Win In Court Every Time

INTRODUCTION

First things first. I am a writer, not an attorney. The contents of this book do not constitute legal advice, and should not be construed as such. Under the First Amendment, we all have a right to disseminate opinions and information. That’s what this book is about. Take from it what you will, and use it to your advantage. You must learn many things if you want to represent yourself in court in a debt case, which I suggest you do. Usually the amount being sued for does not warrant the cost of an attorney, unless there are violations of federal and state laws you can countersue for. Each case is different, and it is up to you to decide how you want to proceed.

If you are reading this, chances are you have already been turned over for collection or sued. Most likely you know nothing about court and have no idea what to do when handed a summons and complaint. The vast majority of cases of this type involve credit card debt.

If you are just looking  for information and are not yet in legal trouble or are contemplating taking out a credit card, there are several things you have to consider. First, READ THE CREDIT CARD AGREEMENT before you make the application. Each bank is different, and there are some critical things you have to look for in these contracts. They include the way your state treats the statute of limitations, (SOL) the availability of private arbitration, (arb) the location of the lender, exemptions in the arb clause for small claims cases, and whether or not the lender will pay your arb fees. Each of these features will be addressed in separate chapters.

Nobody takes out a credit card with the intent to stiff the bank. Things happen, however; sickness, job loss, and other factors result in people defaulting on their obligations to the tune of some 29% nationally. If this happens to you, the lender is going to do one of two things; come after you themselves, or sell your account to what we call a junk debt buyer. (JDB) These companies purchase large volumes of defaulted credit card accounts from the original creditors. (OC) They pay anywhere from 2 to ten cents on the dollar for these accounts. So, if you owe Bank of Whatever $3,000.00 and they sell you to a JDB, the JDB paid $60-$300 for the account. Most of the purchases are in the 3 cent range.

OCs and JDBs have to be dealt with in different ways, as they conduct business in different ways and are subject to different laws. This is what you’ll learn here. Read on and become a winner, not dinner!

CHAPTER ONE: THE PLAYERS

In any debt case, you will be dealing with either a bank or a jdb, a process server, (sheriff, this is the guy who knocks on your door and hands you the summons or sticks it in the door) the court, a collection agency, a law firm, the lawyer the firm selects to pursue your case, (opposing counsel) records keepers from the bank or jdb, a notary, and a magistrate or judge assigned to your case. Magistrates usually run the small claims court and are not always real judges. You may also find yourself dealing with private arbitration companies. The two that are used almost exclusively are JAMS (formerly called Judicial Arbitration and Mediation Services (www.jamsadr.com) and the American Arbitration Association. (www.adr.org)

When you are sued, you will have a certain amount of time (usually 20-30 days) to answer the complaint. If you fail to do this, the court will enter a default judgment against you. Default is yours. Get it? Oh well, I tried. Once the creditor (in court this is the Plaintiff, or party who sued you, and you are the Defendant) has a judgment, they can take legal action to collect the money. In all but four states, (Texas, Pennsylvania, and the Carolinas) they can garnish you wages, which means your employer has to turn over up to 25% of your after tax paycheck until the debt is satisfied. They can also raid (levy) any bank account they can find with your name on it, (including joint accounts) place liens against real estate, attach proceeds of a business distributed to you, or seize personal property to be sold at auction. (rarely done but possible, this is mostly done with car repossessions) Each state has different procedures, so be sure to look them up and read them.

Of course you should never let them get a default judgment in the first place. ALWAYS answer the complaint. The procedure will be outlined in your state’s rules of civil procedure. (RCP) These are all on line, and are your  bible. The rules tell you what procedures must be followed and how long you have for each step. Read them thoroughly and often. You‘re going to feel like you are in law school! However, you have no chance of winning if you don’t know the rules, and you are expected to when you represent yourself. You are held to the same standards as any attorney. If you cannot do this, hire a good consumer attorney or work out a settlement.

Never hire a regular attorney for a debt collection case. They have about as much knowledge as you do, and all most of them will do is tell you to settle and charge you a grand or more. They won’t get you any better deal than you could get yourself, and that legal fee could be better used in negotiation of the debt. You want a consumer attorney. You can look for one at www.naca.net.

Debt collection attorneys are for the most part incompetent. (sorry, boys, you know who you are) The vast majority of them do this work because they can’t get anything better. These firms are default judgment mills, and unfortunately 95% of the people who are sued never respond to the suit. The other 5% are treated in an entirely different manner. You have a MUCH better chance of achieving a dismissal or a favorable settlement if you fight. The more you know, the better off you are. The goal is to make them bleed money pursuing you to the point where they walk away from the case, and it does happen. JDBs are much more likely to take a hike than an OC, however. The OCs have all that nice interest free money from the Federal Reserve, and they will not hesitate to spend it to teach you a lesson. In all fairness, there are some good debt firms out there, so be prepared. If you have no knowledge, they will run you over in court.

When you stop paying a bank, they will turn you over to their internal collections department. They will send you letters, and start calling you on the phone. Original creditors are NOT bound by the Fair Debt Collection Practices Act, which you should read. Fear not, it only takes about twenty minutes tops. It is part of the Federal Trade Commission and can be found here: https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text

Law firms who regularly collect debts ARE subject to the FDCPA, and frequently violate the statute by using overly aggressive, illegal tactics. They can be sued for these violations, and you can collect a penalty of up to $1,000. You also get fee shifting, which means the firm you sue has to pay your legal fees if you win. Most consumer attorneys take these cases at no cost to you if the violation is solid. Be advised the FDCPA states that it only applies to debts incurred for consumer use, not business, so business credit cards generally are not covered.

After Big Bank decides you aren’t going to answer the phone or letters, they will turn you over to a coupon clipper debt collector. These companies are rather passive, they do not sue you. They send you an offer of settlement with maybe 40-60% off. There is a coupon attached, and you make your check out to the bank. The bank then pays them a commission.

If you still don’t pay, the real fun begins. They turn you over to a debt collection firm, which may or may not be a law firm. These are the clowns who call at all crazy hours of the day and night, threatening to take your dog or your kids if you don’t pay, (reminds me of a bumper sticker I once saw; wife and dog missing, reward for dog) tell you that they’ll have you arrested, etc. All of this is illegal, of course, so a tape recorder is in order if you talk to these people. If they tell you the call will be recorded, you don’t have to return the favor. If not, you usually have to tell them YOU are recording. State laws vary, so look it up.

If you want them to stop calling or contacting you at all, send them a certified mail cease and desist letter. Use the wording from the FDCPA. If they call or contact you after that, it violates the FDCPA. Make sure to tell them not to call you at your place of work, too. Actually it’s more fun to let them contact you and violate the law. In many cases, consumers have racked up enough violations to wipe out the debt they are being chased for. Some even turn a profit.

There are mirror statutes in many states, such as the Rosenthal Act in California, and the Texas Finance Code, which is Chapter 392 of the general statutes. These are consumer protection  laws which mimic the FDCPA. You can sue under BOTH statutes and collect twice. There are also unfair trade practices laws in many states. Some of these allow for punitive damages in whatever amount the court sees fit. You can put a major whoopin’ on these guys if you know how to write a complaint or your lawyer does.

Another law they frequently violate is the Telephone Consumer Protection Act, or TCPA. This law makes it illegal for debt collectors to call your cell phone with an automated dialer, etc. This is a complicated law, so I suggest an attorney for that one. To make it work, you MUST revoke any prior consent for them to call any number they have connected to you. Always do it in writing, certified mail. TCPA violations are subject to a $500-$1500 penalty PER CALL, so the damage can be severe. This is why you need an attorney; creditors faced with a potential claim of tens of thousands of dollars will fight you tooth and nail.

So, what happens next when the collection agency (CA) can’t get any money out of you? The OC will now make a decision whether  to sue you or sell the account. They use software and other tactics to determine if you are worth going after. A senior citizen on disability and social security who owns nothing is a lot less likely to be sued than a recent college grad with job potential. Either way, there is a high probability (over 90%) that somebody will eventually sue you.

A sheriff will attempt to hand you the summons. Most people duck service, mistakenly thinking that if they can’t find you, they can’t sue you. Not so. There are several methods by which you can be served. The process server rules are part of the RCP. Read them to see if you have been properly served. If not, you can get the case dismissed and sue them for an FDCPA violation. They may or may not file the case again once they have your correct address. Suing in the wrong location (venue) also violates the FDCPA.

The summons will tell you that you are being sued and in what court, and what for. A copy goes back to the court, and you get some time to file a response, or answer, as previously stated. The complaint is the document (pleading) that lays out the Plaintiff’s case against you. It will tell you who is suing you, how much they want, and the reasons for the suit. They will list each cause of action in a separate paragraph called a count. An action is the legal term for a lawsuit. The cause is the reason for it. Some of the common ones are breach of contract, account stated, and unjust enrichment.

A quick word about who sues you.....OCs are national banks as a rule. Citibank, Chase, Bank of America, Discover, Wells Fargo and  Synchrony (formerly G.E. Money Bank) are some of the major players. A national bank is chartered to do business in all 50 states, and can legally charge you the interest rate of THEIR home state. They always incorporate in states where interest rates have no limit. They can charge you up to the legal limit, which as I recall under the Card Act of 2009 is now 30%. You may have a store card; these are issued on behalf of places like Home Depot, Best Buy, Sears, etc. If you have a Home Depot card, you will NOT be sued