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What would be the "actual damages" one suffers when the JDB attempts to collect unauthorized interest?

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Texas, under it's state version of the debt collection act allows as a remedy for violations of it's rules the ability to sue for "actual damages".

 

What could one claim as "actual damages" when the jdb violates the law by "attempting to collect interest" that is not "expressly authorized by the agreement?

 

I have proof from multiple mailings that the JDB is adding about 21% interest per year to the balance of the alleged debt. I would like to sue them for this, but I don't know what actual damages would arise from them jacking up the amount allegedly owed. Any ideas?

 

Here is the law they borke:

 

Texas Fair Debt Collection Practices Act § 392.303. UNFAIR OR UNCONSCIONABLE MEANS.

(a) In debt collection, a debt collector may not use unfair or unconscionable means that employ the following practices:

 

(2) collecting or attempting to collect interest or a charge, fee, or expense incidental to the obligation unless the interest or incidental charge, fee, or expense is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer; or

 

 

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The same actual damages you sue them for when they violate the FDCPA that also allows for actual damages, emotional distress of anxiety, shock, fear, loss of appetite, loss of sleep, loss of interest in sex with your husband/wife (yes that's an actual damage), and a whole laundry list of things.

 

However, don't get too excited, you better have some pretty solid case law and contract language to back up the allegation of charging too much interest.  

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https://www.oag.state.tx.us/consumer/debt_collection.shtml  notify you attorney generals office.

http://www.consumerfinance.gov/ file your case online they will contact the collection company.

http://www.ftc.gov/bcp/consumer.shtm

Violators of the Texas Debt Collection Act are subject to criminal and civil penalties. Consumers who think they have been harassed or deceived may seek injunctions and damages against debt collectors.

These actions are also violations of the Texas Deceptive Trade Practices/ Consumer Protection Act which gives the Attorney General the authority to take action in the public interest.

Federal Fair Debt Collection Practices Act

Texas statutes cover actions by anyone trying to collect a consumer debt. The federal Fair Debt Collection Practices Act applies only to collectors working for professional debt collection agencies and attorneys hired to collect a debt. It is similar to Texas law, but also prohibits:

  • calls at work if the collector has reason to know the employer does not permit such calls;
  • calls before 8 a.m. or after 9 p.m. unless the collector knows such times are more convenient for the debtor;
  • "unfair or unconscionable means to collect or attempt to collect a debt;"
  • any conduct to harass, oppress, or abuse.

If you are being subjected to harassing, abusive, or fraudulent debt collection tactics by professional debt collectors, and you want to stop further contact with you, notify the collector in writing. Keep a copy of your letter and send the original to the debt collector by certified mail.

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The interest rate is higher than the Texas maximum which would make it usury. Now I understand that the federal law for credit cards preempts this. But Prima facie they are breaking the Texas usury law. So when I sue them,  wouldn't the burden of proof of a valid credit card contract based in another state with appopriate chain of title, etc. now fall on them? (which they probably can't prove, since they are a dumb JDB and especially since the sol is up).    

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 I don't think they'd have a problem proving in which state the OC is located.  Credit card agreements are also readily available.  I'm not sure what you're suggesting would fall under the definition of deceptive, misleading, or unfair.  

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You need to do some research. What does the cardholder agreement specify for interest in the case of default? Usually, they can only charge statutory state allowed interest after the aaccount is charged off and sold. That is always in the 8-9% range.

 

As for "actual damages," that almost aways applies to a provable loss.....money you paid, or as Coltfan said, doctor's bills etc connected to the incident. Punitive type damages for pain and suffering, etc. are not considered actual damages in most venues. In this case, where they may have been tacking on too much interest, you wouldn't have any damages because you haven't paid them yet. Until a court decides in their favor, you owe them nothing. Usury does not apply in credit card cases, these are national banks and may charge whatever interest rate their home state allows, but I believe it is only when the account is active and not charged off.

 

Don't know where you are located, but you have Jerry Jarzombek in your state, one of the best consumer attorneys around. Maybe he'd point you in the right direction.

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A generic agreement is readily available I'm sure. But would that and proving what state the OC is in be enough? Let's say they provided a generic agreement and a statement that the OC is in such and such state and so ususry does't apply due to federal law and made a motion to dismiss or summary judgment or whatever.

 

Couldn't I then challenge them to prove I agreed to that contract with the OC and that they even validly own the debt? And then they'd have to cough up more paperwork or face a trial.

 

The unfair part falls under item number 2 in the statute. They are attempting to collect interest that is "not legally chargeable to the consumer" It's prima facie not legally chargeable in Texas. They have to rebut that, don't they?

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What I am trying to do here, is to be the plaintiff, yet successfully put the burden of proof on them to prove that the money is owed. The JDB is claiming I owe them money. Since the jdb is not a bank, and is not headquatered in Delaware, they can't just say "state usury law doesn't apply to us". They would need to prove that they are now the owners of a debt that still retains those characteristics, I would think. 

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You're getting too far ahead of yourself. Just find out what the cardholdfer agreement says. I've never seen a case yet where the assignee could continue to charge the contract rate of interest on a defaulted credit card account. If they have done so, your defense would be something along the lines of unjust enrichment, citing the state interest rate that applies to judgments, (it's in the code) and they would have to subtract the difference. Usury only applies to certain types of transactions, that's in the code as well. It's a violation, just not the type you think it is.

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A generic agreement is readily available I'm sure. But would that and proving what state the OC is in be enough?

 

It would be enough to cast doubt on your claim.  Also, the OC would be registered in it's home state.  That information is also readily available.  The SEC posts documents online.  There's any number of ways that they could show the OC is a national bank chartered in a particular state.

 

 

Couldn't I then challenge them to prove I agreed to that contract with the OC and that they even validly own the debt? And then they'd have to cough up more paperwork or face a trial.

 

You could, but then the court would ask if you sent a DV request within 30 days of that JDB's first communication.  If you didn't, the JDB considered that debt to be valid.  It doesn't mean that a failure to send a DV means the debt is valid or that you're admitting it's valid.  It simply means the JDB can consider it to be valid.  Therefore, the JDB doesn't do anything wrong if they continue to try to collect.

 

Did you send a DV request?

 

 

The unfair part falls under item number 2 in the statute. They are attempting to collect interest that is "not legally chargeable to the consumer" It's prima facie not legally chargeable in Texas. They have to rebut that, don't they?

 

Yes, they have to rebut it.  However, if they can show that the OC is a national bank chartered in a particular state, then you have to show how they are still in violation.

 

 

They would need to prove that they are now the owners of a debt that still retains those characteristics, I would think.

 

If you are the plaintiff and allege they don't own the account, the burden of proof is on you.

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BV80:

 

I did not send a dv. But in Texas I can send one at any time, and they have to respond or stop collecting. I plan to request info from them proving they owe the debt before I would file a suit and see what their response is.  If they don't respond, or don't respond with adequate proof I go to court. The proof that they don't own the debt would be an affidavit from me stating that they didn't respond to my request for proof and that I do not owe them any money.  I think once we got into court the burden would be on them to show that I owe them money, since they are the ones trying to collect and claiming I owe them money.

 

It's sound like you are saying that the burden of proof regarding their ownership of the debt still falls on me because I would be the plaintiff.  In this case, that seems strange. Assuming they really do not own the debt, either because their records are wrong or they are lying, and assuming I never even had any dealings with the OC, how would I go about proving that I don't owe them anything? There would be no paperwork in existence for me to produce as evidence.

 

Bruno: Usury applies to credit cards in Texas (but unless they are based in Texas the law is trumped by federal law.)

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I did not send a dv. But in Texas I can send one at any time, and they have to respond or stop collecting.

 

Since I'm not from TX, I don't know that law, of course.  Would you mind posting the TX statute?

 

 

It's sound like you are saying that the burden of proof regarding their ownership of the debt still falls on me because I would be the plaintiff.

 

If they sued you and claimed to be the owners of the debt, wouldn't they have to provide proof that they are the owners?  They would have to show something to support that allegation.  The same goes for us if we sue a CA/JDB.  If we make the allegation, we have to offer something to support that allegation.

 

I'm not trying to be difficult.  I just don't like it if we Pro Ses get slammed in court.

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You're getting too far ahead of yourself. Just find out what the cardholdfer agreement says. I've never seen a case yet where the assignee could continue to charge the contract rate of interest on a defaulted credit card account. If they have done so, your defense would be something along the lines of unjust enrichment, citing the state interest rate that applies to judgments, (it's in the code) and they would have to subtract the difference. Usury only applies to certain types of transactions, that's in the code as well. It's a violation, just not the type you think it is.

 

I couldn't find anything related to this in TX or the 5th Circuit Court of Appeals.  However, I did find a case from the 7th Circuit Court of Appeals, and they ruled that an assignee could charge the rate of interest charged by the OC.

 

Olvera v. Blitt & Gaines, PC, 431 F. 3d 285 - Court of Appeals, 7th Circuit 2005

But once assignors were authorized to charge interest, the common law kicked in and gave the assignees the same right, because the common law puts the assignee in the assignor's shoes, whatever the shoe size.

We conclude that section 5 of the Illinois Interest Act does not affect the common law rights of assignees.

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BV80:

 

Here's the Texas Statute where there is no requirement that you DV them within 30 days (subchapter C):

 

http://www.statutes.legis.state.tx.us/Docs/FI/htm/FI.392.htm

 

I don't think you are being difficult. I posted on this board because I want folks to try and shoot holes in my idea, so I will have an idea if it is plausible. I appreciate the feedback; the tougher the better.

 

Regarding getting slammed in court: even if I don't prevail, it is still worth it to me because perhaps they will simply settle by removing the account from my credit reports. As long as the court doesn't think my argument is ridiculous I should avoid being charged attorneys fees, right? So I don't think I have anything to lose. 

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It's good that you're doing your research so that you can make informed decision and be prepared for any defense a CA/JDB might claim.

 

Regarding the TX law, it's doesn't reference debt validation in the same way as the FDPCA.  It makes reference to inaccuracies.  You dispute what you claim is an inaccuracy such as an amount, and they have to let you know if it's correct.

 

I also found this in a footnote in a TX case, Gibson v. GRUPO DE ARIEL, LLC, Dist. Court, ND Texas 2006.

 

[8] The provisions of the Texas act pertaining specifically to third-party debt collectors generally relate to the posting of surety bonds and credit bureau records. See, e.g., Tex. Fin. Code Ann. §§ 392.101, 392.202.

 

BTW, have you checked to see if they're bonded in your state?

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