Tag: debt collectors

Debt Collectors Pay Price

A debt collector recently charged a borrower $2.95 in interest on a judgement, even though no post-judgement interest had been awarded.  A district court decided that this violated the Fair Debt Collection Practices Act, meaning that the debt collector had to pay the borrower $1,000.00, plus legal fees.  This might seem like a hefty punishment for such a small amount of money, but that is the penalty for violating the act – even if the violation is minimal.  You can read the opinion here.

If you are being harassed by debt collectors, The Law Firm of Vaughn, Weber & Prakope, PLLC is here to help.  Call our office at 516-858-2620 today to schedule a free consultation.

Debt Collector Lied to Courts

A New York Federal Court found that a certain debt collector has been lying to courts on a grand scale.  The procedure is a little complicated, but an explanation will highlight some of the issues debt collection defendants frequently face.  In this particular case, the debt collector essentially manipulated Courts into granting default judgements against defendants that never knew they were being sued, and without proper evidence of the debt that was owed.

The Court found that a Debt Collection agency engaged in what is known as “sewer service.”  “Sewer service” occurs when defendants aren’t properly notified that they have to appear in court.  After failing to properly notify the borrowers that they had to appear in court, the debt collector would seek a default judgement against the borrower.  When the judgement was granted, the debt collector would then submit an affidavit of personal knowledge of the debt.  With the affidavits, debt collector employees swear to the courts that they have personal knowledge of the debt owed.  In this particular case, the affidavits were actually “robo signed” – that is, they were printed out in batches of fifty.  The debt collector employees were only checking one out of each batch.

So, basically, the debt collector sued borrowers without telling them to come to court,  then asked the court to sanction the borrowers for failing to appear by entering a default judgement against them.  Then, when it came time to prove that the borrower owed money in the first place, the debt collector forged the evidence.

This particular debt collector did this to more than 100,000 borrowers.  That’s a big number.  It would be comforting to think that this decision would dissuade other debt collectors from taking similar actions, but when so many borrowers don’t even challenge the debt collectors’ tactics, they have every incentive to continue violating the law.

Read more about the case here.

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If you have questions about your rights against debt collectors, call The Law Firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620 today to schedule a free consultation.

District Attorney’s Offices Allow Debt Collectors to Use Federal Prosecutors’ Letterhead

The New York Times recently ran a story about a disturbing new debt collection practice.  Federal Prosecutors are now allowing debt collectors to write collection letters on official Federal Prosecutor letterhead.  Underhanded debt collection tactics are nothing new, but this seems particularly problematic.

Debt collection letters are issued before any legal proceeding or investigation has begun.  As we have noted, debt collectors often lack the evidence needed to win at trial.  Additionally, sometimes borrowers are victims of accounting mistakes, in which case the borrowers don’t owe the debt the collectors are claiming.  If debt collectors use Federal Prosecutors’ letterhead, the borrowers may get the impression that their case has already been decided – especially if the letter claims that the borrower must either pay the debt or face jail time.

Borrowers may feel that they have no choice but to pay, even though no court proceeding has been filed against them, and even if the debt collector lacks the evidence needed to sustain the case.  At the very least, since the letters arrive on Official Federal Prosecutor letterhead, borrowers may believe that Federal Prosecutors have made some minimal investigation into their case, and have decided that the case has merit, when the reality is that the debt collectors have simply been allowed to use official letterhead to scare borrowers.

The important thing to remember is that debt collectors cannot collect debts without a judge’s order.  If debt collectors can’t present evidence, provide the borrower with certain information, follow court procedures, and comply with debt collection laws, then they cannot require a borrower to pay a debt, and certainly can’t sent a borrower to jail – no matter what letterhead they use.

If you are being sued by a debt collector, the Law Firm of Vaughn, Weber & Prakope, PLLC may be able to help.  If you have questions, call 516-858-2620 today to schedule a free consultation.

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Filing Error Prevents Bank From Collecting Debt

Recently, a trial court decided that Citibank could not recover a credit card debt, because its attorney forgot to attach an affidavit to a court filing.  The affidavit should have provided the amount of debt the defendant was alleged to have owed.  Without an affidavit stating the amount of the debt, the court set the damages at zero.

This case occurred in Arizona.  But it highlights the kinds of errors that debt collectors often make when pursuing debts in court.  Similar mistakes can prevent collection in New York Courts as well.

Consumer credit defendants are entitled to certain information; and plaintiffs must submit certain documents to the court.  These matters can seem very technical, and at times superficial.  But the slightest mistake can mean a huge difference for a consumer credit defendant.  This is why it is always best to speak with an attorney before settling a credit card debt, either in or out of court.

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If you would like to speak to an attorney at The Law Firm of Vaughn, Weber & Prakope, PLLC, call 516-858-2620 for a free consultation.

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