Tag Archive | debt collection

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

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

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

“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

What happens in a debt collection lawsuit?

The lawsuit is filed, either at the District Justice or the Court of Common Pleas. If the lawsuit is filed at the local DJ, the collection agency is hoping that you do not attend the hearing, because they will then automatically win. After they obtain the judgment, they will transfer it to the Court of Common Pleas and begin execution proceedings. It is in your best interests to notify the District Justice that you are going to defend yourself immediately upon receiving the notice of the lawsuit from them. You should have an attorney represent you at that hearing, and you should not attend.  In magistrate cases, the collection agency almost never has the proper documentation to beat you in court.  They actually need you to attend so that they can question you and use your testimony against you. Have an attorney go in your place and the results should be in your favor.

If the lawsuit is filed in the Court of Common Pleas, you will receive a visit from your county Sheriff’s Department. A Deputy Sheriff will serve the paperwork on you at your home. Upon receipt of the lawsuit, you will have twenty (20) days to file a written response to the lawsuit that is called either an Answer or Preliminary Objections.

If you fail to file the written response in the allotted time, you will have a judgment entered against you without the benefit of having a hearing. As you can see, it is of the utmost importance to respond to the lawsuit immediately, to preserve your rights to defend yourself in a court of law. That is the key to beating a collection agency, i.e. to defend yourself in court, preferably with the right attorney. There are a number of issues that the collections agency must prove to obtain a judgment against you, and they typically cannot do so, again, as long as you properly defend yourself. You must force them to produce all of the documentary evidence in their claim against you, and then poke legal holes in their case.  A knowledgeable consumer attorney can file the proper responses to the lawsuit and you very likely will never end up in a courtroom.

Contact our office at 412-823-8003 or toll free at 1-888-536-6644 for a free telephone consultation if you have any questions regarding collection agency lawsuits in Pennsylvania.

Posted in Lawsuits, Other


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.