HOW TO BEAT A COLLECTION LAW SUIT: 4 STEPS TO
SUCCESS
By Andy Nelms, Esq./Montgomery, Alabama
www.attorney-in-alabama.com
DISCLAIMER: This article comes with a giant, very
real DISCLAIMER. This article does not and is not meant to give legal advice.
I am not YOUR attorney and we have no attorney client relationship.
If you use any of the information imparted by this article, you do so
at your own risk and I strongly urge you to consult your own
attorney.
This article is written with the assumption that the debt
for which you are being sued is a valid debt and that it is your debt.
If you are being sued over a debt that's not yours, please
stop reading this article and call me directly, immediately!!! (334) 263-7733
Even if you aren't in Alabama, I'll find a local lawyer in your area for
you.
If not, then the difficult moment of truth has finally
arrived; you've been sued by a debt collection attorney. So, what do you do
now, assuming you simply cannot pay the debt?
STEP ONE
The very first thing you do
is request a Federal Fair Debt Collection Practices Act debt VALIDATION
pursuant to 15 USC Section 1692(g) See Validation of Debts. NOTE: Some refer to Validation
as Verification. In my humble opinion there is no difference so don't let the
language confuse you. As far as I'm concerned, for purposes of this article,
Validation and Verification are the same thing.
The United States Congress has given us help pursuant to
15 USC Sec. 1692(g). See Validation of Debts. This statute requires a
collector to cease collection activities pending the debt's verification or
validation. In addition, any credit collector found in violation of 1692(g) is
subject to suit and penalties pursuant to the Fair Debt Collection Practices
Act, 15 USC section 1692(k). See Civil liability
What is validation or verification?
Simply put, proper validation of a debt depends on the specific nature
of the dispute. At a minimum, the debt collector is required to confirm with
the creditor that the amount being claimed is correct and that the person he is
attempting to collect the debt from is the person who owes it. The most basic
response to a validation/verification request would be for the collector to
provide the name of the original creditor and some simple statement regarding
the alleged amount owed.
A Word of Caution; I have seen, and you may see,
Internet sites exclaiming that collectors must provide an expansive amount of
information, and some will lead you to believe that if the collector does not
answer an exhaustive list of specific validation requests, then a violation of
law is created. THIS IS FALSE, FALSE, FALSE!!
The United States Fourth Circuit Court of Appeals has
opined that validation can be nothing more complicated than this:
"Verification of a debt involves nothing more than the debt collector
confirming in writing that the amount being demanded is what the creditor is
claiming is owed; the debt collector is not required to keep detailed files of
the alleged debt." See, Chaudhry v. Gallerizzo, 174 F.3d 394 (1999).
(So, don't listen to those internet pundits! No, wait! I'm one of those! Okay,
you can listen to me. :)
All that having been said, requesting validation of the
debt works for two reasons: First and most importantly, it buys you some time.
Under the FDCPA, all collection activity must cease until the attorney puts
that verification in the mail to you. The verification is usually a
simple statement signed by the creditor, and it will not take the collection
attorney long to obtain it or mail it, but it does "stay" collection
activities, including law suits, until answered. Secondly, it
sends a signal to the collection attorney that you are not going to be a
rollover debtor. He knows you will be active in the defense of the suit.
The last point is very critical because a high percentage
of collection suits simply proceed to default judgment without any response
from the debtor. Default judgment is a collection attorney's dream. He loves
consumers who don't answer law suits and, believe it or not, a majority of law
suits filed by collection attorneys go unanswered because the debtors feel like
they can't fight the debt in court, usually because they feel they owe the
money so they have no point in fighting.
However, by filing a validation request, you send a very
strong message to the collection attorney that you aren't going to give up. He
might actually have to go to court himself and you may force him to prove the
debt.
Also, by filing the validation request, you
actually stay the collection proceedings. Thus, if a collection attorney cannot
move forward against you in a collection suit, the chance of your having a
default judgment against you is greatly diminished. They don't like
that one bit.
HOW DO I FILE A VALIDATION NOTICE?
Validation of a debt is very simple and the response is
also very simple. The statute requires the collector to give the debtor the
name and address of the original creditor. Some courts have also required the
collector to give a simple accounting of the debt, i.e. the principal,
interest, and other added fees such as attorney's fees. Again, I have seen a
lot of "on-line" verification/validation form letters asking for information
and documentation the FDCPA doesn't require the collection attorney to give
you. Such far reaching requests immediately tell the collection attorney you
really have no idea what you are doing. The form letters also make threats
which simply irritate the collection attorney. And perhaps simply enough, they
are wrong.
The FDCPA operates on the least sophisticated
debtor standard so you don't have to be fancy. Just make sure you do it in
writing and send it certified mail. Simply ask the attorney to
verify the debt in accordance with the FDCPA.
See this sample validation
letter:
REMEMBER: ALWAYS SEND LETTERS TO COLLECTION
AGENTS VIA CERTIFIED MAIL.
It's very important not to be antagonistic.
Don't threaten the collector and don't lie. Don't threaten
to sue him or report him to the Bar or say you have an attorney if you don't.
These tactics don't intimidate collection lawyers and simply mark your file for
extra special attention. Finally, a certified mail written request for an FDCPA
verification may end the collection process. That is true in a very small
percentage of cases, but it is worth taking as a first step.
STEP TWO
The second step is to file a
SWORN DENIAL. This step is vital, especially if you don't owe all the money for
which you are being sued. Don't lie to the court; if you owe the amount in
question, you cannot deny the debt. However, seldom does the collection
attorney sue for a correct amount. I'll explain why in another article, but for
now take it on faith that seldom can the collection lawyer justify in an
accounting the complete debt sued for.
The sworn denial is a simple statement filed with the
court once you are sued. This needs to be a statement in WRITING that you FILE
with the court where you have been sued. It can be a simple statement, but
it needs to be typed, signed, notarized, filed with the clerk of the court, and
a copy sent to the collection lawyer. It needs to be a graduated denial. In
other words, it needs to say, "I deny that this is my debt and if it is my
debt, I deny that it is still a valid debt and if it is a valid debt, I deny
the amount sued for is the correct amount".
The sworn denial is a powerful tool! It
eliminates the Sworn Affidavit of Account that the collection attorney has. The
vast majority of collection suits proceed without a witness for the creditor.
The collection attorney enters an affidavit, signed by the creditor, that the
debtor owes the debt and that this is the amount. With that affidavit in hand,
the court gives the creditor a judgment. When a sworn denial is filed,
the debt collection attorney cannot rely upon a sworn affidavit of account, but
must instead produce a live witness to testify about the debt. The
requirement of a live witness changes the dynamic of the collection action
considerably. The likelihood that the action will go no further now
increases again.
STEP THREE
The third step is to file
DISCOVERY. This is more difficult than simply filing the sworn denial. You need
to file a written Request for Production of Documents asking for a copy of the
contract or agreement upon which the debt is based. If the debt is a
credit card debt, it is likely that the debt collection attorney will not be
able to secure a copy of the original agreement, or if he is, he will not be
able to do so timely. Most credit card signature agreements are
scanned, or if older, microfilmed and stored away in electronic archives. If it
is an old debt which has been sold to a debt purchaser, the likelihood of
retrieving the original signed agreement decreases dramatically. If you are
being sued in a small claims type court where discovery is not permissible, ask
for the agreement at trial.
FOURTH STEP
The fourth step is TRIAL.
SHOW UP! I can't stress that enough. As I've said repeatedly,
the vast majority of debt collection suits proceed to default judgment because
no one shows up to dispute them. Show up and ask for a trial. And
remember, the worst thing that can happen is the same thing that would have
happened if you hadn't appeared at all; a judgment. You can't make
it worse. If the attorney doesn't have his live witness available, oppose
the case being continued. Tell the judge you've taken off work to be there and
are ready to go forward. If the judge does continue the case to a new trial
date, show up again.
You will need to educate yourself. You won't be able to
equip yourself to spar with an attorney, but knowing a little is better than
knowing nothing. You will need to read the Rules of Procedure that
govern the court and the Rules of Evidence for that jurisdiction. Look
them up online. The Rules of Civil Procedure will govern how the trial is
conducted. The Rules of Evidence will govern what the Judge is allowed to see
and hear.
If you do have a trial and the creditor produces
a live witness, attack the witness first and the debt second. The
witness can only testify from personal knowledge. Generally, the witness has no
personal knowledge about you or your account, but only knows what's in the file
he got from the collection department. If he is going to testify without
personal knowledge, but from the records and documents of the business, then he
has to have a basis to do so. He needs to be the regular keeper of those books
and records and be familiar with how they are kept and their
contents.
Don't simply accept his answer when the debt collection
lawyer asks him if he is the regular keeper of those books and records and is
familiar with how they are kept and their contents and he says yes. Ask him how
long he has been with the company, in that job, what he does on a daily basis,
when he first saw your file, if he knows from personal knowledge if it's a
complete file, etc. You must destroy his credibility and ability to
testify about the papers he has in front of him. If you can do
that, then the debt collection attorney has no case. If the witness is
actually a good witness and you can't prevent him from testifying about your
file, then you need to know your defenses to the debt.
The best defense is the Statute of Limitations. The
Statute of Limitations is the time limit that an aggrieved party has in which
to file a lawsuit. It is a drop dead deadline. Find out what your state's is
and whether the creditor is beyond that date. If it is, ask the court to
dismiss the suit. See Statute of Limitations
LAST STEP. Okay, I promised that this
would be a four step process but we also assumed you would win at trial, or,
better yet, get the case dismissed. Should you lose at trial there is
one Last Step.
The last step, should you lose at trial, is to APPEAL.
Appeals can take a long time to work through the system; from months to years.
That time is valuable and no collection action such as garnishments can occur
during the pendency of the appeal (unless you live a jurisdiction that
requires that you post an appeal bond to stop collection during an appeal).
At each step in the process, you increase your chances that the debt
collection attorney will give in and simply put your file away. But
remember, always be polite, never cuss and don't hang up on him. You
simply don't want to make your case personal.
If you're dealing with debt
collection or consumer credit issues...help is just a click
away!
Tell
Attorney, Andy Nelms About Your Problem Here! You can also visit our
new Debt & Credit Forums where you can post questions, get answers and
share your debt collection and credit stories with others.
DISCLAIMER: This article comes with a giant, very
real DISCLAIMER. This article does not and is not meant to give legal advice. I
am not YOUR attorney and we have no attorney client relationship. If you use
any of the information imparted by this article, you do so at your own risk and
I strongly urge you to consult your own attorney.
For a complete review of the Fair Debt Collection
Practices Act, visit
fair-debt-collection.com
Copyright © 2005
- Anderson Nelms & Associates, L.L.C.
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