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Tag Archive | junk debt buyer

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

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 Lawsuit Defense Tips

Large quantities of credit card lawsuits continue to be filed on a daily basis.  Credit card lawsuits can be defended quite successfully, especially when the debt has been sold to a debt buyer.  Rule number 1:  Do not ignore the lawsuit.  This happens with such great frequency that it is mind boggling.  People often put their heads in the sand when they are sued.  Why?  I have no answer for that.  Get on to google and search for a consumer attorney…get a free consult, and see if anything can be done.  Rule number 2:  DO NOT DEFEND YOURSELF.   You are being sued, for real money.  This isn’t a game, or a movie, or a chance for you to play attorney.  A wise man once said, anyone who represents themselves in a court of law has a fool for a client and an even bigger fool for an attorney.  The collector knows what he is doing.  This is their job, their career, their payday.  You cannot go into an internet chat room and figure out how to defend yourself.  Rule number 3:  Get a current copy of your credit report.  This can show many things.  Date of last payment, charge off amount, payment history, account ownership.  We recommend www.annualcreditreport.com.  The site is free, you receive 1 credit report per year.  Rule number 4:  Do NOT call the collector.  Their incentive is to get you to pay, period.  They are working on a commission…that means that they get a cut of whatever amount you pay.  They are not looking to protect your rights and interests.  Discuss the matter with a consumer attorney first.  Rule number 5:  Do not assume that you owe the debt.  Yes, you may have had a Home Depot card and you may have stopped paying on it, but, that doesn’t mean that you owe the debt.  When you defaulted, Home Depot had a choice to make…sue you, or, sell the debt to a debt buyer.  If the debt was sold, then they have effectively washed their hands of you.  If you pay the debt buyer, you are paying a scavenger.  The claim that the debt buyer purchased is based upon an old account that they bought in what is called an AS IS sale.  That means that all information is treated as unreliable… they have no way of certifying that the amounts are accurate or that you do owe the debt.

If you are reading this, pick up the phone right now and call my office for a consult.  Its free, and I may be able to help you.

Posted in Lawsuits

Credit Card Lawsuits – DO NOT Represent Yourself

It is amazing to me how many people choose to represent themselves in credit card lawsuits.  I imagine the scenario is this:  get served with a lawsuit, browse google for a few minutes to see how to defend a case, end up in a debtor’s internet chat room, take advice from a McDonald’s employee who happened to make the last post, and then consider yourself a legal expert.  (nothing wrong with the McDonald’s employee, I am just making the point that the person is NOT an attorney).

For the life of me, I cannot understand how somebody without a legal education can think that they can do what we do.  Attorneys have at least 3 solid years of law school, have passed a bar examination, and have hundreds if not thousands of cases of trial experience.  And you think that you can beat one of us?  Amazing.

Now, to get down off of my soap box, yes, it is possible for a non attorney to beat an attorney on a junk debt case.  In those few instances where the debt buyer has zero documentation, those cases are not very difficult to win.  Unfortunately, as we are finding, these buyers are coming up with more and more documentation and are starting to use better collection firms to handle their claims.  This will make it very difficult for a self represented person to prevail on a credit card case.  Remember, the attorney representing the debt buyer does this every day, probably 10-12 hours per day, as his job.  Your one single hour browsing the internet does not qualify you to defend a case.  The part that is so confusing to me is that people would risk thousands of dollars by defending themselves.  You can pay a consumer attorney a few hundred dollars to defend a case to save yourself thousands.  That is the right move, every time, just do it.

Call my office for a free consult at 412-823-8003


Posted in Lawsuits

Equable Ascent

We’ve come across a new debt buyer by the name of Equable Ascent.  They have been buying a large amount of defaulted accounts recently as we have noticed their name on the court docket many times recently.  We’ve had several cases with them over the last few months and we’ve noticed that they have been able to come up with some of the necessary documentation on the cases.  They haven’t yet come up with enough to beat us at trial, but, it does appear that they are making a strong effort to be a “higher class” debt buyer than some of the other companies.  Our guess is that they are paying slightly higher for the debt that they buy, thereby allowing them to procure some of the necessary documentation.

We’ve noticed that they have been using at least two law firms to handle their claims, Sklar Markind and Nudelman, Klemm and Golub.  Both of these firms are very reputable with fine attorneys at each firm, yet another piece of evidence to show that Equable wants to make its mark.  If you receive a notice or a lawsuit from Equable, please contact our firm at 412-823-8003 for a free case review.  We are very confident that we can beat them in a court of law any day of the week.

Posted in Collection Agencies

What can a collector do to me?

This is the number one question at my law office right now, everyone wants to know what the creditor can do to them.  I usually do not answer this question until I ask several of my own questions first.  Who is pursuing you?  That is the most important quesiton that I ask in every case.  If the answer is ” a collection agency” or “A debt buyer”, then I do not ever answer the client’s initial quesiton of “what can they do to me” because it will never matter.  If you are being sued by a debt buyer, then you MUST hire a consumer attorney, whether its my firm or another firm, because you are very likely to prevail in court and then it will never matter “what they can do to you”, as they will not be able to do anything after we beat them.

Now having said that, not every case that my office handles is a winner.  There are times when an original creditor will beat us and the question “what can they do to me” has merit.  The first thing is that if you do not file an appeal, their judgment can become final in the Court of Common Pleas.  That judgment will accrue interest at the rate of 6% essentially forever.  After judgment, they can attempt to garnish a bank account, if they know where you bank, and if the account is not a spousal account (spousal joint accounts cannot be garnished by a collector unless the judgment is against both husband and wife… this protection applies to ALL spousal assets).  The collector can also try to place a levy on your personal property (to expose it to public sale) but this route is taken in less than 20% of all judgment cases, in my opinion.

The collector CANNOT garnish wages in PA for this type of debt.  That being said, they can garnish a bank account that has wages in it.  Once a wage is deposited into a bank account, it is no longer a wage.

The collector can also send out what are called “Discovery requests” in the form of interrogatories.  These are questions asking you to list all of your assets.  Unfortunately, you must answer these questions or you can be subject to sanctions from the court.  Once the creditor learns of any assets after using these forms, they can try to execute on these assets using a Sheriff and a Writ of Execution.

This is pretty much the gamut of what we see being done by collectors.  If you are facing a credit card or other collection lawsuit, please contact my office for a free consultation.


Posted in Other

“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.