Who are Asset Acceptance, Unifund CCR Partners, and LVNV Funding?
August 12, 2009 by Todd Murray · Leave a Comment
Asset Acceptance, Unifund CCR Partners, and LVNV Funding are three of the biggest debt buyers in the collection industry. Other debt buyers include Midland Funding, Cavalry Portfolio, Crown Asset Management, and Palisades. A debt buyer is a company that purchases delinquent consumer accounts from original creditors such as Capital One, HSBC, Discover, and Wells Fargo. The debt buyer purchases the accounts for a tiny fraction of the balance and then attempts to collect the entire balance from the consumer. Debt buyers file thousands of lawsuits and obtain thousands of default judgments each month. They are then free to garnish people’s bank accounts and wages, and as a result, collect millions of dollars. This leads to huge profits, even in the current economy.
But debt buyers have a dirty little secret: they can almost never prove their case in court. Because they didn’t originate the debt, they are at the mercy of the original creditor to provide them with the documents, such as credit applications and billing statements, to prove their case. Sometimes the original creditor refuses or is unable to provide the debt buyer with these critical documents. Debt buyers also have a difficult time providing thorough documentation of their purchase of the debt. Because of this, most debt buyer lawsuits can be successfully challenged. But because the majority of people don’t respond to debt buyer lawsuits, the debt buyers obtain thousands of judgments by default. In most states, this means that debt buyers obtain the judgments without having to provide any proof.
If you have been sued by a debt buyer, you should answer the lawsuit and force the debt buyer to prove their case. If disputed properly, most debt buyer lawsuits can be defeated. Even if they can’t be defeated outright, challenging them can lead to good deals in the form of settlements.
If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.
How to answer a debt collection lawsuit in Minnesota
June 18, 2009 by Todd Murray · Leave a Comment
I recently had a client come into my office with a judgment entered against him by a debt collector. He admitted being served with the lawsuit, but thought it was bogus because the lawsuit didn’t have a court file number on it. And when he called the local courthouse to verify whether the lawsuit was legit, the court had no record of such a lawsuit. Based on this information, he didn’t respond to the lawsuit and the debt collector entered a default judgment and began garnishing his wages.
In virtually every state, a lawsuit is started by filing it with the court. But Minnesota is a unique state because a lawsuit is started by serving the defendant. Because of this quirk, a lawsuit in Minnesota will almost never have a court filing number. And the courts will not have a record of the lawsuit until the creditor files the lawsuit and pays the filing fee. But this doesn’t mean the lawsuit isn’t legitimate. If you’re served with a lawsuit in Minnesota, you MUST answer the lawsuit within 20 days. If you don’t answer the lawsuit, it’s likely that a default judgment will be entered against you without a court hearing.
So the first step to respond to a collection lawsuit is to answer it. An answer is a formal legal document that responds to each of the allegations in the lawsuit. Your answer should be in a format very similar to the lawsuit itself. It should have the same caption, which provides the applicable county and judicial district and names each of the parties. The body of your answer should either admit or deny each allegation in the lawsuit. It’s best to number each paragraph of your answer to correspond with each numbered paragraph of the lawsuit. If you don’t know whether an allegation is true or false, deny the allegation. When you’ve finished responding to each of the allegations, sign and date the answer. You then serve the answer by mailing a copy (keep the original for your records) to the debt collector’s lawyer, or the debt collector itself if they don’t have a lawyer. You don’t have to file your answer with the court and pay the filing fee until the debt collector does.
But answering the lawsuit is just the first step. When they get an answer, most debt collectors will serve you with written discovery, called interrogatories, request for production of documents, and requests for admission. You MUST respond to the debt collector’s discovery within 30 days. Pay particular attention to the requests for admission. If you don’t respond to each admission within 30 days, the admission will be considered completely true. You don’t want to inadvertently admit to owing the debt by not responding to the requests for admission.
If you properly respond to the discovery, the next step is usually a court hearing, most likely a summary judgment hearing. Make sure to respond to the debt collector’s motion papers by the deadline provided on the motion. Then, be sure to attend the hearing and explain to the judge why you do not owe the debt.
If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.
Photo: http://www.flickr.com/photos/shinythings/161216658/
Garnishment in Minnesota
May 11, 2009 by Todd Murray · 1 Comment
Editor’s note: this post only discusses garnishment in Minnesota. Although the laws and procedures may be similar in other states, you should consult with an attorney in your area for specific advice about your state’s garnishment laws.
In Minnesota, debt collectors are allowed to garnish a consumer’s bank account and wages to recover unpaid debts. Although Minnesota law permits garnishment before the entry of judgment in limited circumstances, the majority of garnishments occur after a court judgment has been entered.
To initiate a bank garnishment, a debt collector first sends a garnishment summons to the bank. The bank is required to seize all funds in the consumer’s bank account on the day they process the garnishment summons. Consumers do not get notice of the garnishment until after the funds have been seized, which unfortunately can result in bounced checks and overdraft fees. In contrast, a wage garnishment is initiated by first sending a notice of intent to garnish to the consumer. The debt collector must then wait 10 days before sending a garnishment summons to the consumer’s employer. Upon receipt of the garnishment summons, an employer must seize 25% of the consumer’s after tax earnings for each pay period until the debt is satisfied.
What should you do if your bank account or wages are being garnished? First, determine if any portion of the funds that were seized are exempt. Minnesota law provides that certain sources of funds are exempt from garnishment. For example, a debt collector may not keep most forms of need-based government aid, such as social security or energy assistance. In addition, a debt collector can only keep up to 25% of your wages, even after you deposited them in your bank account. Minnesota law also provides that child support, some insurance settlement proceeds, and many pension plans are exempt from garnishment. This is not an exhaustive list of exemptions and you should consult with a consumer lawyer to determine what, if any, exemptions you may claim. A consumer lawyer can also help you navigate the process to claim an exemption and get your exempt funds back. It is critical to act quickly because Minnesota law provides very stringent deadlines for claiming an exemption and if you fail to act in the required time, you may lose your ability to claim an exemption. 6/30/09 update: for more information on garnishment exemptions in Minnesota, see this post.
Another thing to consider if your bank account has been garnished is whether any of the funds that were seized belong to a joint account holder, such as a spouse or child, who has nothing to do with your underlying debt. Under current Minnesota case law, a debt collector may not keep funds in a bank account that were contributed by a joint account holder who is not responsible for the debt. And there is at least one Minnesota court that has ruled that a debt collector that seizes a joint account holder’s funds to satisfy a debt they aren’t responsible for may have violated the Fair Debt Collection Practices Act, or FDCPA, and other Minnesota laws.
Finally, you should consider whether its possible to get the underlying court judgment vacated, or removed. If the judgment was obtained by default and you were never served with the lawsuit, you may be able to have a court vacate the judgment and return the garnished funds to you. Its also possible, under certain circumstances, to get a default judgment vacated even when you were properly served with the lawsuit. Consult with a consumer lawyer to determine whether you have a viable motion to vacate the default judgment.
(photo: stuart pilbrow)
Why mandatory binding arbitration is bad for consumers
May 7, 2009 by Todd Murray · 2 Comments
Many consumer contracts, including credit cards, contain mandatory binding arbitration clauses buried in the fine print of the terms and conditions. The clauses are very broad and encompass virtually any dispute between the consumer and the company. Increasingly, creditors are invoking mandatory binding arbitration clauses to collect debts. Rather than sue consumers and pursue a court judgment, credit card companies are forcing consumers into arbitration.
Arbitration is a dispute resolution process that, according to supporters, produces a resolution in less time and for less money than litigating a case in court. Sounds great, right? But unlike a judge, who is publicly elected and accountable, an arbitrator is chosen by a private arbitration company. The arbitrator is not required to issue a written decision, so the parties rarely get an explanation about the arbitrator’s ruling. And unlike a court ruling, arbitration rulings are final and not subject to appeal. The arbitration clause usually mandates what arbitration company will hear any disputes. Predictably, creditors choose arbitration companies that pander to their interests. Since credit card companies provide the arbitration companies with thousands of cases, which generate huge sums of money for the arbitration companies, its not surprising that they rule against consumers the overwhelming majority of the time. There are even stories of arbitrators being blacklisted by arbitration companies for ruling in favor of a consumer.
Arbitration may indeed resolve a consumer dispute faster and cheaper than a court proceeding. But the arbitrator is chosen by your opponent, rules in favor of your opponent the vast majority of the time, is not required to explain his decision, and his decision cannot be appealed. Sounds like kangaroo court to me.
If a credit card company is forcing you to arbitration or is trying to confirm an arbitration award against you, please contact me immediately to discuss your case.
(photo: Tasumi1968)
Todd Murray quoted in Minnesota Lawyer article about the increased need for consumer lawyers
April 15, 2009 by Todd Murray · Leave a Comment
Minnesota Lawyer recently published an article about the increased need for consumer lawyers in the current economic climate. The article discussed the rise in debt collection lawsuits being initiated and some of the problems this has caused for consumers.
I was quoted several times in the article, which also featured quotes from fellow consumer lawyers Nick Slade and Sam Glover:
Minneapolis consumer attorney Todd Murray is fielding a lot of calls as well, many relating to issues surrounding garnishment. “There are a lot of people out there who the economy has hit pretty hard and who are having problems with debt collection.”
According to Murray, garnishment statutes tend to favor creditors, particularly the statutes involving exemptions. “A lot of times exempt funds are seized…and the process to resolve it is sort of this ping-pong process,” he said. “This often can take weeks to resolve and meanwhile the account is frozen and overdraft fees pile up.”
Murray added that while creditors are pushing hard to keep the arbitration process in place, many consumer advocate groups have targeted mandatory arbitration as “No. 1″ on their list of things to change.
If you’re in Minnesota and have been sued or garnished by a debt collector and need help defending yourself, please contact me.
Michelle Lore, Consumer lawyers keep busy as creditors push for payment, Minnesota Lawyer, April 13, 2009, at 3.
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