Debt Collection – Attorney Driven Credit Repair

Stop Debt Collectors from Seizing your Coronavirus Stimulus Payment

April 17, 2020 by Eric Stephenson

Coronavirus (Covid-19) Debt Collection Problems

Debt collectors are eager to take your Coronavirus stimulus payment. In many cases they will seek to garnish the stimulus money right from your bank account. Congress has not entered any legislation to protect these payments from seizures by debt collectors but there are still a few ways to protect your Covid-19 stimulus payment.

Get a paper check of your Coronavirus stimulus payment instead of using direct deposit

Have the IRS send your stimulus payment, or any other tax refund for that matter, by sending a traditional paper check by mail. That will substantially delay the payment however, so be careful. If you need the money now and it is going to be automatically garnished, get an attorney to file an emergency protective order to protect the stimulus payment from garnishment. When the payment arrives, cash it or take it out of your account as quickly as possible. That would prevent most debt collectors from taking the money in most cases. Use it for the food, medical care, clothing, housing, and other necessities for which the Covid-19 tax refunds were intended. Even if your bank account is already frozen or being garnished, simply cashing the check will not allow the collection agency to take it. You can check the status of your Covid-19 stimulus payment with the IRS online.

Negotiate with the debt collection agency

Most collection agencies will take your money without any second thoughts. During this Covid-19 panic however, many are likely to be sympathetic to your need for the Coronavirus stimulus payment to go toward food, clothing, rent, mortgage payments, medical care, or other necessities. It can’t hurt to at least try to negotiate time to repay the debt when the crisis ends to to even request a goodwill return of the money if it was already seized.

Its true that most debt collectors, collection agencies, and collection attorneys have hearts of stone and care far more about money than they do about people but some may still do the right thing during this pandemic. If they won’t move on to the options below.

Object to any seizure of your stimulus check

If you have a garnishment order in place you should immediately file an objection to any seizure of your stimulus check. You may also be able to file for an emergency injunction to prevent the seizure of your Covid-19 stimulus payment. Even if you are trying to negotiate with the collection agency, you must still file an objection or request an injunction.

Coronavirus stimulus payments are supposed to help people pay for necessities such as food, rent, mortgage payments, clothing, and medical care. The Covid-19 payments are not intended to use to pay for past debts. You should therefore object if the money is garnished by a collection agency.

There are likely to be some state protections or exemptions to seizure of stimulus payments issued for national emergencies so check your states laws for other possible ways to argue your payment is exempt from seizure.

Stop collection harassment

Many times the right letter can stop collection harassment. Some debt collectors may also stop garnishments or seizures of your Coronavirus stimulus payment if you send the right letter. Debt validation letters, debt verification letters, and other dispute letters can help stop the seizures. These usually work best before a garnishment is in place but may still be effective if the bank is garnishing your Covid-19 stimulus payment. If you have income that is already exempt from seizure or garnishment such as Social Security disability or other similar exempt income, a properly written exemption notice letter may also get collection agencies to stop a bank garnishment.

Sue the debt collector

Under the Fair Debt Collection Practices Act (FDCPA) you have a right to sue any debt collector, collection agency, or collection attorney that violates your rights. Although this issue is far from clear, the courts should consider any seizure of stimulus payments to be deceptive, unfair, unconscionable, or abusive. The Covid-19 stimulus checks are meant to help American’s survive not line the already bloated pockets of collection agencies. The money should therefore be immune from seizure.

Use caution however. Don’t go this route alone. Hire an experienced Fair Debt Collection Practices Act litigation attorney. There is no clear ruling from the courts yet that seizing a Coronavirus stimulus payment violates the FDCPA so you want experienced assistance in making these arguments.

Contact Us Now for a FREE Case Review

If your Coronavirus stimulus payment was already garnished, seized, or frozen by a debt collector, collection agency, or debt collection attorney let us know immediately. We can help stop a garnishment, file an injunction, negotiate with your creditors, or take other action to protect your Covid-19 stimulus payment check.

Debt Statute of Limitations in Utah

April 4, 2017 by Eric Stephenson

By law, a statute of limitations prohibits collection agencies from suing you for old debts. The limitation period varies for different kinds of debt and can be re-started under certain circumstances so never assume a debt collector is barred from collecting a debt under the statute of limitations simply because the applicable time period has expired. Gather your paperwork, review your payment history, review the contract, and contact an attorney before you make any payments or promises to pay if you think the debt might be too old to enforce in court.

Does a debt statute of limitations prevent debt collectors from suing?

The statute of limitations is an affirmative defense so it does not automatically apply or prevent debt collectors from seeking to collect past due debts. It is raised in court proceedings which will stop the debt collection lawsuit if the court determines that the time frame when the debt collector is allowed to file a lawsuit against you has passed. Then, the court will dismiss the case against you. If you are sued for a delinquent debt, and believe the statute of limitations might prevent the collection agency from suing to collect that debt, you must raise the statute of limitations defense when you file your answer. Because it is an affirmative defense, failing to raise it properly could cause you to lose its protections.

Can debt collectors attempt to collect a time-barred debt?

If the collection agency is not suing you but is merely attempting to collect a debt barred by the statute of limitations, things get more cloudy. Generally, the collectors may attempt to collect time-barred debts. But they can’t threaten to sue or make any deceptive representations in doing so. Threatening to sue you when the debt is time-barred or attempting to deceive you into thinking they can sue you when they can’t are violations of the Fair Debt Collection Practices Act which would enable you to sue them for damages.

For example, in a recent case Seventh Circuit Court of Appeals held that Portfolio Recovery Associates, a debt collection agency, violated the Fair Debt Collection Practices Act for using carefully crafted language in a collection dunning letter that attempted to obscure from the debtor that the statute of limitations prohibited the collector from suing or threatening to sue to collect the debt.

It is also a violation of the Fair Debt Collection Practices Act if the debt collector does anything to try to trick you into renewing the statute of limitations. As discussed below, certain acts on your part can reset the time period but debt collectors may not deceive you into taking any of those actions. Most often this occurs when debt collectors attempt to collect zombie debts that are long past the limitations period that were purchased by the collection agencies for pennies on the dollar.

What is the statute of limitations for debt?

In Utah, there are different limitation periods applicable to debt. Which particular statute of limitations applies depends on the type of debt. Generally, the statute of limitations for debt based on a written agreement is six years. Oral contracts and debts incurred for open store accounts for any goods, wares, or merchandise are enforceable in court for only four years. The longest statute of limitations in Utah for debt is an eight year statute of limitations to enforce a judgment.

There are other statutes of limitations in Utah that may apply in less common situations so please don’t consider this list to be exhaustive. And be careful with judgments because judgments can be renewed every eight years which will restart the eight year limitations period.

Is the account open ended or closed ended?

Whether the account is open ended or closed ended is a critical inquiry to determine which statute of limitations applies. Closed ended debt generally refers to single isolated transactions and will generally be subject to the six year statute of limitations for debts based on written agreements. Open ended debts may fall under the four year period for open store accounts but in many cases may fall under the six year written contracts period of time.

For example, a typical car purchase agreement would fall under the six year statute of limitations because the transaction is based on a written agreement. Conversely, a credit card issued by a retail store that may only be used to make purchases from that store will normally fall under the four year period.

The issue is more confusing when a credit card company issues a credit card based only on an application but never obtains a written agreement. Lower courts generally consider the six year period to apply. That outcome appears to be a fairly obvious misreading of the statute but unfortunately the Utah Supreme Court has never clarified this issue. Until it does, the safe assumption if you are being sued for debt is that the six year statute of limitations will be held to apply in individual cases of credit card debt. If there is any doubt at all and the debt is older than four years, contact an attorney to see if there is any way to argue the four year period applies. This is an issue that needs to be tested in court.

When does the statute of limitations begin to run?

Generally, the statute of limitations for debts based on written contracts begins to run when the first payment was due but not paid. In other words, the period starts when the contract is breached. That date could arguably be extended by applicable grace periods so be careful here if the dates are close. Also keep in mind that circumstances other than failing to make a payment can result in a breach of contract so be aware of whether any other breaches of the contract might have occurred.

For debts that fall under the four year period, the statute of limitations starts running when either the last charge is made or the last payment is received, whichever comes last.

For judgments, the eight year period begins running from the date of the judgment. If the judgment is renewed, the eight year period is also renewed.

Reviving, Waiving, or Extending the Statute of Limitations

There are several ways you can revive, waive, or extend the statute of limitations. Debt collectors violate the Fair Debt Collection Practices Act if they attempt to trick you into doing so but aggressive and abusive collectors and even collection attorneys often do anyway.

Reviving the Statute of Limitations

Making a payment on a time-barred debt will revive, or restart, the statute of limitations. Even a tiny payment will revive the debt. This is why debt collectors often ask for a token payment on old debts. And whether the debt is only a year or two old or way outside the statute of limitations does not matter. Making that token payment restarts the clock.

Making a written promise to pay the debt will also restart the statute of limitations. Again, this is why collectors will ask you for an email or letter confirming your intent to pay a debt even when they don’t demand payment. They know that written promise to pay will revive even the oldest debt.

Acknowledging the debt in writing is yet another way you can revive the statute of limitations on a time-barred debt. This is why you must avoid mainstream credit repair companies because most have no clue that a poorly written credit dispute letter can result in an acknowledgment of the debt and restart the clock.

Waiving the Statue of Limitations

As discussed previously, the statute of limitations is an affirmative defense that is waived if you fail to raise it when you are sued for the debt. This is a good reason to seek legal counsel in debt collection lawsuits. A good attorney will properly preserve and argue this, and other, applicable affirmative defenses.

Extending the Statute of Limitations

Extending the statute of limitations, also referred to as tolling, occurs when a person is no longer subject to the jurisdiction of the Utah courts. Most frequently, this occurs when a person moves out of state for a period of time and then returns. When that occurs, the time when the person was absent and not subject to personal jurisdiction is not included as part of the time limited for the commencement of the action under the statute of limitations.

As discussed above, making a payment on the debt also extends the statutory time period for collections. Because of this, some more aggressive collectors will actually make phantom payments on debt they own in the hopes of extending the statute of limitations. Yes, doing so is a violation of the Fair Debt Collection Practices Act but many don’t get caught as it is sometimes difficult to detect and prove who made the phantom payment.

What should you do if a debt collector attempts to collect a time-barred debt?

If a debt collector is attempting to collect a time-barred debt or a debt you think might be too old to collect, don’t make any payments on the debt and don’t make any promises to pay the debt. Find out if the debt is too old first. Otherwise you will reset the statute of limitations and even the oldest zombie debt will be revived. Check the paperwork and your payment history to see if the debt is too old and don’t be afraid to ask the collector for proof of the debt, the contract, and a payment history if you need copies.

If the collector has sent you letters that seem unclear whether or not they can sue you for the debt or they have threatened to sue on a time-barred debt over the phone, contact a consumer protection attorney right away. You could have a claim against the collector for violating the Fair Debt Collection Practices Act which would entitle you to make the collector pay you damages.

You should also contact an attorney if you are being sued for a time-barred or zombie debt. That way you can be sure your affirmative defenses are preserved and properly asserted and you may be able to seek damages from the debt collector.

No matter what you do, act quickly. The statute of limitations will not automatically stop debt collection for an old debt nor will it protect you in court unless you properly raise the defense. In many of these cases attempting to collect the time-barred debt may violate the Fair Debt Collection Practices Act as well which could allow you to turn the tables and obtain payment from the debt collector.

Can an arrest warrant compel debt payment?

March 31, 2017 by Eric Stephenson

There are many misconceptions about whether or not an arrest warrant can be issued by a court of law for failing to pay debt. A recent article from the Standard Examiner entitled “Utah courts increase use of civil bench warrants to compel debt payments” shows how easily some of these misconceptions are spread. And that isn’t the first time the Standard Examiner misreported the issue. In 2016, it reported incorrectly that Rex Iverson died in jail after being arrested for failing to pay debt. If the media won’t report it right how can the average consumer be expected to know whether failing to pay debt can result in their arrest?

Arrest warrants in consumer debt cases are for failing to appear, not for failing to pay

The truth is that, for most debt, the courts may not issue warrants for arrest to compel debt payments. Courts can issue orders allowing creditors to garnish your wages, place a lien on your home, and seize your non-exempt personal property but they cannot have you arrested for failing to pay. The misconception arises because courts can, and justice courts in Utah often do, issue arrest warrants to debtors for failing to appear in court.

But that is a critical distinction. Merely failing to pay debt under normal circumstances will not result in your arrest. True, you can be arrested for failing to pay child support, court fines, or for writing bad checks, but as long as you appear in court and cooperate with the creditor’s efforts to discover your financial assets, you cannot be arrested simply for failing to pay a credit card account or other consumer debt. When you don’t appear at a court-ordered hearing for a supplemental order, however, the court can, and usually will, issue a warrant for your arrest.

The warrant is basically an order for contempt. The court issues the warrant for failing to obey the court’s order for you to appear, not for failing to pay the debt.

These arrest warrants arise in debt cases after the creditor obtains a judgment against the debtor and the debtor fails to appear at a supplemental hearing. These supplemental hearings are court proceedings in which the debtor is required to provide the creditor with details of their assets. That way the creditor can discover the debtor’s bank accounts, employment, and personal assets it can use to satisfy the debt.

An arrest warrant requires personal service

An arrest warrant for failing to appear at a supplemental proceeding is not automatically ordered by the court. Creditors are required to directly serve the debtor with notice of the supplemental hearing before the court will issue a warrant for arrest for failing to appear.

And it is not sufficient to serve another person living in the debtor’s household. For supplemental proceedings the creditor must serve the actual debtor directly. That differs from service of process of the original complaint which is effective upon service of someone else living in the debtor’s household.

In cases where the debtor did not receive direct personal service the court will request an order to show cause and request to continue the hearing to another future date. That way the creditor can try again to serve the debtor.

That doesn’t mean debtors should necessarily avoid personal service, however. Each time the constable attempts service it costs money and that money is added to the debt.

A debtor’s appearance at a supplemental proceeding can be avoided in some cases, but proceed with caution

When debtors are served with notice of a supplemental proceeding to collect a judgment they are provided with a list of questions. The questions relate to the debtor’s assets such as bank accounts, income, and personal property. If the debtor responds to those questions in sufficient detail to satisfy the creditor, the hearing for a supplemental order can be cancelled. Debtors should proceed with caution however, because unless they receive notice from the court the hearing is cancelled they must still appear.

Many times the creditors will still want the hearing to occur if only to put on the court record that the debtor satisfied their requirements. This is good practice for the debtor as well because it can prevent arguments of failing to appear from creeping up later. If the debtor answers the questions prior to the hearing, the court may still want the hearing to occur for the same reasons. Either way, it is best to appear and cooperate to be sure the creditor cannot request an arrest warrant.

The bankruptcy stay can prevent issuance of an arrest warrant

In some cases debtors may be insolvent and simply cannot pay the debt because their living expenses far exceed their income. In these cases, failing to appear will still result in an arrest warrant. One approach to resolving the debt may be to seek protection by filing bankruptcy. Many debtors don’t have enough debt to justify bankruptcy, but in truly desperate situations it can be an excellent tool for starting over.

Once a bankruptcy is filed and notice is provided, the creditor is required to stop any further attempts to collect the debt. That includes hearings for supplemental proceedings. Again, debtors should exercise caution here because the bankruptcy stay will not automatically recall an already outstanding warrant. If the creditor has already obtained an arrest warrant but it has not yet been executed, the debtor who filed bankruptcy could still be arrested and have to pay the amount indicated in the arrest warrant to be released from jail.

Payment plans

Many creditors will accept payment plans to help debtors pay judgments. They will still likely require the debtor’s appearance at a supplemental hearing but if there are any assets or wages to protect, reaching an agreement with the creditor can be a good way to resolve the debt and avoid bankruptcy.

Payments can also be useful in reducing the debt in some cases. For example, when the debtor has no assets or disposable income creditors may be willing to accept an amount lower than the amount of the judgment. In many cases the creditors only accept less than the amount due when the debtor can make one lump sum payment but some creditors will accept less with monthly payments over time as well.

In most cases, it is better to seek a payment plan before a judgment is entered. That way the creditor will still have to request a judgment from the court before it can garnish wages, garnish bank accounts, or seize unsecured non-exempt assets.

Consent judgments

The creditor may require a consent judgment in negotiating the debt to avoid the problem of having to obtain a judgment before it can seek garnishments and property seizure to collect the debt. A consent judgment, also referred to as a stipulated judgment, is entered when both parties consent to entry of the judgment with the court. Debtors often enter into consent judgments because they do not understand the consequences of doing so or because they have little to no choice in the matter. There are numerous ways to lose a debt collection lawsuit so debtors can be easily backed into a corner and feel they have no other choice. Overall, it is better to avoid a consent judgment either by prevailing in the lawsuit or by reaching a settlement agreement that doesn’t require entry of a judgment.

Conclusion

It is truly tragic that Rex Iverson died in jail but an arrest warrant was not issued against him for failing to pay a debt. Like other cases in the Utah courts, the arrest warrant was issued because he failed to show up when ordered to appear in court. To Mr. Iverson’s friends and family that distinction is almost certainly irrelevant, but to the average debtor the difference is important.

Debt collection lawsuits do not normally need to result in the issuance of an arrest warrant. Even if you cannot pay you should still appear throughout the proceedings. If you have assets you want to protect negotiate a payment plan or find out if bankruptcy is appropriate for your situation. Either way you should appear in court and cooperate.

Stop Identity Fraud Debt Collections

February 6, 2017 by Eric Stephenson

Identity fraud can be financially and emotionally devastating. According to some studies, victims of identity theft suffer the same emotional harm suffered by victims of violent crime. Even those that don’t, still suffer from devastating financial loss and a massive consumption of time to repair the damage done to their credit. Here are a few tips to stop identity fraud debt collection to recover quickly and effectively.

Lay the groundwork and send identity fraud dispute letters

Place fraud alerts on your credit reports

Fraud alerts are an excellent way to stop future identity theft from occurring. Place one any time your credit is stolen or used without your permission. They are only a short-term solution and do not stop collections for existing debt, however, so it is important to take additional steps as well.

File a police report

Once you discover your credit has been stolen or your name has been used to establish new credit you should file a police report. In most cases, the police will not actually investigate the fraud or prosecute the perpetrator but the report is helpful in disputing the identity theft accounts with the credit bureaus and collection agencies. File a report but don’t hold your breath waiting for police to actually act.

Send identity fraud dispute letters

Your next step is to send identity theft dispute letters to the credit bureaus and collection agencies. Properly done, these letters put the collection agencies and credit bureaus on alert that your identity or credit was stolen and informs them which accounts they cannot report or collect. There are numerous mistakes you can make in sending these fraud dispute letters so be careful and make sure you handle these letters correctly.

Avoid common identity fraud credit repair mistakes

Mainstream credit repair companies

One of the biggest mistakes consumers make in trying to recover from identity fraud or to stop identity theft debt collections is to hire a mainstream credit repair company. The simple fact is that almost all credit repair companies handle identity theft incorrectly. And its not even close. Many are so incompetent that they simply treat your identity theft debt collections the same as they would any other credit listing by sending the same cookie-cutter credit dispute letters over and over again.

The damage this can cause your case cannot be overstated. Sending a form letter like the mainstream credit repair organizations send can waive your legal rights and, if worded incorrectly, can actually result in making you liable for the debt when you were not liable before. Improperly worded dispute letters can also get you sued for the debt even when it isn’t actually yours. For example, in an identity theft fraud case that recently came across my desk the consumer was a victim of identity theft but tried to no avail to dispute the account using a well-known credit repair law firm. After months of sending the same form cookie-cutter credit dispute letters the firm had already sent on thousands of previous cases and the account was still being reported. The collection agency was also still attempting to collect the debt.

Identity theft collection agency letters

Victims of identity fraud can find various websites offering free identity theft collection agency letters to download. Use of those dispute letters is not recommended for several reasons. First, the letters we reviewed do not adequately protect your legal rights. Preserving your rights is the entire point of sending the letter so if it fails to meet that basic requirement you are doing more harm than good.

Many of the identity theft fraud dispute letters we reviewed also do not properly inform the credit bureaus of the theft. In some cases the dispute letters merely state in conclusory fashion that the account is the result of identity theft while other identity theft collection agency letters request information from the credit bureaus that isn’t even arguably helpful.

Other identity fraud collection letters of explanation threaten the credit bureaus or assert legal doctrines incorrectly. Neither tactic is effective or desirable. Indeed, one of the best ways to instruct the credit bureaus or collection agencies that you don’t actually know what your rights are is to incorrectly assert those rights. Credit repair is as much an art form as a science.

Conclusion

If a debt collector is hounding you for an identity theft account or the credit bureaus are reporting a debt that is the result of identity fraud your best course of action is to act fast. Place a fraud alert, file a police report, and send dispute letters to the creditors, debt collectors, and credit reporting agencies right away.

Trying to stop the identity theft debt collections on your own or by using a mainstream credit repair firm however, can cause more harm than good or even trigger lawsuits against you so use caution. Identity theft debt collections are not a cookie-cutter or form letter situation. These cases are fact-specific and must be handled on a more personal level. Stopping identity theft collections is simply too important to leave up to incompetence or luck.

CFPB Debt Collection Survey

January 12, 2017 by Eric Stephenson

Today the Consumer Financial Protection Bureau released its recently completed Consumer Experiences with Debt Collection survey.

The survey provides a comprehensive insight into consumer experiences with debt collection activity which occurs when a debt collector, collection attorney, or collection agency contacts consumers to collect unpaid debts. These debts include various past due loan and bill payments.

The following is a summary of the CFPB’s key findings:

About one-in-three consumers with a credit record (32%) indicated that they had been contacted by at least one creditor or collector trying to collect one or more debts during the year prior to the survey. Most of these consumers (72%) reported that they had been contacted about two or more debts.

Past-due medical bills, credit cards, and student loans were among the most frequently cited debts consumers were contacted about. The prevalence of contacts about credit cards and student loans in collection differed across demographic and credit-score groups. In contrast, the shares of consumers who were contacted about past-due medical bills were more comparable across income levels, credit scores, and ages.

More than half of consumers (53%) who were contacted about a debt in collection in the past year indicated that the debt was not theirs, was owed by a family member, or was for the wrong amount. Roughly one-quarter (27%) of consumers who were contacted about a debt in collection reported having disputed a debt with their creditor or collector in the past year.

About one-in-seven consumers (15%) who were contacted about a debt in collection reported having been sued by a creditor or debt collector in the preceding year. Twenty-six percent of consumers who were sued reported that they attended the court hearing.

More than one-third of consumers (37%) contacted about a debt in collection indicated that the creditor or debt collector that had contacted them most recently usually tried to reach the consumer at least four times per week and 17% reported that the creditor or collector usually tried to reach them at least eight times per week. Close to two-thirds of consumers (63%) contacted by a creditor or debt collector said they were contacted too often.

Forty-two percent of consumers with collection experience in the past year said they had asked at least one creditor or collector to stop contacting them. One-in-four consumers who made this request reported that the contact stopped.

Consumers most commonly indicated that they would prefer to be contacted about a debt in collection by letter or phone. Consumers most commonly identified in-person contacts as the way they would least like to be contacted.

Consumers feel it is important that others not overhear a message about their debt from a creditor or debt collector. At the same time, most consumers also want the creditor or debt collector to include, for example, their name and the purpose of the call (debt collection) on a voicemail or answering machine.

Consumers tend to take a more favorable view of creditors seeking to collect a debt than of debt collectors. Consumers were more likely to report that debt collectors contacted them too frequently compared with consumers contacted with the same frequency by a creditor. Consumers contacted by debt collectors were more likely than those contacted by creditors to report negative experiences such as being treated impolitely or threatened.

Chase Fined $216 Million for Illegally Robo-Signing Affidavits and Selling Zombie Debts

July 22, 2015 by Eric Stephenson

If you owe JPMorgan Chase for a zombie debt or if Portfolio Recovery, LVNV Funding, Midland Funding, or other junk debt buyer has filed a lawsuit against you to collect a Chase debt, you may be able to get your lawsuit thrown out of court.

On July 8, 2015, the Consumer Financial Protection Bureau (CFPB), Attorneys General in 47 states, and the District of Columbia have taken action against JPMorgan Chase for selling “zombie debts” to junk debt buyers and illegally robo-signing court documents. “Zombie debt” refers to accounts that were inaccurate, settled, discharged in bankruptcy, not actually owed, or otherwise not collectible. “Robo-signing” refers to the practice of automatically signing affidavits under oath without actually reviewing the material on which that oath is based.

“Chase sold bad credit card debt and robo-signed documents in violation of law.”
Richard Cordray, Director of the Consumer Financial Protection Bureau

Under the administrative orders, Chase is required to take certain actions to protect consumers from its unlawful practices. Chase will now be required to carefully document and confirm its debts before selling them to debt buyers or filing collections lawsuits and it is barred from selling certain debts. It must also prohibit debt buyers from reselling debt. Chase was ordered to permanently stop all attempts to collect, enforce in court, or sell 528,000 existing accounts. CFPB Director Richard Cordray said, “Today we are ordering Chase to permanently halt collections on more than 528,000 accounts and overhaul its debt-sales practices. We will continue to be vigilant in taking action against deceptive debt sales and collections practices that exploit consumers.”

Chase has also been ordered to pay at least $50 million in consumer refunds, $136 million in penalties and payments to the CFPB and the included 47 states, and a $30 million penalty to the Office of the Comptroller of the Currency (OCC) in a related action.

Chase Engaged in Unfair, Deceptive, or Abusive Acts and Practices

According to the CFPB, Chase violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair, deceptive, or abusive acts and practices. Specifically, the CFPB and 47 states held that Chase:

Sold accounts that had been settled, fully paid, discharged in bankruptcy, identified as fraudulent, subject to a payment plan, no longer owned by Chase, or were otherwise not enforceable.
Sold accounts with missing or incorrect information about the amount owed and the amounts already paid.
Assisted third party and junk debt buyers in collecting debt deceptively by providing incorrect or inadequate information.
Robo-signed more than 150,000 affidavits and filed more than 528,000 debt collection lawsuits against consumers.
Systematically failed to prepare, review, and execute truthful statements as required by law.
Obtained judgments in debt collection lawsuits for incorrect amounts owed due to its calculation errors.
Failed to notify consumers and the courts when Chase discovered these issues.

Enforcement of CFPB and State Actions

Under the enforcement portions of these actions, Chase has been ordered to:

Cease all collection efforts on 528,000 consumer accounts that were sent to debt collection litigation between January 1, 2009 to June 30, 2014.
Cease collections, enforcement, sale, and credit reporting of any judgments it has obtained on those accounts.
Pay at least $50 million in cash refunds to consumers damaged by Chase’s unfair, deceptive, or abusive acts and practices.
Prohibit debt buyers and junk debt buyers from reselling accounts purchased from Chase, though they can sell the accounts back to Chase.
Confirm that its debts are collectable before selling the debts to debt buyers. The debts also cannot have been paid, discharged in bankruptcy, must not be the result of identity theft or other fraud, settled, or otherwise uncollectable.
Before sale, Chase must provide detailed documentation of the debt confirming the debt is accurate and enforceable.
For at least three years after selling the debt, Chase must provide debt buyers additional account information including; agreements, account statements, payment histories, and records of account disputes.
Notify consumers that their debt was sold and provide consumers their account information including; who purchased the debt, the amount owed at the time of the sale, and a notice that consumers can request additional account information for free.
Not sell zombie debts and other debts without documentation, including; debts that have been charged off or unpaid for more than three years, debts in litigation, debts owed by a service member, debts owed by a deceased consumer, and debts where a payment plan has been arranged.
Withdraw, dismiss, or otherwise terminate all debt collection litigation pending after January 1, 2009.
Stop robo-signing affidavits. Chase declarations must now be hand-signed, must reflect the accurate date of being signed by hand, and must be based on direct knowledge and personal review of the business records of the person signing. Furthermore, documentation supporting the affidavits must be actual records of the debt, verified to be accurate, and not created solely for litigation.
Verify specific account information about the debts when filing a debt collection lawsuit. That includes the name of the creditor at the time of the last payment on the account, the date of the last extension of credit, the date of last payment on the account, the amount of the debt owed, and a detailed accounting of any post charge off fees or interest.
Implement policies, procedures, systems, and controls to ensure compliance with federal consumer financial laws when selling and collecting debts.
Pay at least $50 million in consumer refunds.
Pay at least a $30 million civil penalty to the CFPB.
Pay a $30 million civil penalty to the OCC on a related matter.
Pay $106 million in payments to the 47 states who joined in the enforcement action.

California, Mississippi, and Wyoming were the only three states that did not join in as part of the settlement with the Consumer Financial Protection Bureau. California has litigation pending against JPMorgan for engaging in unlawful and fraudulent debt collection methods involving over 100,000 California consumers over a three-year period. The California Attorney General has accused JPMorgan of flooding the California courts with thousands of questionable cases every month. Mississippi is also continuing its own separate lawsuit against Chase that is ongoing at this time. The Wyoming Attorney General’s office could not be reached for comment on why they did not participate in the settlement.

Fake Debt Collection Call Scams

January 12, 2015 by Eric Stephenson

Fake debt collection call scams are becoming a serious problem for consumers across the country. Some of these calls are from collection agencies collecting actual debt but many of these calls are fake. Our investigations have shown that many of these fake collector calls originate after a consumer applies for a payday loan online or filed bankruptcy a year or two before the calls start. Even if you never applied for a payday loan or filed bankruptcy, however, you can still be a target of these scammers.

How to detect a fake debt collector

It is often hard to tell whether a collection call is actually from a debt collector or scammer. In both calls the caller will often have access to your personal information, such as your name, address, and Social Security Number. According to the Federal Trade Commission (FTC), a caller may be a fake debt collector if it:

is seeking payment on a debt for a loan you do not recognize;
refuses to give you a mailing address or phone number;
asks you for personal financial or sensitive information; or
exerts high pressure to try to scare you into paying, such as threatening to have you arrested or to report you to a law enforcement agency.

This list from the FTC is not completely accurate however. Many debt collectors collecting actual debt engage in the same conduct. One of the most egregious examples is threatening to have you arrested for failing to pay a debt. Some collection agencies collecting real debt might even threaten to revoke your driver’s license if you don’t pay. There are also a lot of real debt collectors that will give you a fake business name or refuse to give you any physical address to contact them in writing.

Never use a wire transfer to pay a debt collector

Another major red flag that can help spot fake debt collection calls is when the caller insists on payment through wire transfer or other untraceable payment method. Never pay any debt collector by an untraceable method. Even if the debt is legitimate you will have no way of proving you paid and no way of tracking the scammers if the debt was fake.

You should always be suspicious if anyone asks you to wire money or load a rechargeable money card as a way to pay them. There’s no legitimate reason for someone you don’t know to ask you to send money that by an untraceable wire transfer.

In other words, the FTC’s advice is a good starting point for detecting fake collection calls but there are too many similarities between fake collection scammers and abusive debt collectors to be sure without more digging.

How to handle a fake debt collector

Never give the caller personal financial or other sensitive information

Don’t give out or confirm personal financial or information like your bank account, credit card, or Social Security number over the phone. Scam artists, like fake debt collectors, can use your information to commit identity theft. They can charge your existing credit cards, open new credit cards, checking, or savings accounts in your name, write fraudulent checks on your accounts, take out loans in your name, or even completely drain your bank accounts.

Ask the caller for his name, company, street address, and telephone number.

Tell the caller that you refuse to discuss any debt until you get a written “validation notice.” The notice must include the amount of the debt, the name of the creditor you owe, and your rights under the federal Fair Debt Collection Practices Act. When you ask for this information some con artists will give you fake information while others will simply hang up. Search online to see if they provided real contact information.

If a caller refuses to give you all of his company contact information, do not pay!

Legitimate companies will always give you a way to contact them in writing. More importantly, paying a fake debt collector will not always make them stop calling. Once you pay a scammer, they will often call again and make up another debt to try to get more money from you.

Stop speaking with the caller.

If you have the caller’s address, send a letter demanding that the caller stop contacting you and keep a copy for your files. Under the Fair Debt Collection Practices Act, real debt collectors must stop calling you if you ask them to stop calling in writing.

Contact your creditor.

If the debt is legitimate – but you think the collector may not be – contact your creditor about the calls. Share the information you have about the suspicious calls and find out who, if anyone, the creditor has authorized to collect the debt.

Check your credit reports.

You should also check your credit report to see if the debt is real or not. Even if the debt is reporting on your credit, however, don’t pay the caller over the phone. Keep digging to be sure the debt is actually due. If you are going to pay it, be sure to pay the company that you actually owe. Just because someone tells you over the phone that you owe them money does not make it so. Demand that they verify the existence of the debt and confirm the payment history in writing before paying a collection agency. Remember, if they can’t prove you owe the debt, they can’t sue you to collect it.

Conclusion

These con artists can be extremely convincing on the phone. They make threats that sound official like threatening to arrest you, revoke your driver’s license, or sue you. But don’t pay over the phone no matter how scary or official they sound.

Do your homework. Pull your credit reports. Find out if the debt is real or not. Make the debt collector prove you owe the debt in writing. Any company that won’t give you written proof of the debt or provide you with contact information for the company, is a scam.

Fake collection calls are a lucrative business. Millions of consumers fall victim to these insidious thieves. Don’t be one of them. If you have already fallen victim to a fake debt collection call, contact an experienced credit or identity theft recovery lawyer to assist you.

Is a Collection Agency Threatening to Arrest You?

February 3, 2014 by Eric Stephenson

Is a collection agency threatening to arrest you or charge you with a crime? Although it is illegal to do so, many debt collectors use false threats of criminal prosecution or arrest to scare consumers into paying debt. Under these threats many consumers end up paying debt that they do not owe, even when they know they don’t owe the debt. Fear is a powerful tool.

Don’t Panic

If a debt collector is threatening to arrest you or to charge you with a crime there are several steps you should take to protect yourself. First, realize that the collection agency is generally lying to you when they threaten to arrest you or charge you with a crime. There are a few circumstances in which you could be criminally responsible for fraud, identity theft, or other similar crimes, but in the vast majority of debt collection cases, those circumstances will not apply. Calm down and think it through. If you are in doubt call an attorney immediately to see if you are in any real danger of being charged with a crime or arrested. In most cases the collection agency is lying to you when they threaten to have you arrested or charged with a crime.

Don’t Pay

Do not pay a collection agency just because they are threatening to arrest you or charge you criminally. Similarly, and just as important, don’t promise to pay either. Find out first if the debt is actually yours, still within the statute of limitations, and has not yet been fully paid. Many collectors collect on debts that consumers do not legally have to pay. Find out first. When a collector is threatening to arrest you or charge you with a crime it is usually because they can’t get you to pay any other way. Call a lawyer before paying when these threats are being made.

Take Detailed Collection Notes

It is also important for you to detailed notes of every threat including the date and time of the call, the name of the company calling you, the name of the person calling you, and the details of everything they say. Don’t record the calls unless you are absolutely certain that it is legal to record calls in your state and the state in which the caller is located. Some states prohibit recording calls without the consent of both parties and your detailed notes are sufficient proof in most cases.

Tell the Collection Agency to Stop the Calls

You should also tell the collection agency to stop the calls and that you do not give consent to call you. If the debt collector is calling your cell phone, you should tell them it is a cell phone and to stop calling. Follow up by sending the collection agency a letter telling it to stop calling and that it is calling your cell phone without your permission. Keep a copy of the letter and get proof the collection agency received it by sending the letter by certified mail.

Get Legal Help

Another important step to take when a collection agency is threatening to arrest you or charge you with a crime is to call a consumer rights attorney. A good attorney can stop the calls, stop the collection agencies from threatening to arrest you or charge you with a crime, and can even obtain monetary damages on your behalf in many cases.

Don’t Fear Collection Threats

One of the most egregious consumer rights violations occurs when a collection agency threatens to arrest you. The threat of arrest or criminal prosecution for failing to pay a debt is a powerful tool in a debt collector’s arsenal. Don’t be afraid, don’t panic, and don’t make a payment until you call a consumer rights lawyer who can guide you through the threats and help you understand your legal rights in these situations.

Remove Your Phone Number to Stop the Calls

January 29, 2014 by Eric Stephenson

Don’t Press 1 to Remove Your Phone Number

Some telemarketers use robodialers and automated messages to sell their services. Con artists use the same technology. Either way, anytime you pick up the phone and a recorded voice tells you to “press 1 to remove your phone number” do not press any buttons. If you press 1 or any other buttons for that matter, the telemarketer or con artist will ADD your number to a call-more-frequently list. No kidding. They won’t remove your phone number but will actually call you more often because now they know they have connected to a live person with a good telephone number. Press 1 to remove your phone number is a lie. The telephone sales companies won’t just call more frequently however. They will also sell and share your number to other annoying telemarketers and scam artists.

Hang Up to Stop the Calls

Your best protection from telemarketers and con artists is to hang up the phone. The last thing you want to do is press any buttons. Don’t let a telemarketer or scam artist know they have connected to a working phone number. Hang up.

Stop Telemarketing Calls

Despite my advice to hang up on certain scam calls you should not hang up on telemarketing calls from reputable telemarketing companies. A reputable company is one that will accurately identify itself on your caller ID and will tell you who they are. When such a telemarketing company calls the best way to stop the calls is to ask to be placed on its internal do not call list. Tell them they are calling a cell phone if true and ask them to remove your phone number and stop calling. Take detailed notes of who you spoke with, what was said, what number they were calling from, and take a picture of the caller ID for each and every call. If they call you more than a dozen times after you tell them to stop, contact a consumer protection attorney. A good attorney can stop the calls from legitimate telemarketers pretty fast.

Stop Debt Collection Calls

My advice to hang up on scam calls and annoying sales calls from unknown companies also doesn’t apply to debt collection calls. Debt collection calls need to be handled more directly. Especially if they are calling more than two or three times per week.

One way to stop debt collection calls is to tell the collection agency to stop calling and that you refuse to pay. Under the Fair Debt Collection Practices Act they have to stop calling when you do. They might sue you however, so talk to a consumer rights attorney before taking such a drastic step. If they keep calling after you tell them to stop, track the details of each call and keep the same detailed records as you would with a telemarketer.

Don’t Stop Debt Collection Calls

In many cases you may want to let debt collectors call you. Track every call as discussed above, however. Take detailed notes, caller ID pictures, and keep track of every call. If the debt collector is abusive, the information you gather now will be evidence against them later. In many cases you should record abusive telephone calls with collection agencies but contact an attorney to assist and advise you first. Recording telephone calls is illegal in many states and punishable as a crime. Don’t record a call unless you are 100% certain that it is legal to do so in both your state and the caller’s state.

Remove Your Phone Number, Maybe

There are times you want to remove your phone number from a telemarketing list but never push a button to do so. Tell the caller to stop the calls and keep detailed records for later use in court if they won’t stop the calls. Of course, if a company calls you more than a dozen times after you tell it to stop, contact a consumer protection attorney for assistance.

How to Stop Harassment

November 25, 2013 by Eric Stephenson

Consumers often ask me how to stop harassment from debt collectors, collection attorneys, or telemarketers. My answer may surprise you but often I recommend that you don’t stop the calls. In many cases it may be better to sue the abusive companies that to merely stop the calls.

Stop Harassment from Debt Collectors, Collection Agencies, and Collection Attorneys

The simple way to stop harassment from collection calls is to simply ask the debt collector in writing to stop the calls. Under the Fair Debt Collection Practices Act (FDCPA) the collector is then required to stop calling you. Yes, it is that easy to stop collection calls. This applies to any collection agency or collection attorney collecting consumer debt that it obtained from another while that debt was in default. Don’t be hasty, however. It is often preferable to let the calls continue.

One reason you should let collection agencies call you is because if you tell them to stop calling, they might sue you. Being sued is stressful and can result in a bad outcome compared to answering the phone once in a while. Contact an attorney before asking a debt collector to stop calling.

Another circumstance in which you should let collection agencies keep calling you is when you need to sue a debt collector for other abuses. Under the FDCPA you can, and should, sue debt collectors, collection agencies, and collection attorneys when they are abusive, unfair, or treat you in an undignified manner. If such conduct is taking place, allowing the calls to continue while you gather evidence can help bolster your case against the collection agency.

Stop Harassment from Telemarketers

It is easy to stop harassment from most telemarketers. First, put your telephone number on the do not call registry. Not all telemarketing will stop by putting your number on the do not call list but it will certainly help reduce such calls. Next, tell the telemarketer to stop calling and ask for a copy of its do not call policy. Those two steps alone will stop harassment in most cases.

In more extreme situations you may need to sue to stop harassment from telemarketers. In that case your first priority is keep a call log of the date, time, and caller of every call. Answer every telemarketing call and tell the telemarketer to stop calling you and make a note that you did so in your log. Take pictures of the caller ID for every call to later prove who called and what number they called from. You can also compare the caller ID information to call records to determine whether or not the telemarketer altered the caller ID information. You should also get copies of your telephone records to bolster the information from your caller ID pictures and call log.

Conclusion

When consumers ask me how to stop harassment from debt collectors, collection agencies, or collection attorneys my answer is often don’t stop the calls. Instead, use the calls to gather evidence. For telemarketing calls, the same advice rings true. Tell the caller to stop calling but keep good records in case they don’t. In any event, stopping these annoying calls is easy to do in most cases. If the calls don’t stop after your repeated efforts, contact a consumer rights attorney. In many cases, we can stop the calls and make these abusive companies pay you for their harassment and abuse.