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Credit card sued me for 18k on 8k principle?


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I was contacted by a law firm claiming to represent an old credit card. DV'd them, and got a pile of statements, nothing with my signature on it.

Dv'd again for more info, got another pile of statements with a new account added. (Same credit card company, different account number.)

Less than a month after receiving second pile of statements, I was served at work (how humiliating)....suing for 18k total on both accounts.

Total principle I owed when account went deliquent was 8-9k. After interest (30%) penalties and attorney's fees new total was almost 19k.

I hired an attorney. Atty asked me if accounts were valid. Of course they are. He suggested negotiations....sent letter....

Credit card will accept 11k. I counter offered 5-6k. They don't accept. After continuing once judge sets trial date.

Now my atty tells me that my letters to offer settlement can be used against me in court. Had I known this, I would have never made an offer.

What are my options?

I can't afford their offer 'cause they won't take payments.

How do I dispute the acct at trial after already making an offer that can be used against me?

Shouldn't my atty have explained this?

He says we'll argue that I didn't pay because they never properly validated debt.

I'm a bit lost. Any help would be appreciated.

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Now my atty tells me that my letters to offer settlement can be used against me in court. Had I known this, I would have never made an offer.

Offering to settle a debt is not necessarily admitting that the debt is bona fide. With the esculating costs of lawyers, interest and such, it is not uncommon to consider paying the debt instead of going to court.

He says we'll argue that I didn't pay because they never properly validated debt.

This is your argument. Even if you may have admitted to the debt, the CA must provide assignment.

My personal research tells me that lawyers are expensive baggage. They take your money, file a few motions and then throw in the towel.

You already have done more work with your DV's than your lawyer ever intends to do. You can file your own motions and demand assignment.

If the CA cannot provide assignment it cannot collect.

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I'm in the Memphis area.

I don't know what, if any difference this makes, but after reading some other posts, I have also discovered another concern.

The atty office that is suing me, is actually representing the OC. The OC is the plaintiff. However, when they initially contacted me, they seemed to be acting as a CA with the whole "This is an attempt to collect a debt...yada yada yada thing." Technically, the OC is suing me, not the CA, but in the beginning the atty representing them was acting as a CA. There seems to be some discussion on this board as to how that makes them accountable legally which may or may not have any bearing on my specific case. After consulting some other attys in the area, they seem to be known for debt collection but whether as CA's or representing OC's I can't tell.

On the good side, I have prepaid legal insurance so all my atty fees are paid, I haven't paid anything out of pocket for representation. On the other side, it may be a reason my atty does not seem real aggressive.

Do courts usually accept statement printouts as sufficient validation without even having the original contract?

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I was contacted by a law firm claiming to represent an old credit card.

How old? Is it within SOL?

Technically, the OC is suing me, not the CA, but in the beginning the atty representing them was acting as a CA.

This OC....is it the one that money or services were originally received from? Sometimes CA after CA is assigned the rights to collect and it becomes murky as to who owns the debt.

If it is the OC then it has hired a collection attorney (CA) to collect the money. The CA must provide assignment along with sufficient evidence that the debt is real and accurate.

Do courts usually accept statement printouts as sufficient validation without even having the original contract?

If you are talking about the last statement of the debt, then yes, this established the original debt.

Nowadays the original contract is usually a pamphlet with no signatures. Even if you originally sent in an application with your signature it is unlikely that the judge in any court would acquiesce to your demands for the CA or OC to come up with it.

First, figure out if the debt is within SOL. The CA or OC cannot collect through the courts beyond a specific time.

Next would be the usury.

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Wow, unfortunately you guys have only confirmed the bad news I suspected.

No the SOL has not run out. The last statement is only about two years old.

Yes, it is the actual OC suing me. The atty representing first contacted me as a debt collector, but then sued on behalf of the OC. The OC is named as the plaintiff.

So far, the only defense I can come up with is:

1. They didn't properly validate the debt (the suggestion of my lawyer) - however, if a judge doesn't need more than an account history, then they validated.

2. Usury - The principle on the card is less than half the amount they requested in the suit. Might have some ground to stand on there.

3. Plead the mercy of the court? I have tried numerous times to negotiate a settlement with these people but to no avail. I've explained my financial situation and even offered small payments when the account first went delinquent and before it got to a CA, but the OC said my interest rate was now so high, I could never keep up.

I'm thinking that the best I can do is lose without losing the whole amount requested, then file a motion to make installment payments, or file chapter 7, which I have serious reservations in doing.

The only potential counter suit I might possbily have is that when they validated, they filed suit in less than thirty days. But my atty explained that an OC can sue whenever they please, and even if I won that, 1k would not make much of a dent in 18k.

So unless you guys have any other ideas, I think I'm pretty much doing damage control at this point. I'm just trying to figure out the best way of going about it.

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Total principle I owed when account went deliquent was 8-9k. After interest (30%) penalties and attorney's fees new total was almost 19k.

The CA should have sent you a CC agreement which was in effect at the time of your DOFD. In there it should say what the default charges would be upon DOFD.

Fields v Wilber gives a good standard of explaining the add-on charges. Here, like your case, the OC hired an attorney to collect a debt.

Even if attorneys’ fees are authorized by contract, as in this case, and even if the fees are reasonable, debt collectors must still clearly and fairly communicate information about the amount of the debt to debtors. This includes how the total amount due was determined if the demand for payment includes add-on expenses like attorneys’ fees or collection costs.

“A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. As an example of such conduct, § 1692e(2)(A) states that it is a violation to falsely represent “the character, amount, or legal status of any debt[.]” Section 1692f states that “[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.”

Here is a link to the entire case: http://caselaw.lp.findlaw.com/data2/circs/7th/034108p.pdf

It doesn't seem like your debt should have ballooned more than double the original amount in 2 years.

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Thanks for that case reference, I'll look it up. DOFD was roughly October 2006, and they stopped sending me statements sometime in summer of '07. However, when the CA "validated" the most current statments were as recent as April '08. News to me since I never haven't been receiving any for about a year.

As I recall, they never sent anything outlining the terms of delinquency, however, I would have to go back and look at them to see if there was anything in the fine print. I also am not sure what the "default" interest rate was supposed to be, but they were charging me 30+ % as well as late, non payment, etc fees. The delinquent amount like I said was about 8500, and if I recall correctly, they were adding 300-400.00 in interest alone each month. So when I offered them 25.00 - 50.00 a month back in nov-dec- 2006, just to show good faith, they told me I could never keep up with the interest and to not even bother. This ticks me off too because in the "sworn" statement from the OC rep, they indicated that no payments of any kind had been made since delinquency. I'm guessing if I had sent some anyway, it could have at least helped my case.

According to the summons, about 4k of the 18k is atty fees. Don't know how much the judge will generally award for that.

I will definitely have to file slow pay or installment pay if I lose the case. I'm hoping for the lowest amount possible, but I guess that is based on my income and expenses.

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According to the summons, about 4k of the 18k is atty fees. Don't know how much the judge will generally award for that.

If your lawyer is not actively seeking itemization of the debt then I would send a motion to the Court to dismiss him/her and state that you will be representing yourself pro se.

Then I would send Discovery to the collection attorney for the agreement that was in effect at the time of your DOFD. I would also ask that he/she explain the add-on charges as prescribed by Fields v Wilber.

The CA might say that the OC is not obligated to follow the FDCPA. This is true. However, as a collection attorney, he/she is. The fine would be assessed against the CA.

Now that you have the CA's attention you can renegotiate.

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So if I read that case right, the atty fees that are included in the case should have been itemized and expalined. Will it make a difference that the atty fees were never included in any dunning letters but were only inlcuded in the suit itself?

And....Even if they itemize, you are saying that I should ask them to send a copy of the contract that was in force at the DOFD to prove they are actually entitled to the fees in the first place. Is that correct?

Is there any defense against the large interest rate that was put on the acct at the time of default? Or would that also be determined by the same contract?

Is there a chance that I could only be responsible for the principle balance? How would a judge calculate the interested owed as well?

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the atty fees were never included in any dunning letters but were only inlcuded in the suit itself?

This shows a pattern of "misrepresenting" the debt. The more you can show "persistent non-compliance" to the FDCPA, the more the judge may be inclined to raise the sanctions against the CA.

It is common knowledge that one should always bargain from a position of power. The more the CA violates the FDCPA, and other laws, the more power you have to persuade the CA to come around to your way of thinking.

And....Even if they itemize, you are saying that I should ask them to send a copy of the contract that was in force at the DOFD to prove they are actually entitled to the fees in the first place. Is that correct?

Exactly!

If the CA wants to use the "law" to collect the debt, it has to follow the law itself. It cannot randomly create add-on charges out of thin air. There has to be some kind of agreement between you and the lender or a law on the books which allows said add-on charges.

Is there a chance that I could only be responsible for the principle balance? How would a judge calculate the interested owed as well?

If the CA does not produce the agreement/contract which allows the add-on charges, yes.

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So if I understand you correctly, the atty can present the actual statements of the account in court to prove it belongs to me.

However, he must also present a copy of the contract that was in force at the time of DOFD to show that the atty charges, interest and penalties were calculated consistently with said contract. If he is unable to do this, then I could argue that the judgment should not exceed the principle amount at DOFD.

AND...if I ask for this from the atty before trial, he should be able to provide it, and if he doesn't or is unwilling to provide an itemized statement of his charges...I can cite Fields v Wilbur as evidence that he has violated the FDCPA, and place myself in a greater position to negotiate?

So, one of you mentioned "discovery". I am very new at this. Is there some form I fill out, or is this just simply a letter or list of questions I send to the atty? And is there some statute that I'm supposed to cite as reason for this request, like "pursuant to blah blah blah I'm requesting this information"?

Also, the statements that I have in hand do show how the monthly interest and penalties that accumulated on the accounts from DOFD until the time the acct was closed.

Is this enough to show the contract in force was being followed by the OC or should they still provide an actual contract that reflects DOFD rules?

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Check the date on your summons and see if you still have time to answer the summons. Usually it is 20 days after service. You can go to this link to research Affirmative Devenses and Counterclaims that fit your situation:

http://www.debt-consolidation-credit-repair-service.com/forums/showthread.php?t=252142

If your lawyer has already submitted your Answer then do a search on this forum for "Discovery". You will find it above under where it says "Welcome bdebtfree" Read through the different threads and you will eventually find a list of Discovery requests and answers.

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Unfortunately I am way beyond the 20 day period to file a response, complaint or request for dismissal. The sticky on forms and defenses was very helpful. Thanks. I guess the best I can do now is try to come up with a list of defenses and get my atty to send a discovery request to the OC atty. If I really felt like I could handle all this without representation i would do it pro se, but the trial is only about a month away and I don't feel that I know quite enough just yet to represent my self. I am going to run this stuff by my own atty though.

As far as I know, the only response he sent the other atty was a request for the OC's lowest offer for settlement. He seemed to think that the court would accept a pile of statements as proof of the debt. Unless he made a request for documents or discovery that I don't know about, he pretty much just jumped straight into the negotiation phase without asking for any kind of additional proof from the other party. I'm sure that didn't help my case much. Because I'm on pre paid legal, his fees have already been covered, and so I know they won't cover another atty if I switch in the middle of proceedings. (I know that 'cause I've already consulted someone else).

Hmmmm. . .

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Any court will usually permit at least one 90 day continuance unless the action has already proceeded to the 1 year required completion of most RCP's.

I don't think your pre-paid lawyer will fight as he/she should unless you pass more money over the table. You could test my theory by asking him/her how much it would cost to get the CA's bill down to where you want it.

Get a copy of the Appearance (where the lawyer says that he/she is representing you) Answer (admit or deny the charges on the summons) and Counterclaims (claims against the Plaintiff -violations of the FDCPA and such). You can get these from your lawyer or the clerk of court.

It's possible that rent-a-lawyer didn't file Counterclaims but the Appearance and Answer are a must.

Generally, a Defendant is limited to the Affirmative defenses and Counterclaims which were filed in a response to a summons. That said, whatever your lawyer filed with the clerk is what you can use.

I would also request to look at your file on the case and subsequently make copies of everything including handwritten notes. If he/she refuses, walk over to the clerk of court's offfice and ask for a blank subpoena.

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Lecasbas, I like your thinking. . .

Though I won't know until I ask, I'm sure all he filed was an appearance and an answer. I say this because when I asked him in our first consult if there were any counter claims I could pursue, he didn't have any ideas.

I am interested to see how he answered the summons.

I've already had one continuance because we were still negotiating with the other atty. I just hate that I have to learn all this on a case that could cost so much.

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A few posts ago...

However, he must also present a copy of the contract that was in force at the time of DOFD to show that the atty charges, interest and penalties were calculated consistently with said contract. If he is unable to do this, then I could argue that the judgment should not exceed the principle amount at DOFD.

No, you should argue for dismissal. If the evidence is flawed or unsubstantiated then these fact bring the rest of the CA's presentation into question.

AND...if I ask for this from the atty before trial, he should be able to provide it, and if he doesn't or is unwilling to provide an itemized statement of his charges...I can cite Fields v Wilbur as evidence that he has violated the FDCPA, and place myself in a greater position to negotiate?

Judges do not like surprises. I would send a "good faith" letter to the CA asking for a copy of the agreement which was in effect which governed their add-on charges. I would make a copy of the insert I put on the forum of Fields v Wilber and insert it in the letter.

This way, when you do appear in court, the judge will see that the CA has been forewarned that its evidence is lacking and what it could have done to remedy the problem.

Everything you do to show "persistent non-compliance" will strengthen your case and hopefully cause the judge to become pissed at the CA for being ill prepared.

You could ask your attorney to do these things but I think he is already done with the case except for making arrangments for you to pay the other guy.

A word of warning...be careful how you "cite" opinions to the Court. They can take offense at a pro ser telling them the law. You should, however, not neglect to bring it up in a nice manner (not demanding).

One continuanace is a given. It is not uncommon to have 2 or 3 if justice demands it. As a matter of fact, the CA will probably try to get one if the Court will follow suit and ask for a written itemization. I would not accept a verbal explanation of the add-on charges.

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  • 1 month later...

Ok...pushed it and showed up for trial. My atty said we were ready...other atty dismissed the case! My atty said sometimes creditors push their luck hoping they will get a default judgment. Now I have to wait a year to see if I get served again. . . if not, my atty says I'm done! Woopee!!!!

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Now I have to wait a year to see if I get served again. . .

You can never be sure but I doubt if you hear from the same CA again.

The OC may pass the debt on to another one but most creditors are cutting back on expensive ventures.

You could spend the next year, at your leisure, exploring counterclaims to offset the next possible threat by the OC to sue.

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