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To sue or not to sue for 2 FDCPA Violation

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Hello,

 

I have Calvary Portfolio Services after me for alot of money, over $18.000

 

Calvary Portfolio Services Purchase the account from another debt collector. its 4 1/2 years from the last payment from the Original creditor.

 

I got an email alert from my credit report stating that Calvary Portfolio Services has posted a collection. and i send a Certified mail Debt Validation letter on 9/22/2014 and Did not get a reply until December 19.2014.

 

I have a copy of the certified mail receipt and a return signature.

 

I have also disputed with all 3 major credit reporting agency and THEN they send me the Debt Validation letter.

 

I think i have 2 counts of FDCPA Violation lawsuit.

 

1. Calvary Portfolio Services reported collection to my credit report before they have replied Debt Validation letter. or EVEN to notify me i own them and warning me if i dont reply they will send negative mark on my credit score.

 

2. Calvary Portfolio Services did not reply to my Debt Validation Letter in time. 3 Months LATE.

 

Any suggestion?

 

The main thing goal is to get them off my credit report.

 

THanks everyone

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I think i have 2 counts of FDCPA Violation lawsuit.

 

Unfortunately you do not.

 

I got an email alert from my credit report stating that Calvary Portfolio Services has posted a collection. and i send a Certified mail Debt Validation letter on 9/22/2014 and Did not get a reply until December 19.2014.

 

Getting a notification from a credit monitoring service that a negative trade line is posted does not trigger your 30 day rights to dispute under the FDCPA.

 

1. Calvary Portfolio Services reported collection to my credit report before they have replied Debt Validation letter. or EVEN to notify me i own them and warning me if i dont reply they will send negative mark on my credit score.

 

They are not required to notify you first before reporting to the bureaus under the FDCPA.  They had already reported and you DV'd them based on being notified of the new trade line.  The courts are divided on whether a trade line is collection activity because it is not contact with YOU.

 

2. Calvary Portfolio Services did not reply to my Debt Validation Letter in time. 3 Months LATE.

 

The letter is not 3 months late.  The 30 days only applies to you.  Once a collector makes initial contact with you then as a consumer you have 30 days to dispute the debt from that initial contact.  They can take as long as they want to respond to you or never if they choose. However, until they do respond they must cease collection activity.  

 

Any suggestion?

 

The main thing goal is to get them off my credit report.

 

While they can no longer sue you for the debt (the SOL in CA is 4 years) the one thing they can and will do is jack your credit report until the bitter end of the reporting period.  That is 3 years from now.  They can legally report the trade line for 7 years 6 months from the date of first default.  Unfortunately the amount of the debt is very large.  They are going to want a significant sum for a PFD if they will even do it.  

 

Cavalry will hang in their validating until the very last minute on this one given the large amount.  Sorry there isn't better news.

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@longstand one of the tactics Cavalry uses often is to charge interest on the alleged debts. Unless the original contract states a future creditor or debt collector may do this (and rarely they do) it becomes a violation of the FDCPA. Check your statements from Cavalry and compare them to the prior debt collector's invoice and the original creditor's last statement. If Cavalry is tacking on interest charges, they have misrepresented the status of the debt. Further, if they report an inflated amount on your credit reports, it becomes a violation of the FCRA.

 

I'm not saying they've done these things to you, but they have to many. Please see:  http://baileyandglasser.com/cavalry-portfolio-services-class-action/  and http://www.newyorkconsumerprotection.com/Debt-Collector-Directory/Debt-Buyers/Cavalry-Portfolio-Services-LLC.aspx

 

Review all of your statements carefully. Good luck!

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@Skiba

 

Considering the validation request was not sent in response to a collection letter containing the 30-day notice, the CA was under no duty to validate and could continue collection attempts.

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@longstand one of the tactics Cavalry uses often is to charge interest on the alleged debts. Unless the original contract states a future creditor or debt collector may do this (and rarely they do) it becomes a violation of the FDCPA.

...

If Cavalry is tacking on interest charges, they have misrepresented the status of the debt.

I've seen this theory floating around but I haven't seen any case law. In fact, the Eastern District of Illinois has found if the original contract allows for interest, a JDB may also charge interest.

Because Mr. Simkus has not disputed that his original cardholder agreement with BOA allowed the imposition of interest, we grant summary judgment for Defendants on the § 1692f(1) claim.

SIMKUS v. CAVALRY PORTFOLIO SERVICES, LLC, No. 11 C 7425 (N.D. Ill. Jan. 27, 2014).

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Thank you everyone for your help/reply.

 

@Skiba

no letters. but they have given me phone calls BUT from different company named " ACME "

 

I'm trying to purchase a home and according to FHA regulation. credit has to be 580 and higher. and this Collection has to be remove or paid. this is the only thing preventing me from getting a loan for a house.. I also have %20 percent for a regular loan, but still can't get it with this Collection on my report.

 

as of today. this debt is about 5 years old. and i dont want to wait another 2 1/2 years until it gets erase to purchase a home..

 

you guys/girls are the best.

 

any suggestion WILL be very appreciated.

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I've seen this theory floating around but I haven't seen any case law. In fact, the Eastern District of Illinois has found if the original contract allows for interest, a JDB may also charge interest.

SIMKUS v. CAVALRY PORTFOLIO SERVICES, LLC, No. 11 C 7425 (N.D. Ill. Jan. 27, 2014).

 

@Harry Seward, the issue comes primarily down to the original credit's contract. The following states interest can only be charged if allowed by the original contract and state law. My read of this means, the contract has to state that interest can be charged by collectors, not just the original creditor (similar to contact language that allows for legal fees in the debt collection process).  Please see:  http://www.vpix.net/index.php?tour=68621

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@Determined1

 

1692f(1):

 

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

 

That doesn't say that a contract has to specify that debt collectors can charge interest.  It simply says that the agreement has to authorize that interest at a particular rate will be charged. 

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@Determined1

 

1692f(1):

 

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

 

That doesn't say that a contract has to specify that debt collectors can charge interest.  It simply says that the agreement has to authorize that interest at a particular rate will be charged. 

 

Hi @BV80. I see the point you and @Harry Seaward were making and appreciate your pointing it out. I read further on the issue and think I see where the interest / FDCPA issue is a legitimate one to raise. What many debt collectors or jdb's do is charge interest retroactively the date the account was charged off by an original creditor - not the date they came into possession of it. I believe that is a misrepresentation under the FDCPA. 

 

I had a scenario last year where a zombie debt buyer sent me a debt collection notice on an alleged debt dating back to approximately 1999. I've had half a dozen similar notices from different parties in the last 5 years, so I know the alleged "account" has been bought and sold numerous times. In my instance, the new acquiring debt collector tried to charge interest back to 1999. Never mind the fact that they had no specifics on the account other than their claim of a dollar amount and party's name (a bank that closed around 1999), no account contract, no proof of the debt etc. The most ridiculous part of their letter (and nasty phone calls) was they tried to charge 15 years of interest, despite owning the alleged account for just a few months (aside from the lack of proof of any debt, or any contract that defined the interest issue).

 

I think its a fair point to say a debt collector cannot charge interest for any period of time they do not own an account, whether that period of time is 1 month or 15 years. 

 

This class action against Cavalry points out the issue rather well.  Please see:  http://baileyandglasser.com/wp-content/uploads/2014/11/Cavalry-Complaint-Amended.pdf

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@BV80 and @Harry Seaward, this law firm's analysis takes the issue one step further and states that once the original creditor sells an account and stops sending statements, the original creditor (and future creditors) legally gives up their right to continue to charge interest. This appears to agree with my original point, but I'm unclear on the legal issue created by an original creditor failing to send statements after charge off affecting their original contract rights.  

 

Consumer Class Action Filed Against Cavalry Portfolio Services Alleging Unlawful Interest Charges

Boston, Massachusetts

 

Bailey & Glasser, LLP, filed a consumer class action against Cavalry Portfolio Services, LLC and Cavalry SPV I, LLC, among the nation’s largest debt buyers, on behalf of thousands of Massachusetts consumers. Cavalry buys charged-off debt from credit card companies, usually for pennies on the dollar. The suit alleges that Cavalry illegally assessed retroactive interest on these debts purchased from creditors such as FIA Card Services.

 

According to the complaint, once a credit card account is “charged off,” the creditor legally gives up its right to apply or collect interest because it stops sending monthly statements. The balance remains the same.

 

But after Cavalry purchases debts, it goes back and retroactively adds the interest that the creditor waived, causing balances to jump by thousands of dollars overnight. In the case of class representative, this practice added more than $5,000 to the amount of a purchased debt Cavalry was attempting to collect.

 

The class action suit alleges that Cavalry has no legal right to this interest, and that its practices violate the federal Fair Debt Collection Practices Act and the Massachusetts Unfair and Deceptive Practices Act, Chapter 93A.

 

The class action lawsuit was filed by class action attorneys Elizabeth Ryan and John Roddy of Bailey & Glasser’s Boston, Massachusetts office.

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@Determined1

 

I agree with you about retroactive interest and that a debt collector cannot charge interest for the period before the collector owned the account if the OC waived the right to charge interest after the account was charged off. 

 

Note, the above applies to the contractual rate of interest.   It does not necessarily apply to the statutory rate of interest unless the contract expressly states that statutory interest will not be added.  If the contract makes no such specification, and state law allows debt collectors to add state statutory interest to a debt, the debt collector can do so.

 

In regard to the contractual rate of interest being assessed after a JDB purchases an account, it depends on the circumstances and one's courts.

 

Here's an interesting ruling that encompasses both contractual and statutory interest.  The 6th Circuit recently ruled in Stratton v. Portfolio Recovery (2014):

 

"Under Kentucky law a party has no right to statutory interest if it has waived the right to collect contractual interest. And any attempt to collect statutory interest when it is "not permitted by law" violates the FDCPA."

 

KY's usury statute states:

 

The legal rate of interest is eight percent (8%) per annum, but any party or parties may agree, in writing, for the payment of interest in excess of that rate[;] . . . and any such party or parties, and any party or parties who may assume or guarantee any such contract or obligation, shall be bound for such rate of interest as is expressed in any such contract, obligation, assumption, or guaranty, and no law of this state prescribing or limiting interest rates shall apply to any such agreement or to any charges which pertain thereto or in connection therewith...

 

The court ruled:

 

"Nothing in the statute suggests that a contracting party retains the option to charge statutory interest."  In other words, it's one or the other.  Contractual or statutory.

 

PRA, as GE's assignee, moreover, "acquire[d] no greater right than was possessed by [its] assignor . . . but simply stands in the shoes of the latter." Whayne Supply Co. v. Morgan Constr. Co., 440 S.W.2d 779, 782-83 (Ky. 1969). PRA cannot be given a right to collect interest—contractual or statutory—that GE waived.

 

The court ruled that, under KY law, PRA had no right to charge any interest at all (not even after they bought the account) because GE waived that right when it stopped charging interest after the account was sold. 

 

If an OC stops charging the contractual rate of interest after charging off the account, one would have to look to his courts to see if that interest rate could by charged by a JDB after it purchases an account.  The attorney for the class action against Cavalry should have made the claim that Cavalry had no right to charge contractual interest at all that had been waived by the OC, but he didn't and that surprises me.

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@BV80 - I believe one question comes down to what is considered a waiver of an original creditor's contractual right (and subsequent creditors rights) to charge contractual interest. Is merely not sending a statement post charge off deemed a waiver? If so, then most OC's waive this right post right off when they stop sending statements. Unless another action (or lack thereof) waives this right?

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@Determined1

 

I don't think any credit card OC continues to charge interest after charge-off, but I'm not sure the failure to send a statement would be proof.   Most OC's send a final charge-off statement.   It should show the charge-off amount and -0- finance charges.

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@BV80, doesn't that bring the issue full circle?  If an OC typically waives their right to charge interest post charge off, as referenced in the PRA case you posted, then a JDB or debt collector would be prohibited from charging contractual interest going forward, after their acquisition. This would bring an FDCPA violation for misrepresentation into play if they attempt to do so pre suit, ie through a billing statement or written demand. Yes?

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@Determined1

 

This is not something that's been litigated often, but it's going to depend on the courts.   A district court in IL ruled a JDB did not violate the FDCPA by retroactively charging the contractual interest for the period of time between charge-off and the JDB's purchase of the account.  However, it's possible the court made that ruling because the consumer's complaint was deficient.

 

Stubbs v. CAVALRY SPV I, LLC, Dist. Court, ND Illinois 2015

 

Plaintiff also alleges that the imposition of retroactive interest by Defendants violated § 1692f(1). That section is "directed at debt collectors who charge fees not contemplated by the original agreement, not debt collectors who seek to charge fees contemplated by the agreement but arguably waived thereafter." Terech v. First Resolution Mgmt. Corp., 854 F. Supp. 2d 537, 544 (N.D. Ill. 2012).

 

It is undisputed that the interest rate on Plaintiff's credit card account was 19.99 percent in August 2009. (Dkt. 180-2, ¶ 11.) And Plaintiff does not allege that BOA could not charge interest on any unpaid balances under the agreement. (Id. at ¶ 7.) Defendants cannot have violated § 1692f(1) as interest was clearly contemplated in the agreement between Plaintiff and BOA. Defendants' Motion for Summary Judgment is granted as to Plaintiff's § 1692f(1) claim.

 

She did not claim that BOA waived its right to charge interest after charge-off thereby preventing Cavalry from charging retroactive interest (or any contractual interest, for that matter).   Perhaps if she had done so and included an affidavit from BOA that states it doesn't charge interest after charge off, it might have made a difference.    But who knows?

 

As the 6th Circuit (and other courts) have ruled, an assignee has no greater rights than the assignor.  If the assignor waives a right, how can it be restored to the assignee?  That's why I'm surprised that the attorney who's filed the class action that you mentioned didn't make that allegation.   He has the perfect opportunity to get a ruling (unless there's a settlement), but he didn't take advantage of it.

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@Determined1

 

This is not something that's been litigated often, but it's going to depend on the courts.   A district court in IL ruled a JDB did not violate the FDCPA by retroactively charging the contractual interest for the period of time between charge-off and the JDB's purchase of the account.  However, it's possible the court made that ruling because the consumer's complaint was deficient.

 

Stubbs v. CAVALRY SPV I, LLC, Dist. Court, ND Illinois 2015

 

Plaintiff also alleges that the imposition of retroactive interest by Defendants violated § 1692f(1). That section is "directed at debt collectors who charge fees not contemplated by the original agreement, not debt collectors who seek to charge fees contemplated by the agreement but arguably waived thereafter." Terech v. First Resolution Mgmt. Corp., 854 F. Supp. 2d 537, 544 (N.D. Ill. 2012).

 

It is undisputed that the interest rate on Plaintiff's credit card account was 19.99 percent in August 2009. (Dkt. 180-2, ¶ 11.) And Plaintiff does not allege that BOA could not charge interest on any unpaid balances under the agreement. (Id. at ¶ 7.) Defendants cannot have violated § 1692f(1) as interest was clearly contemplated in the agreement between Plaintiff and BOA. Defendants' Motion for Summary Judgment is granted as to Plaintiff's § 1692f(1) claim.

 

She did not claim that BOA waived its right to charge interest after charge-off thereby preventing Cavalry from charging retroactive interest (or any contractual interest, for that matter).   Perhaps if she had done so and included an affidavit from BOA that states it doesn't charge interest after charge off, it might have made a difference.    But who knows?

 

As the 6th Circuit (and other courts) have ruled, an assignee has no greater rights than the assignor.  If the assignor waives a right, how can it be restored to the assignee?  That's why I'm surprised that the attorney who's filed the class action that you mentioned didn't make that allegation.   He has the perfect opportunity to get a ruling (unless there's a settlement), but he didn't take advantage of it.

 

Thanks @BV80! I see the issue often on statements I've received from JDB's. Quite frankly, I think most of them make up an interest rate percentage of their choosing, as most do not have an original contract to rely on.  I feel I'm in a strong position to make such an FDCPA complaint on many of the notices I've received. They OP may be in a different position, as the alleged debt appears to me relatively new and there may still be a contract to refer to.

 

I agree with you on the issue of the class action, and its curious the attorney didn't make the allegation you suggest. I did note in reviewing the case their was a settlement, so its anyone's guess whether it may have been made in an Amended Complaint if the case proceeded. 

 

Great feedback, thanks!

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@Determined1

 

Check your state laws before doing anything.  Also, check the laws of the governing state of the agreement.  Some courts may rely on that.

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I recently received the Original Creditor Paperwork. this paperwork has my signature on it. and the last Statement the Last day of payment 9/12/2009. then a few months later i think 180+days from the last payment it was charge off.

 

I have read several threads and I believe i asked this question before. just to make sure. as of TODAY 1/26/2015 according to the last payment of 9/12/2009. I'm protected under Status of Limitation?

 

I have read so much threads and article provided by @Determined1, and I have learn so much more.. YOU GUYS/Ladies are AWESOME.

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@longstand

 

As I understand it, the SOL on a debt in CA is 4 years.   As a result, the debt is outside the SOL for a lawsuit. SAVE THAT LAST STATEMENT.  If you were sued, you'd have proof that the debt is outside the SOL.

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@DV80, I have provided you with the correct date of the last payment paid to the company. and yes your correct, in California Status of Limitation is 4 year DV80, your short reply just made my Year.  THANK YOU..

 

Now i need to figure out how to get this JDB to be remove off my credit report if that is even possible. Debt Validation and Yelling at the 3 credit agency did not help. JDB send a letter stating they have purchase the debt. I'm trying to purchase a home and They stated "this Collection needs to be paid first before we could get you a home loan"  ARGGG..

 

 

.... Dang Dang Dang. so close on having a Home Loan.

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Thanks @longstand. The JDB's ability to report is for 7 years, versus their legal right to sue which has expired after 4 years. If it were me, I would look for a violation of law based upon any improper interest charged or another infraction of the FDCPA, California’s Fair Debt Buying Practices Act, or an FCRA violation based upon improper reporting (ie. an inflated amount or a re-aging of the debt on the credit report). Then run it past a NACA attorney (naca.net),  Even fighting them to a draw without any financial penalty for the purpose of a removal from your report is a victory.

 

Another alternative, assuming there is a violation of law, is to file a CFPB complaint. They may remove it just to satisfy the complaint.  See http://www.consumerfinance.gov/

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