Tag Archive | credit card

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

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

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

District Justice vs. Court of Common Pleas

I get asked quite often about the difference between the District Justice and the Court of Common Pleas.  The differences are many.  The most important difference is that the District Justice is an elected official.  Anyone can be a District Justice, that is, anyone who can win the election.  In most instances, District Justices ARE NOT attorneys.  There are a few who are attorneys, but I would estimate that less than 10% are attorneys.  The District Justice claim is capped at $12,000.  If your claim is over $12,000 then you must proceed to the Court of Common Pleas.  Claims at $12,000 or below may be filed in either court.  The proceedings in front of a magistrate are usually very informal.  Rules of evidence are followed, but to a lesser degree in many instances.

The Court of Common Pleas is divided into two divisions —  Arbitration and regular court.  Arbitration is mandatory for all claims that are $$25,000 or less (this number varies from County to County, but $25,000 is the norm).  At arbitration, your case is heard by three attorneys picked at random from the community who act as judge and jury.  In regular court, a Common Pleas Judge will be assigned to your case.

Posted in Other

Portfolio Recovery Associates – Who are they?

We have seen a surge in recent lawsuits being filed by Portfolio Recovery Associates.  Portfolio Recovery is a large company whose sole business is to purchase allegedly delinquent credit card accounts for pennies on the dollar and then try to collect on the full amount. The most recent data that we have seen shows that Portfolio is now purchasing bad debt for 1.75 cents on the dollar.  A great price for them, don’t you think?  Generally, after purchase, Portfolio  will send a letter to you (they are required to do this by law, but they do not always do it) and/or they will call you.  They do not want  to sue you, they want to collect money from you, and they hope that you will voluntarily pay them.  A lawsuit will occur if you do not.  I have not seen many instances where Portfolio sells its accounts to other purchasers, so if they obtain your account, you either pay them or they will sue you.

That may scare most people, but it shouldn’t scare you.  If you are here reading this, then you are smarter than most of the general public.  It means that you are doing research, and that is a good thing.  It also means that you are doing research in the right place, which is even better.  The truth of it is that a lawsuit filed by Portfolio Recovery Associates in Pennsylvania should not scare you.  It should concern you, sure, but it should not scare you.

When Portfolio purchases these accounts, in most instances they do not obtain the documentary evidence that they need to prevail against you in a court of law.  Their business model is based on 3 things:  1) they acquire the accounts cheaply; 2) they assume that many people will be frightened and will pay them voluntarily; 3) they assume that you are not smart enough to contact and/or hire an attorney.

Posted in Collection Agencies, Lawsuits, Portfolio Recovery

Credit Card Lawsuits – What NOT to do!

The sheriff arrives at your door with papers, or, the mailman asks you to sign for a certified letter.  Uh oh, you have just been served with a credit card lawsuit.  What do you do now?  Let’s start with what you should NOT do… with number one on the list being: ignore the lawsuit.  You can’t pretend that you didn’t receive it, and you cannot hope that it will go away on its own, because it won’t. Number two, do not call the creditor.  This is a huge mistake that many people make.  You are not a negotiator, (well, chances are that you are not a negotiator) so you shouldn’t speak to the creditor (in addition, you might be better off defending the lawsuit than negotiating it).  Number three, do not call a debt settlement company.  As we have mentioned in other posts, every single debt reduction or debt settlement company that we have encountered has either been in a best case scenario a company that grossly overcharges and in a worst case scenario a complete scam.

So what do you do?  Call a consumer attorney.  For the life of me, I cannot figure out why this isn’t everyone’s first choice.  My office offers a free initial consultation on a credit card lawsuit, as do most other reputable consumer law firms.  Let an attorney who deals with this sort of issue on a daily basis review your lawsuit.  I will tell you if you should defend the case, negotiate, or take another action.  Certain cases should absolutely be defended, and others absolutely should be negotiated.  A good consumer attorney can usually make this judgment in a few short minutes.  Take the time and contact our office or the office of another consumer attorney if you are faced with a credit card lawsuit.  412-823-8003 or 1-888-536-6644 for a free consultation.

Posted in Lawsuits

District Justice Lawsuits

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.

Posted in Collection Agencies, Lawsuits, Other

Defective Notice on a Default Judgment

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

Posted in Collection Agencies, Lawsuits

“But I owe the money”

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”?

Posted in Collection Agencies, Lawsuits

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.