John Skiba - 3/1/2012 - JDSUPRA
I meet with clients on a regular basis that have been sued by a debt buying company on an old credit card debt. If you have had the misfortune of being sued, you know that the process server provides you with a copy of the Complaint and Summons.
In Arizona, you have 20 days from the day you are served with the Complaint and Summons to submit a written response to the court. The written response is called the “Answer”. How you answer a lawsuit can have lasting implications in your collection lawsuit. Because of this, it is important to fully understand the process of answering a lawsuit and what things to avoid.
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Watch Your Step...Answering Collection Lawsuits
Showing posts with label debt collection. Show all posts
Showing posts with label debt collection. Show all posts
Thursday, March 1, 2012
Tuesday, January 11, 2011
Dirty Debt Collectors Sued Under RICO Act
Ben Popken on January 11, 2011 - The Consumerist
A judge has set an interesting precedent, allowing a pack of skeevy debt collectors get sued under the RICO act, the Racketeer Influenced Corrupt Organization law.
The RICO act allows for increased criminal penalties and civil action against members and entities working together in a criminal enterprise. It was created to prosecute the Mafia but has been expanded to be used against the Hells Angels, Major League Baseball, and health insurance.
In this case a debt-purchasing company, law firm and process-serving company are accused of working together to snag borrowers with "sewer service." This is where the process servers tell the courts they've given notice to the clients, but actually haven't. Because that would give them more of a chance to fight back.
Since the clients usually don't show up, it's easy to get default judgments against them.
Read the rest of the story:
Dirty Debt Collectors Sued Under RICO Act
A judge has set an interesting precedent, allowing a pack of skeevy debt collectors get sued under the RICO act, the Racketeer Influenced Corrupt Organization law.
The RICO act allows for increased criminal penalties and civil action against members and entities working together in a criminal enterprise. It was created to prosecute the Mafia but has been expanded to be used against the Hells Angels, Major League Baseball, and health insurance.
In this case a debt-purchasing company, law firm and process-serving company are accused of working together to snag borrowers with "sewer service." This is where the process servers tell the courts they've given notice to the clients, but actually haven't. Because that would give them more of a chance to fight back.
Since the clients usually don't show up, it's easy to get default judgments against them.
Read the rest of the story:
Dirty Debt Collectors Sued Under RICO Act
Thursday, January 6, 2011
Most Charges Upheld in Debt Collector Fraud Suit
By NICK MCCANN - Courthouse News - January 6, 2011
A class action against a debt purchaser, law firm and process-service company, which allegedly conspired to obtain millions of dollars in default judgments through "sewer service," can proceed to trial after a federal judge in New York upheld most of the claims.
The plaintiffs claim that the law firm Mel S. Harris & Associates obtained default judgments against them for failure to answer collections complaints, but the alleged debtors say they never knew about the court dates because they were not served with summons and complaints as required by law.
So-called "sewer service" refers to process servers who file affidavits in court purporting to have delivered court papers, but have actually thrown the documents into sewers outside the debtor's home. Among companies that only pay process servers for completed service, employees rely on sewer service to get paid, the class claims.
The debt-purchasing company Leucadia National and shell companies L-Credit and LR Credit filed over 100,000 consumer debt collection actions since 2006 in New York City civil court. The class action claims the Mel S. Harris & Associates law firm represented Leucadia 99 percent of the time, and Leucadia regularly hired the Samserv process-serving agency.
U.S. District Judge Denny Chin noted from the complaint that a single Mel Harris employee named Todd Fabacher signed 40,000 affidavits claiming the debt claims were accurate.
Read the rest of the story:
Most Charges Upheld in Debt Collector Fraud Suit
A class action against a debt purchaser, law firm and process-service company, which allegedly conspired to obtain millions of dollars in default judgments through "sewer service," can proceed to trial after a federal judge in New York upheld most of the claims.
The plaintiffs claim that the law firm Mel S. Harris & Associates obtained default judgments against them for failure to answer collections complaints, but the alleged debtors say they never knew about the court dates because they were not served with summons and complaints as required by law.
So-called "sewer service" refers to process servers who file affidavits in court purporting to have delivered court papers, but have actually thrown the documents into sewers outside the debtor's home. Among companies that only pay process servers for completed service, employees rely on sewer service to get paid, the class claims.
The debt-purchasing company Leucadia National and shell companies L-Credit and LR Credit filed over 100,000 consumer debt collection actions since 2006 in New York City civil court. The class action claims the Mel S. Harris & Associates law firm represented Leucadia 99 percent of the time, and Leucadia regularly hired the Samserv process-serving agency.
U.S. District Judge Denny Chin noted from the complaint that a single Mel Harris employee named Todd Fabacher signed 40,000 affidavits claiming the debt claims were accurate.
Read the rest of the story:
Most Charges Upheld in Debt Collector Fraud Suit
Tuesday, January 4, 2011
A Lawsuit That Dirty Debt Collectors Should Be Worried About
By ABIGAIL FIELD - 01/04/11 - Daily Finance
Federal Circuit Court Judge Denny Chin just issued an opinion in a consumer class action case that should send chills down the spines of debt collectors, perhaps including foreclosure-mill law firms and their process servers, nationwide.
Judge Chin decided that plaintiffs alleged enough information about the debt collectors in this case -- a law firm, a process-serving company and a debt-buying company -- to sue them for being a criminal enterprise under the Racketeer Influenced Corrupt Organization (RICO) law. Judge Chin also allowed claims under the Fair Debt Collection Practices Act.
Why should other companies in and related to the debt-collection business be so nervous?
Well, Monique Sykes and the other plaintiffs claim that the defendants' business model is as follows:
- Buy debt with little documentation that the debt is accurate.
- File lawsuits claiming personal knowledge of the debt but using robo-signed affidavits instead.
- Deliberately fail to tell the "debtor" that the lawsuit is pending (a practice called "sewer service").
- Get a "default" judgment against the debtor when she fails to show up in court to defend herself.
- Enforce the judgment, including by freezing the debtor's bank account.
And remember, JPMorgan Chase (JPM) whistle-blower Linda Almonte said Chase's records about its customers' debts were often false, and that executives routinely robo-signed debt-related documents. Also, the The New York Times has more generally reported that inaccurate debt records and robo-signed documents are common. Similarly, sewer service is a common enough practice to have a name. So it's hard to imagine that the three businesses at the center of this case are the only ones that have this business model and thus are vulnerable to RICO charges.
Read the rest of the story:
A Lawsuit That Dirty Debt Collectors Should Be Worried About
Federal Circuit Court Judge Denny Chin just issued an opinion in a consumer class action case that should send chills down the spines of debt collectors, perhaps including foreclosure-mill law firms and their process servers, nationwide.
Judge Chin decided that plaintiffs alleged enough information about the debt collectors in this case -- a law firm, a process-serving company and a debt-buying company -- to sue them for being a criminal enterprise under the Racketeer Influenced Corrupt Organization (RICO) law. Judge Chin also allowed claims under the Fair Debt Collection Practices Act.
Why should other companies in and related to the debt-collection business be so nervous?
Well, Monique Sykes and the other plaintiffs claim that the defendants' business model is as follows:
- Buy debt with little documentation that the debt is accurate.
- File lawsuits claiming personal knowledge of the debt but using robo-signed affidavits instead.
- Deliberately fail to tell the "debtor" that the lawsuit is pending (a practice called "sewer service").
- Get a "default" judgment against the debtor when she fails to show up in court to defend herself.
- Enforce the judgment, including by freezing the debtor's bank account.
And remember, JPMorgan Chase (JPM) whistle-blower Linda Almonte said Chase's records about its customers' debts were often false, and that executives routinely robo-signed debt-related documents. Also, the The New York Times has more generally reported that inaccurate debt records and robo-signed documents are common. Similarly, sewer service is a common enough practice to have a name. So it's hard to imagine that the three businesses at the center of this case are the only ones that have this business model and thus are vulnerable to RICO charges.
Read the rest of the story:
A Lawsuit That Dirty Debt Collectors Should Be Worried About
Tuesday, November 10, 2009
4 options when police call about debt
Justin Harelik - Bankrate.com - November 10,2009
Q: Recently I got a call from the police. They told me that a creditor has filed a lawsuit against me as a result of a personal loan from that lender. I made payments and I could not make payments anymore because I lost my job. Now I am still without a job and can't afford to fight any legal battle. What should I do?
A: I completely understand the approach you took to your financial distress: head in the sand. You simply could not pay the debt and could not afford to respond to the lawsuit that the creditor filed against you. So you decided the best approach was to do nothing and hope that ignoring the problem would resolve it. This is not uncommon, but unfortunately, the sheriff's department in your county or town is very aggressive and acts on this type of judicial order.
Here is basically what happened: The lender considered all available options when you started to miss payments. The lender sent letters and made phone calls asking for payment. These collection efforts went unanswered. You had a good reason since you had no job and could not pay. But the creditor does not care.
Then the lender filed a lawsuit against you. The lender was supposed to serve you with papers regarding the lawsuit. This does not always happen. As I have written before, some unscrupulous lenders serve you via "gutter service," meaning the lender's process server -- the person that hands you the lawsuit papers -- simply discards the papers into the gutter and claims he or she served you with them.
Read the rest of the story:
4 options when police call about debt
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Q: Recently I got a call from the police. They told me that a creditor has filed a lawsuit against me as a result of a personal loan from that lender. I made payments and I could not make payments anymore because I lost my job. Now I am still without a job and can't afford to fight any legal battle. What should I do?
A: I completely understand the approach you took to your financial distress: head in the sand. You simply could not pay the debt and could not afford to respond to the lawsuit that the creditor filed against you. So you decided the best approach was to do nothing and hope that ignoring the problem would resolve it. This is not uncommon, but unfortunately, the sheriff's department in your county or town is very aggressive and acts on this type of judicial order.
Here is basically what happened: The lender considered all available options when you started to miss payments. The lender sent letters and made phone calls asking for payment. These collection efforts went unanswered. You had a good reason since you had no job and could not pay. But the creditor does not care.
Then the lender filed a lawsuit against you. The lender was supposed to serve you with papers regarding the lawsuit. This does not always happen. As I have written before, some unscrupulous lenders serve you via "gutter service," meaning the lender's process server -- the person that hands you the lawsuit papers -- simply discards the papers into the gutter and claims he or she served you with them.
Read the rest of the story:
4 options when police call about debt
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Saturday, August 15, 2009
FTC Discussion on Process Servers and Legal Collection Issues
by Phil Britt - August 11, 2009 - insideARM.com staff
Improper process serving was a big topic at the FTC's roundtable on legal collections last week. Industry experts and the FTC spoke to insideARM about what came out of the discussion.
A lengthy discussion about process servers was one of the more interesting and unexpected items to come out of last week’s Federal Trade Commission roundtable (“FTC Collection Litigation Roundtable Sees Lively Debate on Legal Issues,” Aug. 7).
The roundtable, held at Northwestern University in Chicago, followed up on the FTC’s February 2009 report Collecting Consumer Debts: The Challenges of Change – A Workshop Report, which recommended that the debt collection regulatory system in the U.S. should be reformed and modernized (“FTC Proposes Significant Changes to FDCPA in Workshop Report,” Feb. 27). The report also announced regional roundtables to further discuss issues surrounding litigation and arbitration practices in the accounts receivable management process, last week’s event in Chicago being the first. The next will be at the end of September at a still undetermined location in northern California.
Read the rest of the story:
FTC Discussion on Process Servers and Legal Collection Issues
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Improper process serving was a big topic at the FTC's roundtable on legal collections last week. Industry experts and the FTC spoke to insideARM about what came out of the discussion.
A lengthy discussion about process servers was one of the more interesting and unexpected items to come out of last week’s Federal Trade Commission roundtable (“FTC Collection Litigation Roundtable Sees Lively Debate on Legal Issues,” Aug. 7).
The roundtable, held at Northwestern University in Chicago, followed up on the FTC’s February 2009 report Collecting Consumer Debts: The Challenges of Change – A Workshop Report, which recommended that the debt collection regulatory system in the U.S. should be reformed and modernized (“FTC Proposes Significant Changes to FDCPA in Workshop Report,” Feb. 27). The report also announced regional roundtables to further discuss issues surrounding litigation and arbitration practices in the accounts receivable management process, last week’s event in Chicago being the first. The next will be at the end of September at a still undetermined location in northern California.
Read the rest of the story:
FTC Discussion on Process Servers and Legal Collection Issues
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