Tag Archive | "credit card"

FDCPA – Instant Success Story


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!

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The Worst Credit Card Lawsuit Defenses Ever


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.

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Reduce debt by 70% and other false claims


The advertisements for debt settlement companies are all over the radio and television.   “Information the Credit Card companies don’t want you to know” and  “You are entitled to lower your credit card debt by 70%”.  “We can lower your payments substantially and cut your debt in half”.  “Be debt free in less than a year”. The words fraud and scam come to mind when I hear these phrases.

If you have ever heard the saying that its too good to be true, then it likely is. These ads fit that description exactly. You are not “entitled “ to lower your credit card debt under any law  that I am aware of.  “We can cut your debt in half”, well, only in very extreme and lucky circumstances.  Cutting the debt to 70% is a more reasonable goal (unless you are dealing with a debt buyer and not the original creditor. You can get a better reduction, but you should not pay anything to them) and this sort of reduction only applies where you can pay a lump sum or make substantial monthly payments.  “Be debt free in less than a year”? Only if you file bankruptcy or hit the lottery.

The truth of the matter is that these claims are false, misleading, and in my opinion, fraudulent. These claims are merely a sales pitch to get you to hire a debt settlement company. They know that you are having financial difficulties and will do anything to get out of it. The worst part about these false claims isn’t that they can’t back them up and make them come true. No, the worst part is that they charge you an outrageous fee when you sign on with the company, usually a large percentage of the debt (I have seen upwards of 20%) and an additional monthly fee.  The fee is typically paid up front, before any creditors are paid.

Here’s how the debt settlement companies work. They promise to reduce your debt. You hire them. They arrange for you to make payments to their account. When the account builds up enough money, they contact creditors one by one and try to settle cases. To be blunt, this is a horrible idea.  What do you think is happening while you are paying into the account? The creditors are getting upset and are filing lawsuits against you, all the while, the interest continues to accrue at a rate approaching 30%.

Let’s look at a hypothetical situation. Mike owes $25000 in debt to credit card companies. He hires XYZ debt settlement company to work on his debt problems. They establish an account, he pays $500 per month to the account. Since their fee is 20% (that would be $5000 here), and they get paid first, the first 10 payments are solely to pay the debt settlement company. I have to shoot out a common sense question here, is that money well spent? How much interest accrued during that 10 months? How many lawsuits were filed during that 10 months?  Even though they may tell you otherwise, signing on with a debt settlement company does not stop a creditor from filing a lawsuit. To the contrary, it may expedite the filing of the lawsuit because many creditors do not work with debt settlement companies.

The moral of the story here is to contact a consumer attorney in your area if you are faced with credit card debt. There are a number of issues that need to be reviewed, including who the creditor is, how old the debt is, who is representing the creditor, whether the debt has been sold, on and on. Perhaps negotiation is the way to go. On the other hand, perhaps defending a lawsuit is the way to go. Bankruptcy is always an option to consider. Spend the time to consult with a consumer attorney if you are struggling with credit card debt.  Hire the debt settlement company, and you are simply burning money.

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Another Debt Settlement Scam


Potential Client X sent an email to me today advising that she was in trouble.  She has several credit cards in default, so she hired a debt settlement company to assist her. (This is always a HUGE mistake as all debt settlement companies are either scams or not worth the exhorbitant fees that you pay them). The company is charging her 20% of her outstanding debt and have asked her to make monthly payments of $500 into their account. Because her total debt is about $40000, their fee is going to be $8000!  (I wish that I could charge that much, but my conscience doesn’t allow me to do that).  The best part (maybe the worst part) is that the company gets its money first.  The first 16 monthly payments go to the settlement company before they do any work.  Isn’t that just great!  Of course, all of the credit card companies are going to wait this out until the company gets its fee, right? 

The sad part, if it could get any sadder, is that the company told potential Client X that the credit card companies would not sue her because they were involved now. They mentioned that if a lawsuit did come, that they would take care of it.

Well, the lawsuit from Citibank did arrive. Potential Client X notified the company and they advised her that they would handle it.  They advised her to send an extra $125 per month to make payments to Citibank.  Potential Client X complied, only to find that while the funds did go to Citibank, the debt settlement company did not respond to the lawsuit and a judgment was entered against her for the full amount plus attorney fees. They told her that they thought Citibank would like to have 6 months of payments and then they would review her case, because ” that’s how they have handled things in the past”.

This entire fiasco could have been averted if Potential Client X had contact my office, or the office of another consumer attorney, rather than the debt settlement company.  Moral of the story, all debt settlement companies are a waste of your time and money.

 

Even if they get a reduction of 40%

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I filed my own response to the lawsuit


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…

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Illegal Debt Collection Threats


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.

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Yet Another Victory!


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.

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Pittsburgh Credit Card Lawsuits


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.

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The Garnishment Threat


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.

Posted in Collection Agencies, Garnishment, LawsuitsComments (0)

Debt Negotiation in Pennsylvania


I get  many inquiries from potential clients who want me to assist them with debt negotiation.  I will only negotiate a debt under very limited circumstances. 

The first circumstance where I will negotiate a debt is when the Plaintiff (the company that is suing you) is an original creditor.  An original creditor is the finance company that you established your credit account with.  Capital One files alot of their own lawsuits in Pennsylvania, so most times  I am open to negotiation for a client on a Capital One case. 

Negotiation really works best when you have a lump sum of money to offer as a settlement.  For instance, if you owe an alleged $10,000 debt, if you can offer $5000 or $6000 as a lump sum, then you have a shot at obtaining a settlement.  On the other hand, if you can only afford to pay $100 per month, a negotiation is not going to get much of a reduction for you, if any.

I also would consider negotiating with a collection agency on a very small case, perhaps under $1,000.  While my steadfast rule is to never negotiate with collection agencies, there is a reason that I would negotiate on this small amount.  Quite frankly, its more cost effective for the client to pay me an hour’s worth of fees to negotiate a settlement on a small case rather than to hire me to defend it in court for several hours of time.  

On larger claims, let’s say $1000 and up, I would almost never negotiate with a collection agency in Pennsylvania.  Hire me to defend the lawsuit, or, hire another attorney if that’s your choosing, but it would be money well spent.  A knowledgeable consumer attorney can defeat a collecton agency about 85% of the time, perhaps better, so you really should take your chances in court.

If you have any questions about debt negotiation, credit card accounts, collection agencies, or any other consumer matter, please contact my office at 412-823-8003 or 1-888-536-6644 for a free,  no obligation consultation.

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Credit Card Lawsuits

If you are faced with a credit card lawsuit, whether its an original creditor or a junk debt buyer, contact my office at 412-823-8003 right away. We offer a free, no obligation review of any credit card based lawsuit that is filed in PA.

FDCPA Attorneys

Many Debt Collectors threaten people, that's a fact. Threats of wage garnishment, jail, fraud charges and contacting employers, friends and relatives happens every day to people just like you. The truth is that most of these threats are illegal. If a debt collector is threatening you, contact our office at 412-823-8003 for a free initial consultation.
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