Capital One caught collecting over 15,000 accounts that were discharged in bankruptcy

January 3, 2012 by Todd Murray · Leave a Comment 

Bankruptcy is designed to be a last-resort option for people with serious financial problems. When someone files bankruptcy, her debts are discharged, which means that they are no longer legally owed. Apparently, however, Capital One didn’t get the memo on how bankruptcy works.

A auditor appointed by a bankruptcy court in Massachusetts found that Capital One pursued over 15,000 claims for debts that had been discharged in bankruptcy. Yup, our good friends at Capital One seem to have made a practice of trying to collect debts that they have no legal right to collect. Capital One, of course, denies any nefarious intent, but their actions speak much louder than their words. In fact, according to the WSJ article, the Chief Judge of the U.S. Bankruptcy Court in Mississippi has demanded that a representative from Capital One appear in court and provide proof that the company’s pattern of collecting discharged debts is a “legitimate error and not a conscious, malevolent effort to go out and collect a debt that’s been discharged.”

Capital One’s pursuit of discharged debts is not only a violation of the bankrutpcy code. It’s also a violation of the Fair Debt Collection Practices Act. Among other things, the FDCPA prohibits debt collection conduct that is unfair or untrue. Do you think it’s fair to pursue someone for a debt that isn’t legally owed? Me neither. And do you think that saying in a lawsuit that someone owes a debt when they don’t actually owe the debt is untrue? Yup, me too.

What’s in your wallet? Capital One’s greedy hands, apparently.

Debts Go Bad, Then It Gets Worse | The Wall Street Journal | December 23, 2011

If you live in Minnesota and Capital One–or any creditor–has attempted to collect a debt that was discharged in bankruptcy, please contact me to discuss the situation further. I offer a free case review for all FDCPA cases and if I agree to handle your case, you won’t have to pay me any money up front. My fees come from the money I recover from you if you win your case or accept a negotiated settlement.

5 tips for negotiating a settlement with a debt collector

October 27, 2011 by Todd Murray · Leave a Comment 

1.  If possible, negotiate a lump sum settlement. The best way to get a good deal from a debt collector is to offer a lump sum settlement. Debt collectors usually have blanket authority to settle debts for between 40% and 80% of the full balance if you pay the settlement in a one-time payment. If you’re unable to afford a lump sum payment, the debt collector usually has the authority to agree to smaller monthly payments, often over a couple of years. But in exchange for the flexibility of a low monthly payment, you’re probably going to have to pay the full account balance.

2.  The last day of a month is the best day to get a great deal. Debt collectors have monthly goals that they must meet and there are significant consequences if they don’t meet those goals. If a collector is short of their goal on the last day of the month, they may be willing to accept a lower settlement amount than they normally would. To take advantage of this, however, you’ll probably have to make the settlement payment that day. So plan accordingly.

3.  Insist that the debt collector confirms any agreement in writing, before sending them any money. Once you’ve reached a verbal agreement with the collector, ask them to send you confirmation of the agreement in writing before turning over your money. Read the agreement carefully to be sure that it actually contains the terms that you agreed to. Any reputable debt collector will be willing to confirm a payment arrangement in writing, so be wary of one who won’t.

4.  Keep a record of your payment. If you’re paying with a personal check, get a copy of the canceled check from your bank. If you’re paying with a money order or cashier’s check, make a copy of the check and either note the date that you mailed it or, better yet, use certified mail. If you pay in cash or make the payment in person, be sure to get a receipt. Along with the collector’s written confirmation, your proof of payment may be needed in the future to prove that you settled the account.

5.  Be sure to get the proper follow-up documents. The appropriate follow-up documents vary depending on what point in the legal process you are when you settle the debt:

  • If you settle the debt before you get sued, the collector’s written confirmation of the agreement, plus your proof of payment, should be sufficient.
  • If you settle the account after you’ve been sued, but before a judgment is entered, the collector should send you (and the court if the case has been filed) a dismissal WITH prejudice. A dismissal with prejudice means that the claim is fully resolved and can’t be brought against you again. Don’t accept a dismissal without prejudice if you’ve settled the account in full because there’s a possibility that you could get sued again for the same claim.
  • If you settle the account after you’ve been sued and after a judgment has been entered, the collector should send you and the court a satisfaction of judgment. And if your wages were being garnished at the time you settled the account, the debt collector should quash the garnishment.

Things a debt collector won’t tell you

October 17, 2011 by Todd Murray · Leave a Comment 

Reader’s Digest posted an article last week titled 13 Things a Debt Collector Won’t Tell You. It’s a fascinating peek inside the world of debt collection and it gives some insight into how debt collectors are trained. Here are some of the most revealing, along with my comments:

  • Debt collectors are trained that all consumers are compulsive liars. Let’s face it, collecting debt is an unpleasant job, especially if you have a conscience. It’s much easier to aggressively push for payment when your training demonizes all consumers as irresponsible liars.
  • Debt collectors don’t care about why you can’t pay because they’ve heard every hard-luck story there is. There’s nothing to be gained from explaining to the collector why you fell behind on paying your bills. Collectors with a conscience don’t last long, so chances are that the collector you’re dealing with doesn’t have one.
  • Collectors are trained to get as much personal information as possible. Never tell a collector where you work or where you bank. If you’re unable to settle the account, the collector will use this information to garnish your bank account and wages.
  • The more money the collector brings in, the bigger his bonus. Most collectors are paid a very small salary, plus a commission on the money that they collect. Collectors know that their ability to make ends meet is largely contingent upon how much money they can squeeze out of you. And collectors that consistently fail to meet their monthly collection goals routinely get fired. It’s no surprise, then, that this immense pressure causes collectors resort to ruthless and illegal collection tactics.

Click through to the article to see the entire list.

If you’re dealing with debt collectors, make sure to download and use my free debt collection call log so that you can document all of the debt collectors’ communications. And if a debt collector does anything that you think was unfair; untrue; or harassing or abusive, please contact me to discuss the situation further. I offer a free case review for all FDCPA cases and if I agree to handle your case, you won’t have to pay me any money up front. My fees come from the money I recover from you if you win your case or accept a negotiated settlement.

Five reasons to sue a debt collector that violates the FDCPA

August 9, 2011 by Todd Murray · Leave a Comment 

1. Up to $1,000 in statutory damages. If you bring a successful FDCPA case, the court will award you up to $1,000 in statutory damages. These damages are provided by law as a penalty against a debt collector that violated the FDCPA and you don’t have to prove that you suffered any actual harm to be awarded statutory damages. Although there are rare cases where a court awards a consumer less than $1,000, in most cases the consumer is awarded the full $1,000.

2. Provable actual damages. If a debt collector’s abuse has caused you to cry or lose sleep or if the collector’s harassment has affected your relationship with your loved ones or your performance at work, you may be able to recover actual damages. Not every consumer will suffer actual damages due to a collector’s conduct, but if you can successfully prove that you’ve suffered tangible harm, you’re entitled to compensation for that suffering.

3. A free attorney. Probably the most important remedy under the FDCPA is the fee-shifting provision. This means that if you win your case, the collector has to pay your attorney fees. Because of this, most consumer attorneys take FDCPA cases on a full contingency fee, which means that you don’t have to give your lawyer any money up front. Your attorney gets paid by the debt collector or gets a percentage of any out-of-court settlement.

4. Your litigation costs are covered. Litigation can be expensive. The costs for filing fees, service fees, deposition transcripts, etc. can quickly add up. But if you win your FDCPA case, the debt collector has to pay all of your court costs.

5. Hold the debt collector accountable. When the FDCPA was enacted, Congress gave each individual consumer the right to sue a debt collector for violating the Act. The idea was that consumers and their attorneys would act as “private attorney generals” by holding debt collectors that violate the FDCPA accountable for their conduct through private lawsuits. Debt collectors love to lecture consumers about taking “personal responsibility” for paying their bills. An FDCPA lawsuit is a chance to turn this argument right back around at the debt collector and force them to take responsibility for their illegal debt collection tactics.

If you’re dealing with debt collectors, make sure to download and use my free debt collection call log so that you can document all of the debt collectors’ communications. And if a debt collector does anything that you think was unfair; untrue; or harassing or abusive, please contact me to discuss the situation further. I offer a free case review for all FDCPA cases and if I agree to handle your case, you won’t have to pay me any money up front. My fees come from the money I recover from you if you win your case or accept a negotiated settlement.

Plaintiff awarded $1.26 million in New Mexico FDCPA case

August 1, 2011 by Todd Murray · Leave a Comment 

Last week, a New Mexico jury awarded a consumer $1.26 million in a FDCPA suit in New Mexico. The jury awarded $161,000 in actual damages and whopping $1.1 million in punitive damages.

The case involved repeated attempts–including two wage garnishments–to collect a debt from a person that did not owe it. Although the plaintiff in the case had the same name as the actual debtor, she persistently told the debt collector that the debt did not belong to her. Even her employer got involved: when the debt collector served the garnishment papers, the employer told the debt collector that they were attempting to garnish the wrong person. And it turns out that they were. During the proceedings, it was revealed that the original creditor had provided the debt collector with the contact information for the correct debtor, but that the debt collector manually changed the contact information to that of the similarly-named non-debtor. And although the debt collector asserted that the mistake was a result of a bona fide error–which is a defense to a FDCPA claim–apparently, the jury did not buy their argument. And probably for a good reason. In my opinion, it’s difficult to argue bona fide error when you originally had the correct contact information, altered it to pursue the wrong person, and ignored that person’s (and her employer’s) repeated warnings that the collector had the wrong person.

Jury Awards Plaintiff $1.26 million in FDCPA Violation Lawsuit | InsideARM | July 31, 2011

If you’re dealing with debt collectors, make sure to download and use my free debt collection call log so that you can document all of the debt collectors’ communications. And if a debt collector does anything that you think was unfair; untrue; or harassing or abusive, please contact me to discuss the situation further. I offer a free case review for all FDCPA cases and if I agree to handle your case, you won’t have to pay me any money up front. My fees come from the money I recover from you if you win your case or accept a negotiated settlement.