Cardholder Agreements and the Statute of Limitations in Credit Card Debt Cases
Take a look at the case of Capital One Bank USA, NA v Gregorich. In that case, the court explained that statute of limitations on a credit card debt could be drastically impacted by the cardholder agreement. Since the cardholder agreement in that case required application of Virginia and Federal law, the court held that the statute of limitations was only 3 years.
This is especially important here in Oregon because we have such a long statute of limitations contract debt cases — 6 years. If a debtor can use shorter stautes elsewhere in the country, that will greatly help in stopping debt collection long after the card went into default.
There is also more information here.
Do Not Reset the Statute of Limitations on Your Debts
Debt collectors often try to collect debts beyond the time they can legally sue you for the debt (the “Statute of Limitations“). If you are facing this situation, it is VERY important that you contact a lawyer right away. Here’s why.
The debt collectors are trying to do something called “re-calendaring” your debt. This means the debt collectors want to reset the statute of limitations. This is done in one of two ways. First, they will get you to start making small payments on the debt. As part of these payments, they will get you to reaffirm the debt. If they do it the right way, you will have restarted the statute of limitations and given them another 6 years to collect from you. Second, the debt collector will get you to acknowledge an inaccurate date of the alleged breach of the contract. This means they will get you to admit that the payments were in default much later than they actually were.
There are also other tricky things the debt collectors can do to get your money. A cursory Google search shows that lots of poor and inaccurate information exists out there on message boards and various other places. If you are facing a collector on an old debt, it will pay to call a lawyer.
Managing Debt in Times of Unemployment
As some readers may know, in addition to handling debt law issues, I also represent employees in employment law issues. I am sad to report news that should come as no surprise — employers are letting employees go at a brisk pace. And, what’s worse, they are often doing it in illegal ways. So what does this have to do with debt? Unemployment can obviously make it difficult to deal with bills. And, with this tough job market, unemployment may be sticking around for a while.
In any case, the absolute most important thing you can do is to ADDRESS YOUR FINANCES. Most of my debt-related work arises when people face financial obstacles (loss of job, medical emergency, etc.). Almost every client debt-related problem I deal with could have been dealt with cheaper and easier at some time in the past. Truth be told, it is going to be okay if you lose your job. It is never an issue of “if” you are going to survive, it is just a matter of “how.” The real problems arise when you do not address your change in income.
Rather than dealing with debt collectors, foreclosure procedures and repossessions, it is best to honestly assess your finances to determine the impact of unemployment. Once you understand what unemployment will do to your finances, you can react appropriately. In some cases, it may be necessary to sell property to reduce debt to a manageable level. In some cases, bankruptcy is both necessary and appropriate. In any case, dealing with the issue early on will save lots of money and prevent you from staying up all night worrying about debt.
Abuse and Harassment: Part 4 - No Lists of Debtors
This is a quirky little part of the FDCPA that I do not think many normal consumers will be exposed to. Regardless, it is worth looking at just to see what the FDCPA prevents. Under the FDCPA, debt collectors may not publish any “list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting [the requirements of other statutes].” 15 USC §1692d(3). This statute helps to protect a debtor’s integrity by making it unlawful for debt collectors to publish debtor “black lists.”
One example of something that would happen without this statute comes from Russia, where it is not illegal to publish debtor blacklists. Take a look at: http://debtrussia.com/blak_list.php. This Russian collection company is using this list as an attempt to shame the listed alleged debtors into paying. This type of website, if implemented by an American debt collection company, would draw a class action lawsuit in no-time flat. In fact, it looks like this guy is trying to mimic the Russian site. I cannot tell from the site whether this site is trying to operate in the United States. The whois.net information points to a slovak domain and a city somewhere in Hungary. This is just a glimpse of some things from which the FDCPA protects consumers.
In the United States, there are not many reports of debtor blacklists. A Federal District Court in Minnesota held that publishing a foreclosure sale list pursuant to a court order did not violation §1692d(3) because it was judicially mandated and therefore not an attempt to collect a debt. (Read the memorandum here). Otherwise, §1692d(3) is frequently used to help interpret other parts of the FDCPA related to threats and oppression. (See example here)
Abuse and Harassment: Part 3 - Obscene and Profane Language
15 U.S.C. §1692d(2) prohibits the “use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.”
Unfortunately, this law is violated far more often than anyone would hope. There are many examples of conduct clearly violating §1692d(2). See, e.g., Horkey v. J.V.D.B. & Associates, Inc., 333 F.3d 769 (7th Cir. 2003) [debt collector violated §1692d(2) by saying "tell Amanda to stop being such a [expletive] bitch.”]. In cases like this though, most debtors know they’ve been subjected to illegal practices. There are many examples that are less clear. Here are a few:
One Federal District Court held that “damn” and “hell” may not be profane or obscene under §1692d(2). United States v. ACB Sales & Service, Inc., 683 F Supp 734, 739 (D Ariz 1987). Federal regulations explicitly prohibit debt collectors from name calling. A debt collector cannot call a debtor a liar or a deadbeat. Debt collectors are also prohibited from using religious, racial, or sexual slurs. 53 Fed Reg 50,097, 50,105 (1988).
As with any debt collection harassment case, proving the illegal conduct is always an issue. Always keep all documents and confirm everything in writing. I also wrote a post on proving phone harassment. And, when in doubt, call a lawyer — we’re here to help.
Abuse and Harassment: Part 2 - No Violence or Criminal Means
This portion of my abuse and harassment series focuses on what is the least-complained-of area of prohibited debt collection practices - threats to use violence or criminal means to collect a debt. According to the most recent FTC complaint statistics, only .3% of all complaints about debt collection involve threats of violence or criminal actions.
As one might suspect, it is illegal for debt collectors to use or threaten to use violence or other criminal means to harm the physical person, reputation or property of any person. No surprises here. But, what may be surprising is what may actually qualify as a threat under this section.
For example, I once heard a voicemail message where the debt collector ominously said they were sending somebody out to collect the debt “one way or another” and that they would be “real tough.” The devil is in the details. These collectors weren’t explicitly saying they would come break kneecaps. But, the tone was suggestive and threatening. The moral of this story is that some seemingly non-violent statements, when said in a particular tone, may actually become threatening. If you feel threatened, do not hesitate to call a lawyer and also report the threatening conduct to the FTC.
Abuse and Harassment: Part 1 - General Overview
Over the next week, I am going to roll out a series of posts about harassment and abuse by debt collectors. This is the first post in the series and is simply an overview of the topic.
As a general matter, it is unlawful for debt buyers and debt collectors to abuse or harass you when collecting a debt. Take a look at 15 U.S.C. § 1692d:
A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.
It never really surprises people when I read this statute to them. The sticky part is determining whether certain conduct is “harassing,” “oppressive,” or “abusive.” The key question is whether [insert what the debt collector is doing to you] fits under 15 U.S.C. § 1692d.
The FDCPA lays out a list of things that are specifically prohibited as harassing, oppressive or abusive. The contents of this list will be the topics of the rest of this series. For today, I’m going to leave you with one way to help determine whether the conduct you are being subjected to is prohibited by the FDCPA.
To decide whether conduct is abusive, a court looks at the situation through the perspective of a consumer who is relatively more susceptible to abuse (it is supposed to at least). Jeter v. Credit Bureau, 760 F2d 1168, 1179 (11th Cir 1985) More than what? Good question. The safe answer is probably “more than the average consumer.”
This standard is vague, but it does tell us a few things. First, debt collection abuse victims are not presumed to be educated about the ins and outs of debt collection laws and procedures. Second, we know that the court will not be sympathetic to the “i’m a psychological wreck” defense. In most cases, this standard means that if you exercise decent judgment and still feel like you are being abused, harassed or oppressed, then there’s a good chance you are. If that’s the case, it will not hurt to try calling a lawyer to determine whether you have a case.
Determining the Proper Service Method
Yesterday, I talked about the four main types of service in Oregon. Service is very important because without it, Oregon courts may not have proper jurisdiction. I wanted to continue that topic by discussing which types of service are required for certain defendants under ORCP 7. Consider the following, applicable in Oregon state courts, including Multnomah County Circuit Court:
Individual Defendant
Personal service is required. Only if personal service is impossible is substituted or office service.
Corporations and Limited Partnerships
The primary method is personal service on a registered agent, officer, director, partner or a clerk for the registered agent. If these cannot be found, then substituted service or mailing service may be proper.
General Partnerships
In most cases, services must be made upon a partner or agent authorized to receive process.
Improper Service of Summons as Grounds for Setting Aside a Default
In this post, I mentioned that improper service of a summons may be grounds to set aside a default judgment. As Mike Wasylik of Ricardo & Wasylik commented, “strict compliance” with service rules is required for the court to have jurisdiction over the defendant. The bottom line: if a debtor is not properly served, they may be able to challenge the default judgment. So what is proper service?
If you’re in Oregon, take a look at ORCP 7. This is a pretty complicated rule and I always urge people to consult a lawyer to evaluate the adequacy of service. But, I will provide you with some highlights of ORCP 7 notice. Generally speaking, the ORCP 7D(1) test for valid service requires service in any manner reasonably calculated, under the circumstances, to apprise the defendant of the suit and offer a reasonable chance to defend. There are four main service methods permitted under ORCP 7. Which of these you use depends on who you are serving.
Personal Service
This is where the summons and complaint are delivered directly to the defendant by someone 18 years or older who is not party to the suit. By “deliver directly,” I mean that the papers are given to the actual defendant.
Substituted Service
This means that the summons and complaint are delivered to the defendant’s “usual place of abode” and left with someone 14 years of age or older. Substituted service also requires that a copy of the complaint and summons be mailed to the defendant with a statement of the details of substituted service.
Office Service
This is accomplished by leaving the summons and complaint at the business office of the defendant during normal business office hours with a person in charge. Then, the summons and complaint are mailed to the defendant’s usual abode or place of business. Note: this rule does not permit dropping the papers on the receptionist’s desk at 6:00 pm and then leaving.
Mail Service
Mail service is accomplished by sending the summons and complaint by first class mail AND certified or registered mail, return receipt requested or express mail.
Debt Collection Discovery: Show Your Cards
Following up on yesterday’s post, there’s a very practical question I would like to address: how do I get a debt collector to prove a debt is mine? The answer to this question depends on whether you have been sued.
If you have not been sued and it is still within 30 days of the first contact from the debt collector, you can send a written notice to the debt collector requesting validation of the debt. 15 USC § 1692g(b) Strangely enough, the debt collector does not violate the FDCPA by failing to send you the information. Jang v. A.M. Miller & Assocs., 122 F3d 480 (7th Cir 1997). But, until the debt buyer does send the validation, it CANNOT continue trying to collect a debt. If it does try to collect the debt, it is in violation of the FDCPA. Luxenburg v. Equifax Credit Info. Servs., 2005 US Dist LEXIS 426, 2005 WL 78947 (ND Ill Jan 5, 2005). One exception though — the debt collector can file a lawsuit within the 30 day period. There’s really no statutorily required waiting period. Bartlett v. Heibl, 128 F3d 497, 501 (7th Cir 1997).
If you have been sued and you are not on the wrong end of a default judgment, you may be able to proceed with discovery. Guess what I am going to say now? That’s right, I think you should hire a lawyer if you are going to conduct discovery. Doing discovery on your own is like doing your own dental work. C’mon people. The basic idea of discovery is that you should be able to request documents, get the other side to admit to certain things and then ask questions of the person suing you.
I will discuss this in a later post, but Oregon law does not provide for interrogatories (if there are any California lawyers reading this, you’ll wonder how I survive). So, in Oregon debt collection discovery, the name of the game is “documents.” It is useful to see any relevant account statements, charge receipts, applications, correspondence, etc. If the debt buyer cannot offer a scrap of paper, it is doubtful that you will have to pay the alleged debt.
