Tuesday, July 13, 2010

Temper-Tantrum Tuesday: Debt Lawsuits

I just read this article from the New York Times Automated Debt-Collections lawsuits Engulf Courts about how computer software has automated the process of turning over debts to the civil courts.

Collection Lawyers do this because they know when someone gets into a spiral of debt that they go into depression and are unlikely to fight a court battle. That’s why 90% of the collection suits go unopposed. If you are faced with a lawsuit for a credit card debt chances are it was filed by computer process and here is how to fight back.

In order to sue someone under contract law, there needs to be a contract. It sounds silly but the credit card companies don’t keep track of these so often they won’t have a contract filed with the original complaint. A lot of states have softened this rule for credit cards but they still have to provide some evidence from the original creditor of the terms and conditions that where in place when you got the card.

The second thing for a lawsuit under contract law is a statement of how much is owed. Again this sounds silly but a lot of these collection lawyers don’t include a copy of the last billing statement, or if they do send a billing statement the amount they are asking for doesn’t match that on the billing statement.

Third they are not allowed to charge any fees not agreed on in the original contract. If they do it is a violation of the Fair Debt Collections Practices Act and you can counter sue for $1,000. This is particularly helpful if the debt is for a small amount, as the counter suits can grow larger than the original.

Finally, the complaint must be in English. This is where the automated system hurts the collection lawyers.

If you get a summons look it over for the first three things, if they aren’t there or in statements that the “Least Sophisticated Consumer” wouldn’t understand, file a response asking the case be declined for lack of evidence. They will have to file a response. This is the first time a lawyer actually gets involved.

Because they have grown so accustom to the computer doing all their work the response might have grammatical problems like, “Document A clearly state:” State, in this case, is the plural possessive of say, so you have the right to demand they produce the other, non-existent, document that they are referring to.

When you show up in court the lawyer will try negotiating with you, because they have based the lawsuit on the assumption you won’t show. As the judges are being overwhelmed by silly lawsuits these days they tend to be nicer to the defendant and if you can show reasonable cause that they should produce the documents you ask for they will probably tell the collection lawyer to produce them, which they won’t be able to do.

If enough people start fighting these automated lawsuits it will become too expensive to file a lawsuit on every little credit card debt, and they will go out of business.

I am not a lawyer just a former Security Broker and Insurance Agent, this shouldn’t be construed as legal advise.

By Darrell B. Nelson author of Invasive Thoughts

1 comment:

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