of court). 

If they make a minor correction, that cures a few defects, but not all of them, then objections can be filed a second time.  If this occurs, then Judge Wettick gives the collection agency or credit card company an additional 30 days to make corrections.  Typically, Judge Wettick does not afford further opportunity to these companies. 

The ruling has obvious benefits to the court system.  The collection attorneys know what they need to have to proceed with a case, and the consumer attorneys such as myself who are defending against these lawsuits know exactly how the court will rule on a given case.

An individual sent me an email today asking whether they should still respond to a lawsuit filed by a collection agency.  The individual explained that they had reached an agreement with the collection agency on a payment plan.

My first response was to  tell the individual that they had made a huge mistake in agreeing to pay the collection agency anything.  Typically, as you will see from any of myother posts, a collection agency has a difficult time in proving a  case against you in a court of law in Pennsylvania. 

My second response was that if they are going to continue on with the proposed settlement, making their mistake even larger, then they should absolutely file a written response to the lawsuit.  An agreement with a collection agency is pretty meaningless unless you have it spelled out specifically inwriting.  I would never trust an oral agreement with a collection agency, ever.  If you fail to file your response to the lawsuit, the agency most likely will simply enter a default judgment against you for the full amount of the alleged debt, often with an inclusion of their attorney fees.  If you do “strike a deal” with a collection agency, (which again is a huge mistake) then at least get it in writing.