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Archive | May, 2014

Sued by LVNV Funding – Who Are They?

The Sheriff knocks at your door or you receive a certified letter and find that a lawsuit has been filed against you by LVNV Funding.  Your first thought should be… who is LVNV, I’ve never heard of them?

LVNV Funding is a junk debt buyer.  They are a subsidiary of a very large debt collection/buyer called Sherman Originators.  This is a company that buys delinquent credit card accounts, often 5,000 to 10,000 accounts, for pennies on the dollar.  Yes, that’s right, they purchase credit card accounts that are in default.  This is perfectly legal in any state in the U.S.  The statistics change, but it appears that these companies pay between 1.5 and 3.5 cents on the dollar to purchase these accounts… that’s pretty cheap if you ask me.  I’d like to purchase almost anything for 2 cents on the dollar.

Why do they purchase delinquent credit card accounts like yours?  Well, to make a profit, of course.  When they buy an account, they get to “step into the shoes” of the original creditor.  That is, they are allowed to try to collect the entire amount from you.  If you pay them, they make a HUGE profit on their expenditure.   Let’s say that you have a $5000 credit card debt with Chase.  You default, likely because you have a health problem, divorce, or job loss.  Chase doesn’t want to sue you so they sell the debt to LVNV.  LVNV then sues you.  You now happen to be back on your feet so you think about paying the debt.  If you do pay the $5000, remember, LVNV has only paid about $100 to acquire that claim. That is a very large profit, wouldn’t you agree?

The truth of the matter is that its a numbers game for LVNV.  They know that about 8o% of the people whom they sue will either roll over and pay the bill, OR, will put their head in the sand and do nothing.  Right off the bat, LVNV wins 80% of the time.  Of the remaining 20%, LVNV knows that a little more than half will try to defend themselves (this is a big mistake).  So now LVNV has won 90% of the time that it files a claim.  Less than 10% of the people who are sued by LVNV actually hire an attorney.  (Make sure that don’t just hire any old attorney, hire a Consumer Attorney).

LVNV Funding uses a few large collection firms to handle their cases in Pennsylvania.  Currently, they are using Apothaker and Associates and Hayt, Hayt and Landau.  These are two fine collection firms, they know how to handle credit card cases.  These are not firms that you want to go up against without legal representation.

So the big question is, what happens when you hire a consumer attorney?  Well, it depends upon which court you are in.  If the lawsuit is in the local District Justice court, then you will let the attorney go to the hearing and argue the case.  This most often can result in a judgment in your favor.  LVNV is often unprepared at Magistrate hearings.  If the lawsuit is filed in the Court of Common Pleas of your county, then a different approach is necessary.  A written response needs to be filed and for LVNV cases, the most appropriate response is often to file Preliminary Objections.  These objections are a statement to the court that the lawsuit is defective.  (All LVNV lawsuits are defective when initially filed).  The court will rule on the objections and likely force LVNV to come up with more evidence.  When they cannot come up with more evidence, the case is often tossed.

If you are sued by LVNV, please do not contact them without speaking to a consumer attorney, whether its someone from my firm or another.  These cases are best handled by an attorney, not by you.

Posted in Lawsuits, LVNV

Statute of Limitations for Credit Cards

What is the Statute of Limitations for Credit Cards in Pennsylvania?  We get calls asking this question every day.  In most instances, the statute of limitations on a collection claim in PA is 4 years.  There are a few exceptions, namely for Discover and Capital One accounts, which may be only 3 years.  Discover and Capital One may have different (and lesser) statutes of limitation due to the contract that they include with their accounts.  Not every contract has the same language, but some of them do.

When does the Statute of Limitations start?  The SOL starts when the account or claim goes into default.  Default occurs when you fail to make a payment, in most instances.  As an example, you make a payment December 31, 2009.  The next payment presumably is due on January 30, 2010.  If you fail to make that payment, then the statute clock starts to click.  If there is a four year SOL at work here, then the claim against you would have to be filed by January 30, 2014.  If the claim is filed after that date, then the claim may be “time-barred”.  Time barred simply means that a claim is too late, it does not mean that the collector cannot sue you.  What I mean is that time barred lawsuits are filed every day.  You cannot simply call up the collector and say “this is too late, drop it”.  That phone call is rarely going to work.  Instead, you are going to have to assert your defenses to the lawsuit by filing a responsive pleading.  Then, you may have to go to a hearing or have a motion for summary judgment scheduled.  The point being made here is that many people believe that if the lawsuit is too late, they can either ignore it or they can simply call the court or opposing attorney and ask them to withdraw the case.  I can say that rarely is an effective maneuver.

If a credit card collection action is filed against you and you think that the SOL has run, you should consult with a consumer attorney right away.  The action of filing a claim after the SOL has run is illegal and is contrary to the Fair Debt Collection Practices Act (FDCPA).  This can result in you filing a claim against the debt collector who sued you.  Such a lawsuit would entitle you to up to $1000 in statutory damages, plus any actual damages, plus recovery of reasonable attorney fees.

Posted in Lawsuits

Can I strike a Default Judgment?

We seem to get 3-4 phone calls per day asking what to do about a judgment.  In most cases, the only option is to settle.  You cannot raise “statute of limitations” defenses, or say that “it was my ex-wife’s debt”.  Those are affirmative defenses that needed to be raised BEFORE the default judgment was entered.  Having said that, all default judgments should be reviewed because there is an opportunity to strike them under certain circumstances.

In order to get a default judgment, the Plaintiff must do everything properly.  That means that they must properly serve you with the complaint, they must include the proper notice to defend, the proper important notice, and if the debt was sold, it must include an allegation that they are the assignee of the account.  As far as service goes, this means that the sheriff must have served you or an adult in your family with the lawsuit. Every once in a while, we come across a case where “sewer service” occurs.  This is where the lawsuit is allegedly served upon “someone”, but you have no idea who that “someone” is. This happens most often when you live in an apartment complex or you move from your residence.  Service may also be obtained by mail, but only after a Court Order is issued.  Another scenario that we see is where the Notice on the Notice to Defend is incorrect.  It might be missing language, have extra language, have the incorrect phone number or address for the bar association, there are a few different issues that we look for.  The same applies to the Important Notice (or 10 day notice).  We had a scenario where a certain attorney was using an incorrect Important Notice for about 2 years… and every judgment that they have entered is subject to being stricken.

If you would like a review of your default judgment, you will need to provide us, or another attorney, with a copy of several documents.  The Complaint, the Important Notice, the Sheriff return document and a copy of the complete docket statement.  We can review for errors and determine whether any mistakes were made.  If any were made, then you can petition the court to strike the judgment.  If this is successful, this does NOT mean that you win the case.  It simply means that the lawsuit is re-opened.  You will have an opportunity to defend the case from that point.

Posted in Lawsuits

Go It Alone? Bad Move on a Credit Card Lawsuit

I had a conversation with a gentleman yesterday that I have had numerous times with other potential clients.  The caller asks for a case review, which we are always glad to offer.  He was being sued by Portfolio Recovery Associates for about $7000, which is alot of money.  I discussed the claim in detail, explaining what needed to be done and what we could do for him.  Based upon what we discussed, I was nearly certain that I would win the case if hired.

At the end of the phone call, the man said that he was going to file his own answer. Even though I hear this all the time, I am still very shocked each time it happens. I explained to him that filing an answer was the wrong move, that he was making a very large, possibly fatal mistake, and he said that was still what he was going to do.  I explained to him that filing objections on his case would be the proper move, and he said that he would add the objections to his answer and that he was confident that the court would honor them.

The first question that I have, that remains unanswered, is why did you call an attorney if you are going to ignore their advice?  The second question that I have is why would you risk so much money when you have a guaranteed winner if you hire a consumer attorney?  The third question that I have is why do you think that you can learn what I know by spending an hour or two on google?  Obviously, I will never receive answers to my questions…. This gentleman kept insisting that he was making the right move, that he knew all about “standing” and other legal concepts.  I did ask him why he called my office if he had no intentions of hiring an attorney and he clearly felt that he knew more about the law than I did, and his response was that he just wanted to see what an expert would say.  Well, the expert spoke and the expert says that he is going to lose, GUARANTEED.  It is inevitable that in 3-4 months this gentleman will call me up and ask me how much it costs to file an appeal because he got crushed at the arbitration hearing.  Well, sir, the fee is much higher to handle an appeal than it would be to handle the original case, because now I have to try to correct the mistakes that you made, and that will require extra court appearances…

Look, I know my job and I know credit card law. I know every case and I know how most counties handle these matters.  I know the proper response and the proper defenses.  I know how to defend you  and protect your rights and interests.  You may be smarter than me, obviously there are many people who are smarter than me, but there are very very few, if any, who know Pennsylvania Credit Card Law better than me.  You cannot go onto google for an hour or two and think that you are prepared to defend your case, especially when its for $7000.

You don’t want to represent yourself on these cases for many reasons.  You don’t know the proper response to the lawsuit.  Even if you did know what it was called, you don’t know how to draft and present it.  You don’t know how each collection agency or attorney handles things, what their procedures and tendencies are.  We craft defenses based in part on what is in the complaint and on which law firm is representing the debt buyer.  Each debt buyer has different attachments that they place in the lawsuit, that require different responses.  Most importantly, you should not personally be involved in the defense of the lawsuit, at least at the onset, because you are a liability.  That’s right, you are a danger to your own case.  You can be cross examined and your testimony can be used against you.  Bet they didn’t tell you that in the internet chat room that you visited when drafting your own answer…

If you call my office, I am glad to give a consultation, even if you are not going to hire me or my firm.  That being said, if you don’t hire us, and you don’t hire someone else who does what we do, you are setting yourself up to lose a case that you would almost otherwise be guaranteed to win.

Posted in Lawsuits

Telephone Communication Protection Act (TCPA)

In 1991, the United States Congress passed the Telephone Consumer Protection Act (“TCPA”).  The primary goal of the TCPA is to protect individuals from harassing telemarketing phone calls.  More specifically, the TCPA is designed to prevent the annoying pre-recorded calls that you receive from unknown numbers at all hours of the day.  Common pre-recorded messages will sound something like this:

“Congratulations, you qualify for an all-expense paid trip to sunny Florida.  To redeem your gift, press 1.”

“Did you know that you can save on your electric bill?  Press 0 to speak to one of our representatives.”

These pre-recorded messages can be for anything including cruises, utilities, vacations, emergency bracelets, professional services, etc.  If you have received one of these pre-recorded phone calls, you may have a lawsuit against the company who initiated the phone call.  But first, you need to gather more information.  Make sure you capture an image of the caller ID that shows the time, date, and phone number.  You can take a picture with your cell phone, or capture a screen shot.  Next, follow the command prompts by pressing “1,” “0,” or whatever you are directed to do.  Once you are connected to a live person try to get that person’s name and who he or she works for.  Once you have that information, we can start doing the research to determine who called you and whether or not you have a claim.

There is no reason for you to suffer the harassment of telemarketing phone calls.  Thanks to the federal government, you can make money from them, if you gather the right information.  A violation of the TCPA could be worth up to $1,500.00 per phone call.  At Morrow and Artim, P.C., we don’t charge you for our representation, so you only pay us once we prevail.  Our fee would come from the “victory” proceeds.  If you think you are receiving unwanted phone calls of this nature, give us a call.  We will determine whether your case is ready, or what you need to do during the next phone call to secure the claim.

Posted in Other

Debt Collection Letters on Out of Statute Debts

Are you getting debt collection letters on very old debts?  All states have a statute of limitations on the collection of debts.  A statue of limitation is the time period within which you must be sued on a given claim. It is also called a time-barred debt. It is an affirmative defense, in other words, you must raise the defense in your answer to the collection complaint.  If you fail to raise the defense, then you are deemed to waive it. What is the statute of limitations in Pennsylvania? For a typical credit card case it is four (4) years, but maybe as short as three (3) years for Discover Bank and Capital One cards.

So, you get a collection letter on an account that you know is over the statute of limitations. What do you do?  You should keep both the letter and the envelope that it came in.  If the debt collector failed to tell you that it was out of statute or failed to tell you when the last payment was on the account, you may have a violation of the Fair Debt Collection Practices Act (“FDCPA”).

The FDCPA is a law that governs the behavior of debt collectors. It is only applicable to consumer debts, not debts that you would have incurred in a business or for a business purpose. It is a remedial statute and will be construed broadly in order to give it the full effect. The Courts interpret the FDCPA not from your individual perspective, but from a much lower standard, the “least sophisticated consumer”. The law states that if the debt collector violates the FDCPA it must pay your reasonable attorney fees and costs and you are entitled to your actual damages and statutory damages.  The FDCPA was written to provide for attorney fees so that it would be enforced by private attorneys.  Without the fee shifting, the FDCPA would only be worth the paper it’s written upon.

A recent court decision helps to clarify that it is a violation of the FDCPA when a debt collector is collecting on a time-barred debt and used the word “settlement” in the letter.  The Court in McMahon v LVNV Funding, LLC, et al. held that even in the absence of a threat of litigation, the use of the word “settlement” would lead the least sophisticated consumer to believe that the debt was legally enforceable or collection litigation might still occur on the time-barred debt.

So, you if you have any collection letters on a debt you know is out of statute within the past one (1) year you should contact our office for a review of the letter.  You may email or fax a copy of the letter to us for a free no obligation review, making sure you have a cover sheet with your contact information.  Attorney Clay Morrow from our office will be glad to review your letter and advise as to the proper course of action.

Posted in Illegal Threats

Sued By Calvary SPV?

You’ve just been served with a lawsuit from Calvary SPV, and your first question is …. “who is Calvary SPV?” and your second question is “what do I do now?”.  Let’s address each question in some detail.  For the first question, Who is Calvary? its a pretty simple answer.     Calvary SPV is a very large debt buyer who purchases delinquent credit card accounts for pennies on the dollar and then tries to collect 100% of what is owed.  They purchase these accounts at a substantial discount and then come after consumers like you for the full balance.  These purchases are often made electronically such that a large volume of credit card accounts can be transferred at the touch of a button.  We frequently see sales of 5,000, 10,000,  20,000 or more.  This is a perfectly legal endeavor and it happens on a daily basis.  Credit card companies like HSBC, Capital One, Bank of America and Chase often sell their defaulted credit card accounts rather than pursing individuals through the collection process.  At the time of this writing, Calvary is in what we at our firm call one of the “big 4″…the four largest  debt buyers that we deal with (along with LVNV, Midland Funding and Portfolio Recovery Associates).

The second question, “what do I do now” has a few correct answers, but some are more correct than others.  Let’s start with the WRONG answer.  The wrong answer is to put your head in the sand and do nothing.  Believe it or not, this is a very common response from consumers and frankly I cannot understand it.  If you are being sued, the last thing that you want to do is ignore the lawsuit.  The next WRONG answer is to contact a debt settlement company.  This is also a very common response and I can understand the thinking here.  You hear a great radio ad about this company that can help you get out of debt.  You’ve been meaning to call them and now that you are sued, this is the perfect time to call.  Again, this is the WRONG answer.  Debt Settlement companies, at least 99% of the ones that my clients have dealt with, are not worth the exhorbitant fees that you pay them, or worse yet, are scams.  Granted, there are a few debt settlement companies out there that are legitimate, but in my experience, they are few and far between.  The next WRONG answer is to contact Calvary SPV directly yourself.  This, quite frankly, may be worse that doing nothing.  This puts you in the position of dealing with a debt buyer directly without representation.  You will be taken advantage of, that is a fact.

Now, for the RIGHT answer, you should consult with a consumer attorney, especially here in Pennsylvania.  Any good consumer attorney is going to tell you to defend, defend, defend.  It sounds self serving, I know, but it is the correct course of action 99% of the time.  I mentioned earlier that Calvary buys thousands of these accounts at a time.  Well, when they make these purchases they make them on an AS IS basis.  This means that they have no way of knowing if the information that they receive from the original creditor is legitimate, accurate, or authentic.  On top of that, how much information do you think they get for something that they paid 2 cents on the dollar?

There are limited times when I tell a consumer to settle with Calvary.  The first is if there is an urgency to clean a credit report, say for a job or home purchase.  The second is where the debt is very small.  If they are suing you for $500-600, it may be more cost effective to settle at a discount rather than to defend.  Having said that though, you should still consult with a consumer attorney on any Calvary lawsuit.

As always, we offer free consults on debt buyer lawsuits.  Call our office at 412-823-8003 or email your inquiry using the contact page on this site.


Posted in Other

Can They Garnish My Wages???

Several inquiries this week on this hot topic. Debt collector calls person and says that they are going to start legal processing and wage garnishment if the person doesn’t pay $500 by 6 p.m.  Pretty scary threat, huh?  Well, let’s think this through.  If you owed me money and I could garnish your wages, why would I call you?  Why would I bother?  I would simply garnish your wages and get my money.  Sounds easy, right?

Fortunately, that’s not how it works, especially in Pennsylvania.  To begin, wage garnishment generally cannot occur unless a court says that it should occur (administrative wage garnishments can occur on student loans, this does not require a court proceeding) .  This generally means that there has to be a lawsuit and you have to lose.  Even after you lose, the case has to be one that fits into the permissible wage garnishment sections.  PA only allows wage garnishment in very limited circumstances… back rent, child support and related family law/divorce issues, restitution, certain student loans, and certain out of state judgments that are properly transferred into Pennsylvania.

So a debt collection lawsuit for a credit card is not one of the listed entries for which a wage garnishment can occur (again, unless there is a valid out of state judgment that is properly transferred into PA).  If you live here and you work here and you are sued here, there is no possibility of wage garnishment in PA if you are sued on a credit card claim.

So why does the debt collector make the wage garnishment threat?  Because it works, it scares you, it places you in a position of complete fear.  Nobody wants to have their wages garnished, right?  You would do anything to avoid the wage garnishment, at least that is the debt collector’s thinking.  They are scaring you into paying, which is completely ILLEGAL.  A debt collector cannot make a threat that it cannot legally carry out.  The law that protects you when the debt collector makes such a threat is called the Fair Debt Collection Practices Act (FDCPA for short).  The FDCPA gives you the right to sue any debt collector that violates the law, AND IT REQUIRES THE DEBT COLLECTOR TO PAY YOUR LEGAL FEES.  Think about that for a minute… the debt collector has to pay your attorney to sue them.  It’s a truly wonderful law that we use on a daily basis.

If a debt collector has threatened you with wage garnishment, rather than getting scared, take the time to ask him/her some questions.  Get their name, address, phone number, any contact information that you can, and then contact our office.  We would be happy to offer you a free, no obligation review of your issue.


Posted in Garnishment

Why we don’t often settle with Debt Buyers like Portfolio Recovery and LVNV.

This is the headline in the news today…”Consumer debt collectors Portfolio Recovery Associates LLC and Sherman Financial Group LLC (parent company of LVNV Funding) have agreed to vacate thousands of judgments totaling $16 million, and pay a total of $475,000 in penalties and costs, for making untimely claims against New Yorkers, the attorney general said Thursday.”

Read that again, please. They have agreed to vacate thousands of judgments in New York totaling $16,000,000.00.  Why would they do that?  Because they basically committed fraud in filing those lawsuits. No debt collector or debt buyer may file a lawsuit on a claim where the statute of limitations has expired. To do so would be a violation of the Fair Debt Collection Practices Act (FDCPA).

Portfolio Recovery Associates and Sherman Financial Group (again, LVNV) are both debt buyers that purchase unpaid consumer debts, mostly from credit cards, from the original creditors or other debt-holders at substantial discounts and then try to collect. In these instances, they filed lawsuits on debt that was expired or “beyond the statute of limitations”. This sort of thing happens on a daily basis. When a debt buyer purchases a group of accounts, they are buying the accounts AS IS.  This means that there are no warranties or assertions that the data or documentation contained therein is accurate.  Think about that… these companies have no idea if the amounts are correct, if the debt has already been paid, if the customer names are correct, if the interest and fees that were applied are correct… on and on.  This also means that they often have no idea if/when the statute of limitations has expired.  Do you see where I’m going with this?  How can we recommend to our clients to pay one of these claims?

Why would these debt buyers file these lawsuits if they might be time barred?  Because the problem often isn’t noticed.  We have seen different statistics showing that between 85% and 92% of people who are sued on a collection case do not contact an attorney.  They either get scared and pay the debt, or, put their head in the sand and do nothing, and the debt buyers know this.  Apparently, filing these out of statute claims is part of the business model and its apparently, its a risk worth taking.  If you knew that you were going to win the lottery 85% to 92% off the time that you played, would you play every day???  Of course you would.

The AS IS portion of this article is why we rarely recommend to our clients to settle these claims.  These debt buyers like Portfolio and LVNV and others buy these debts AS IS.  They have no idea if the information/data is accurate.  We, and most other knowledgeable consumer attorneys, win these cases with great frequency.


Posted in LVNV, Portfolio Recovery

Settle with Midland Funding?

You’ve just received a letter from Midland Funding (or its subsidiary Midland Credit Management) or worse yet, a deputy delivered a lawsuit to your door.  Your first question is, “Who is Midland Funding?”  Midland Funding is a debt buyer, a very large one.  They buy delinquent credit card accounts for a few pennies on the dollar and then they try to collect from consumers like you.  It often starts with a letter from Midland Credit Management.  The letter alleges that you owe a debt and then states that they would be happy to settle with you.  There is often a “discount” settlement offer included in this letter.  It may go something along the lines of “Pay us 50% right now, that is a tremendous savings for you” or “Pay us 60% in three easy installments”.  Typically, if you do not pay, you will receive a second and/or a third letter.

So the question is, should you settle?  Most times, the answer is NO NO NO.  I find that for the most part, the people who call my office are good people.  They had a credit card that they could not pay, usually due to a divorce, a job loss/income reduction, or a health issue for themselves or a family member.  They want to pay the debt, but they simply could not pay it at that time, or, they still cannot pay it now.  I understand that, and it makes sense.  Please keep reading though and you’ll see why we think that you should not pay them.

Let’s assume that you had a credit card account with JCPenney.  For whatever reason, you default (be it job loss, divorce, health, doesn’t matter).  When you default, JCPenney has a decision to make.  They can sue you, OR, they can sell the debt to a debt buyer like Midland.  In many cases, they sell the debt.  When they sell the debt, they SELL it.  What I mean is, they retain no ownership rights whatsoever in that account.  If you settle a claim with Midland, the original creditor is not going to see an additional dollar.  So, are you really paying your debt if the original creditor isn’t getting any money? We say no, you are not.

To compound the issue, let’s look a little further into what Midland is acquiring.  They are buying allegedly defaulted credit card accounts, in bulk.  These sales can range from 500 accounts up to 25,000 or more.  That’s alot of credit card accounts… and they make these purchases several times per year.  When they buy these accounts, they are bought on an AS IS basis.  Maybe you have heard that term before with a used vehicle… it means that the accounts (and the limited paperwork or information contained therein) are not authenticated to be accurate.  Think about that for a minute… they are buying accounts that may or may not contain  accurate information, amounts, documentation, contracts, or contact information.  Why would you pay on something that might not be accurate.

To make matters worse, often times these accounts are sold several times.  We have seen many scenarios where a person settles a debt, or rather, believes that they did, and then they are sued by another company alleging to own that same debt.  This is a nightmare scenario for the consumer and its one of the main reasons that we generally advise against settling with debt buyers.

If you have been sued by Midland Funding or if you have received a letter from Midland Credit Management, please contact my office for a free consult.

Posted in Midland Funding

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.