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2015 Legal Climate: Midland and New York

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I don't think the flat rate legal fees, or if they charged by the hour makes a difference with arb. The plaintiff simply does not want to spend 5-10k to collect on a debt they may not win. Don't get me wrong, if they did bite the arb bulletin, you would probably lose. They know that. Rules are much more relaxed in arb, but the question is how much would they be willing to spend? Most original creditors will do arb, because it is their agreement, but the junk dealers are about profit.

A flat fee lawyer will get his flat fee no matter what forum. But the JDB would have to cough up the arb fees too. That is why it is a good deterrent.

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But the JDB would have to cough up the arb fees too. That is why it is a good deterrent.

It's possible that some arb cases end with the consumer owing all of the debt buyer's arb fees as well as any legal and pre-arb court costs (filing fee, etc).

 

It all comes down to the wording of the agreement, the rules of the arbitration company and the arbitrator's interpretation of both of those things.

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The CC agreement seems to be a critical part of the arb route.

 

@Harry Seaward,

I'm unclear if large banks like Citibank simultaneously issue numerous types of CC agreements, one for each specific CC card type, or if each updated CC agreement issued functions like an umbrella covering all CC accounts that they administer?

 

Perhaps I can somehow locate a more precise CC agreement from Citibank, one specifically associated with the specific CC type issued close it time prior to DOFD in question?

I'll need to look into JAMS rules as well. 

 

 

@shellieh98,

"A flat fee lawyer will get his flat fee no matter what forum. But the JDB would have to cough up the arb fees too. That is why it is a good deterrent."

 

OK, now I see your point. If the JDB has to cough up arb fees and they are unrecoverable, even if they win, then going the full distance in arb would likely amount to a net loss for them. How much does a 'standard' rigourously defended pro-se arb case in JAMS cost the JDB? The question is how much it will cost Midland to get a judgement for the $7k in arb (assuming the arb process will not award arb fees), how such a collection scenario fits into their cost/benefit business model, and how predictable is Midland's responses to the former.

 

Reviewing the additional advantages and rights a defendant if the case if heard in court will also factor in deciding the venue. 

 

I suppose the big question mark is the quality of the evidence Midland can reasonably be expected to produce.

 

 

I'm wondering if all these recent NYC  consumer protection legal reforms is changing the nature of the purchase agreements between OCs and top tier JBDs like Midland. In my ignorance of the field, I can't help the feeling that the NYS/NYC reforms could present a profound roadblock to applying the profitable business model JDBs have used in the past in NYS. Profitable businesses run by intelligent experts and their shrewd attorneys can be reasonably expected to innovate their strategies and adapt. Unless of course, we've just been through a sort of Wild West scenario in consumer debt collection and the goose that laid the golden egg is nearing menopause. 

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The CC agreement seems to be a critical part of the arb route.

 

@Harry Seaward,

I'm unclear if large banks like Citibank simultaneously issue numerous types of CC agreements, one for each specific CC card type, or if each updated CC agreement issued functions like an umbrella covering all CC accounts that they administer?

 

Perhaps I can somehow locate a more precise CC agreement from Citibank, one specifically associated with the specific CC type issued close it time prior to DOFD in question?

I'll need to look into JAMS rules as well. 

 

 

@shellieh98,

"A flat fee lawyer will get his flat fee no matter what forum. But the JDB would have to cough up the arb fees too. That is why it is a good deterrent."

 

OK, now I see your point. If the JDB has to cough up arb fees and they are unrecoverable, even if they win, then going the full distance in arb would likely amount to a net loss for them. How much does a 'standard' rigourously defended pro-se arb case in JAMS cost the JDB? The question is how much it will cost Midland to get a judgement for the $7k in arb (assuming the arb process will not award arb fees), how such a collection scenario fits into their cost/benefit business model, and how predictable is Midland's responses to the former.

 

Reviewing the additional advantages and rights a defendant if the case if heard in court will also factor in deciding the venue. 

 

Typically, the card agreements used & provided by the JDB in collection cases, is a generic card agreement from the year of default.  If you're looking for a pre-emptive arb claim, then find the card agreement from around the date of your last purchase.  You can also use agreements from previous years, as they have survival clauses in them (in regards to citi).

 

From what I've read, the cost of a JAMS hearing is between 5k-10k per day, this doesn't include attorneys fees.  Specifically with Citi, if you lose your initial JAMS case, then you have the right to a 3 panel appeal, that (from what I've heard) will run upwards of 50k-100k in additional fees.  If by chance you lose both, you then have the right to appeal in Federal Court, which will cost additional attorneys fees.  There is a poster on debtorboards that supposedly ran up an Arb bill with Citibank for close to 400k.

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Typically, the card agreements used & provided by the JDB in collection cases, is a generic card agreement from the year of default.  If you're looking for a pre-emptive arb claim, then find the card agreement from around the date of your last purchase.  You can also use agreements from previous years, as they have survival clauses in them (in regards to citi).

 

From what I've read, the cost of a JAMS hearing is between 5k-10k per day, this doesn't include attorneys fees.  Specifically with Citi, if you lose your initial JAMS case, then you have the right to a 3 panel appeal, that (from what I've heard) will run upwards of 50k-100k in additional fees.  If by chance you lose both, you then have the right to appeal in Federal Court, which will cost additional attorneys fees.  There is a poster on debtorboards that supposedly ran up an Arb bill with Citibank for close to 400k.

 

 

Ouch.

That's music to my ears!

 

In the big picture, my strategy is to try my hand at fighting and knock any cases off one by one. If at any point I lose and an adversary obtains a judgement, more than likely I'd file for BK (circumstances depending). So there really isn't an imperative to avoid fighting altogether. Again, I'll need to wait and see if some of my debt safely makes it to the SOL which expire shortly, which would lighten my burden.

 

Looked at en masse, having several defaulted debts can appear insurmountably daunting ... however in real world terms it will never advance beyond the threat/challenge/burden of being confronted with an individual collection case (and each individual action in the former). Like climbing a mountain thousands of feet tall it's easy to get psyched out and overwhelmed by the massive scale of the undertaking. But broken down into individual sections of a few dozen feet one moves steadily upward ,addressing and dispatching the immediate challenges, while keeping a sense of the whole. 

 

Furthermore, each successive confrontation with a JDB will find me better equipped to defend myself, more familiar, more knowledgable, more experienced, more seasoned, more confident, more qualified, more creative, and more ductile. If I push myself into the fight it should become easier as I move forward into each successive confrontation ... which renders the big picture actually much less imposing than it appears at present conditioned by my near complete ignorance.

 

There's also the possibility of introducing an offensive element, in the form of counter-claims or as a petitioner in an FDCPA case. Reading about alleged debtors making money during the collection process is like a balm to the unpleasantness ... in fact it was this sort of thing that awoke me from my slumbers based on the hopelessness of my defaulted debt. Somehow, through the weirdness of the internet I'd stumbled into a massive many years long forum post about some guy who was making money off his debt collectors and was rallying others to do the same and offering free guidance to boot. It seemed preposterous to me but it was entertaining. As I read deeper I got my first exposure to debtors who were actually defending themselves, fighting their OC and JDBs and winning. That was immensely empowering stuff to read (not that it always goes that way as Henry Seaward very astutely cautions). And that brought me here ...

 

 

Thank you all for your forbearance and I offer my apologies for rambling on ... as I type I'm making the transition from being idle to taking up the fight. 

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@LegalTender

 

Keep researching; keep reading actual filings and rulings from your courts. Save all correspondence. Learn the new NY consumer rules in effect now and as of Aug. 30, 2015, and use them to protect your rights. If you send DV requests at the last moment to be within the 30 days of receipt, and properly request the NY substantiation, you may get closer to the SOL. You'll also get the documents to help you understand how much evidence your creditor (OC or JDB) has. This will help you to analyze the best strategy going forward.  @debtzapper gave you great advice to consult with experienced attorneys. You never know what may come of it. Best of luck to you.

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@LegalTender

 

In adding to what @Brotherskeeper mentioned.

 

Winning these collection cases comes down to leverage, and a well pled, timely, strategy, but your largest tool is gaining leverage.  Adding FDCPA, TCPA, FCRA, and state law UDAP (unfair deceptive acts & practices) to any potential claims, will increase your leverage significantly.  There are ways to be astute in your dealings with Collection agencies & JDB's, as most will violate one of the aforementioned statutes in the process of collecting your debt.  

 

Save all correspondence

DV and dispute all collection letters

Answer and record all calls (if legal in your state)

 

You're one step ahead of most people that are in this situation, as you're already investigating ways to prevail, before you have been sued.  So, start collecting leverage and formulating winning strategies that apply to your situation.

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Good advice you guys.


 


@Brotherskeeper


I am doing the heavy duty research but I need to start shifting focus to NYS/NYC cases to better understand rights, rules, and statutes.


“If you send DV requests at the last moment to be within the 30 days of receipt, and properly request the NY substantiation, you may get closer to the SOL. You'll also get the documents to help you understand how much evidence your creditor (OC or JDB) has. This will help you to analyse the best strategy going forward.  @debtzapper gave you great advice to consult with experienced attorneys. You never know what may come of it. Best of luck to you.”


 


Good points all and well taken. 


 


 


@Coffee_before_tea


OK. Great ideas. I’lll take the claims against collectors much more seriously as an essential tool.


 


Phone calls:


I've not answered my phone in a few years ... all calls go to voicemail. It's a good system as it leave virtually no negative impact on my life. These days most callers hang up without leaving message. Occasionally someone will call regarding a collection and I'll erase the voicemail. 


 


In my state it's legal to record calls (and I've had to do that in previous unrelated circumstances). Are you suggesting taking calls for the sole purpose of catching the collector in violation of the statutes and/or draw out conversation with prospect of a violation being made?


 


What’s a good condensed resource for familiarising oneself with identifying and obtaining evidence for violations of FDCPA, TCPA, FCRA, and state law UDAP?


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The CC agreement seems to be a critical part of the arb route.

 

@Harry Seaward,

I'm unclear if large banks like Citibank simultaneously issue numerous types of CC agreements, one for each specific CC card type, or if each updated CC agreement issued functions like an umbrella covering all CC accounts that they administer?

 

Perhaps I can somehow locate a more precise CC agreement from Citibank, one specifically associated with the specific CC type issued close it time prior to DOFD in question?

I'll need to look into JAMS rules as well. 

Arbitration in New York isn't my thing, but I believe any agreement from the period of time the account was active will do.

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Just to be clear, the DV letter I send in reply to Midland’s notification that they now own my account should include, a.) request for specifics about the debt, b.) request substantiation of charged of debt as per NYS statutes (I do not know if the debt was charged off as it’s not on my CR anymore), and c.) include a statement that I elect arbitration. All this should be included in one letter CRRR?

 

Another issue is as I have an active security freeze on my CRAs, I've received letters from two CRAs very recently (same time frame that Midland purchased my debt) stating that a creditor has reported a change to my address. My address has not changed in many years.  The letters from the two CRAs were also sent to the 'changed address, i.e. to my neighbour (I know her and she's an elder sweet woman who lives alone and keeps to herself, so I'm not too concerned about her receiving my debt correspondence). She left the letters in the public hallway of my building near the mailboxes where I retrieved them. This suggests to me that in the future debt collection correspondence and/or legal notices may be sent to the wrong address/person. It seems to me that this might be a violation of my privacy (sending info about my debt to my neighbor) and perhaps FDCPA, TCPA, FCRA, and state law UDAP?  

Could this be, or develop into a claim against collectors? What is the recommended course of action?

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@Coffee_before_tea

OK. Great ideas. I’lll take the claims against collectors much more seriously as an essential tool.

 

Phone calls:

I've not answered my phone in a few years ... all calls go to voicemail. It's a good system as it leave virtually no negative impact on my life. These days most callers hang up without leaving message. Occasionally someone will call regarding a collection and I'll erase the voicemail. 

 

In my state it's legal to record calls (and I've had to do that in previous unrelated circumstances). Are you suggesting taking calls for the sole purpose of catching the collector in violation of the statutes and/or draw out conversation with prospect of a violation being made?

 

What’s a good condensed resource for familiarising oneself with identifying and obtaining evidence for violations of FDCPA, TCPA, FCRA, and state law UDAP?

 

 

I'm not advising you answer the calls for the sole purpose of catching a collector violating statutes; however, this is often done, and it shouldn't matter as they are the ones calling you, right?  Answering the phone calls can accomplish a few things:

 

- Do they have the correct person?

- Are they threatening legal action they are not allowed to take?

- Are they outright threatening you?

- Allows you to verbally revoke consent from calls.

- Allows you to get all contact information, mailing address, phone number etc...

- If they are calling your cell phone, using an automated dialer

 

There are some that I'm missing, but you get the point.  

 

This is a good write-up of FDCPA violations from one of the top consumer attys in the country.  PDF warning:  http://www.edcombs.com/wp-content/uploads/2013/05/fdcpa-december-2012.pdf

 

You'll have to tailor it to your NY State. 

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Just to be clear, the DV letter I send in reply to Midland’s notification that they now own my account should include, a.) request for specifics about the debt, b.) request substantiation of charged of debt as per NYS statutes (I do not know if the debt was charged off as it’s not on my CR anymore), and c.) include a statement that I elect arbitration. All this should be included in one letter CRRR?

 

Another issue is as I have an active security freeze on my CRAs, I've received letters from two CRAs very recently (same time frame that Midland purchased my debt) stating that a creditor has reported a change to my address. My address has not changed in many years.  The letters from the two CRAs were also sent to the 'changed address, i.e. to my neighbour (I know her and she's an elder sweet woman who lives alone and keeps to herself, so I'm not too concerned about her receiving my debt correspondence). She left the letters in the public hallway of my building near the mailboxes where I retrieved them. This suggests to me that in the future debt collection correspondence and/or legal notices may be sent to the wrong address/person. It seems to me that this might be a violation of my privacy (sending info about my debt to my neighbor) and perhaps FDCPA, TCPA, FCRA, and state law UDAP?  

Could this be, or develop into a claim against collectors? What is the recommended course of action?

 

@LegalTender

 

If the incorrect apartment address is listed on your 3 credit reports, you would write to correct the error. The Consumer Financial Protection Bureau (CFPB) is a very good consumer resource: http://www.consumerfinance.gov/askcfpb/314/how-do-i-dispute-an-error-on-my-credit-report.html

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Just to be clear, the DV letter I send in reply to Midland’s notification that they now own my account should include, a.) request for specifics about the debt, b.) request substantiation of charged of debt as per NYS statutes (I do not know if the debt was charged off as it’s not on my CR anymore), and c.) include a statement that I elect arbitration. All this should be included in one letter CRRR?

 

 

 

You now have several threads discussing similar topics. In order not to miss valuable information and leave a good trail for others following behind you, try to stay in one thread, when it makes sense to do so. IANAL but I would include "I am disputing this debt," or language using "dispute" in your letter. Yes, send it certified mail return receipt requested. I would use the instructions and exemplars on the CFPB site as the basis for the letter. http://www.consumerfinance.gov/blog/debtcollection/

 

Be sure to use the recommended language for NY consumers requesting substantiation. http://www.nyc.gov/html/dca/downloads/pdf/Debt.pdf

 

 

charge-off or chargeoff is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors will make this declaration at the point of six months without payment. In the United States, Federal regulations require creditors to charge-off installment loans after 120 days of delinquency, while revolving credit accounts must be charged-off after 180 days.[1]https://en.wikipedia.org/wiki/Charge-off

 

http://www.experian.com/blogs/ask-experian/2011/11/23/defining-charge-off/

“Charge off” means that the credit grantor wrote your account off of their receivables as a loss, and it is closed to future charges. When an account displays a status of “charge off,” it means the account is closed to future use, although the debt is still owed.

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Just think of it as a self taught college education, for which you will receive no credit or diploma.  However if you should want to pursue an education in the legal field, you would be 2 steps ahead of the game.

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@usctrojanalum,

 

Thanks for your informative answer. It’s a great relief to know that the legal reforms in NYS/NYC have tooth and are leaving their  impact in litigation.

 

I’ve wondered if the reforms in NY and some other states would have precipitated a sea change nationally in how banks document debts and how JDBs purchase them.

 

 

I hope you do not mind if I ask a few follow-up questions?

 

A.) Are the JDBs you mention your law firm litigating against bottom feeders, or top feeders like Midland (and only one step removed from the original debt)? 

What about suits brought by OCs (credit cards)? Any word on the status of the difficulty of such litigation?

 

B.) Re: “sua sponte” dismissals (I’m unfamiliar with them). Are these with prejudice, or without prejudice? 

 

C.) What do you mean by 'putting the case forward'? Some sort of lengthy adjournment? 

(“He charges $250.00-$750 (depending on balance owed and whether case is Supreme Trial Court or Lower District/Civil Court) files the answer and then puts the case forward for a year.”)

 

 

PS: good luck in your school applications!

 

 

@LegalTender

 

In response to A) most of the JDB's that the firm has handled has been portfolio - but that's mainly because of volume. they filed 25,000 cases last year in Nassau County Courts alone.  Partner does have some midland cases as well.

 

As for OC's, he has only taken one case against Amex and they were super aggressive. Circumstances were different because the client had substantial assets and owed around 75k so it was not really the typical CC company v. debtor you usually see.  Attorney was able to settle the case for 50k which client was able to pay.

 

In response to B.) so in the lower level New York Courts - (District/Civil) if there are attorneys representing both sides - the case is marked "off calendar" and one the attorneys has to put it on the calendar to be heard.  If neither attorney moves the case within 1 year, the Court will mail a certified letter to the plaintiff and tell them there is a hearing to dismiss the case.  If no one shows up and the plaintiff does not pay for what is called a notice of trial, the case is dismissed without prejudice. If the balance is large and brought in the Supreme Trial Court - the Courts do not dismiss them on their own accord, one of the parties has to ask the Court to do it.  A case could be pending in perpetuity theoretically if neither side does anything.  I've seen cases be stale for 3-4 years before they moved it before a judge.

 

In response to C) basically it was slang/jargon talk by me.  Most attorneys keep what is called a "diary system" or "calendar system" to track cases. Our firm uses computer software that tracks it for us, and we will just push the case forward 6 months to review, check if the plaintiff has moved it forward, served discovery, requested an arbitration or trial date etc etc. 

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I'm not advising you answer the calls for the sole purpose of catching a collector violating statutes; however, this is often done, and it shouldn't matter as they are the ones calling you, right?  Answering the phone calls can accomplish a few things:

 

- Do they have the correct person?

- Are they threatening legal action they are not allowed to take?

- Are they outright threatening you?

- Allows you to verbally revoke consent from calls.

- Allows you to get all contact information, mailing address, phone number etc...

- If they are calling your cell phone, using an automated dialer

 

There are some that I'm missing, but you get the point.  

 

This is a good write-up of FDCPA violations from one of the top consumer attys in the country.  PDF warning:  http://www.edcombs.com/wp-content/uploads/2013/05/fdcpa-december-2012.pdf

 

You'll have to tailor it to your NY State. 

 

Hmm. The calls initially were an annoyance, but they no longer are as I take not notice of them and ignore them ... they aren't a part of my life. 

If my answering the calls doesn't directly benefit a legal strategy or impart valuable info ... it appears to more trouble than it's worth ... unless I'm missing something here .... because at present my private life isn't impacted in the least by the calls.

I'm quite content ignoring them. 

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@Harry Seaward


“Arbitration in New York isn't my thing, but I believe any agreement from the period of time the account was active will do.”


Thanks, that seems to be the consensus.


 


 


@debtzapper


Thanks for the additional useful NY info. 


 


 


@Brotherskeeper


“You now have several threads discussing similar topics. In order not to miss valuable information and leave a good trail for others following behind you, try to stay in one thread, when it makes sense to do so.”


 


Ok, I’ll use this thread even though it’s scope widening behind the Midland-spedific content. 


 


“Be sure to use the recommended language for NY consumers requesting substantiation. http://www.nyc.gov/h...ds/pdf/Debt.pdf


 


Unless I’m mistaken, the statute regarding the NY substantiation request doesn’t begin until the end of August. My 30 day deadline for sending the DV letter is prior to that date, therefor the substantiation request will need to be sent separately and can go out on the first day that the statute becomes active. 


 


Thanks for the charge-off info. There are numerous terms that I’ve first encountered only in the past couple weeks and have at best a cursory understanding of.


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Just think of it as a self taught college education, for which you will receive no credit or diploma.  However if you should want to pursue an education in the legal field, you would be 2 steps ahead of the game.

That's an optimistic way of seeing things!

 

I have no ambitions to pursue a formal education in law, and my passions lie almost on opposite ends of the earth, so this is a grand detour. 

Ha ha, I was rather successfully trying to put my brain to other uses, which is why ignoring creditor phone calls was such an immensely productive undertaking. 

 

Sometimes one gets more than they bargained for. What that something is in the legal profession I'm not entirely clear. But that's a larger conversation. 

 

The one thing that I found disheartening from previous legal encounters was that I was curious to ask the attorneys that I'd developed a relationship to (people of high intelligence that I respected) about their viewpoint regarding life, their worldview. They all appeared to be jaded at the least, and more commonly fully cynical based on their (long term legal practitioners) experience with the justice system. There's a certain type of headspace that's almost a requirement to thrive in the field. 

 

I've never formally studied logic and now would be an opportune time to do so, it's just that I have a very full platter, and logic likely would undermine the stuff I'm cultivating! Indeed, I can viscerally feel my other, somewhat intense, studies being forcibly displaced and modified by this new influx of legal knowledge. It's hard for me to engage with something without committing deeply, and the prospect defending several pro-se lawsuits over the course of a few years is by nature going to demand that. To that end, I can see the funeral of everything I've studied and developed over the past few years rapidly approaching. Hows that for pessimism? 

 

I'll keep an open mind... it's hard to predict the real world outcome of such engagements, as that info is unavailable to me. Is it possible to swim without getting wet? 

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@Brotherskeeper

“You now have several threads discussing similar topics. In order not to miss valuable information and leave a good trail for others following behind you, try to stay in one thread, when it makes sense to do so.”

 

Ok, I’ll use this thread even though it’s scope widening behind the Midland-spedific content. 

 

 

You can edit the title of a thread, if needed. My suggestion to try to keep similar things in one thread was for mostly your benefit, so you wouldn't miss some information or link if you were to let a thread die. We live life forwards but must understand it backwards (sorry, Kierkegaard), and the same is true of our journey through the debtor's minefield. As you gain knowledge, revisiting earlier information is highly recommended; you will see how much your understanding has grown. 

 

Here's a FAQ for Debt Collectors on the new NY laws:

http://www.dfs.ny.gov/legal/regulations/adoptions/faq-debt-collect.htm

 

 

When you send your DV, incorporate some or all of the bolded language below. IANAL. This may cause the JDB to have send you the info on how to request substantiation and eat up time. Please see  IV. Special Treatment of Charged-Off Debts http://www.klgates.com/start-spreading-the-news-recent-new-york-regulations-impact-debt-collection-and-default-servicing-01-07-2015/

 

'Second, the New York regulation contains a process for “substantiation” of charged-off debts that is different from the validation of debts under the FDCPA.[28]  If a consumer “disputes, orally or in writing, the validity of a charged-off debt or the right of the debt collector to collect on a charged-off debt,” then the debt collector must comply with certain procedures to notify the consumer about how to request substantiation of the debt.[29]  The notification procedures can be avoided if “the debt collector has already provided the consumer the information required” regarding how to request substantiation.[30]  Accordingly, debt collectors might ease their compliance burden by supplying this information at the same time as the initial disclosures.

If the consumer makes a request for substantiation, the debt collector must generally: (1) provide substantiation within 60 days of receiving the request; and (2) cease collection activities until the substantiation is provided.[31]  The substantiation must be in written form and must include one of several specified documents, including a copy of a judgment, the charge-off account statement, a complete chain of title, or certain records regarding a prior settlement agreement.[32]'

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Hmm. The calls initially were an annoyance, but they no longer are as I take not notice of them and ignore them ... they aren't a part of my life. 

If my answering the calls doesn't directly benefit a legal strategy or impart valuable info ... it appears to more trouble than it's worth ... unless I'm missing something here .... because at present my private life isn't impacted in the least by the calls.

I'm quite content ignoring them. 

 

If you are looking for leverage for any potential lawsuit coming your way, then closing yourself off to potential consumer law violations, is probably not the best strategy, especially when you have a large amount of debt.  

 

You don't have to trap them into anything, all you're doing is actively participating in their efforts to collect against you.  Either way, it's entirely up to you, and your comfort level.  But remember one thing, winning these cases comes down to who has the most leverage, and effective strategy.

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From what I've read, the cost of a JAMS hearing is between 5k-10k per day, this doesn't include attorneys fees.  Specifically with Citi, if you lose your initial JAMS case, then you have the right to a 3 panel appeal, that (from what I've heard) will run upwards of 50k-100k in additional fees.  If by chance you lose both, you then have the right to appeal in Federal Court, which will cost additional attorneys fees.  There is a poster on debtorboards that supposedly ran up an Arb bill with Citibank for close to 400k.

 

What is the strategy behind this on the collector's behalf to justify such high collection expenses (I'm making an assumption that the expenses of collection/arbitration substantially exceeded the amount of debt)?

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I think generally, a collector/JDB will choose to make wise business decisions, to increase their bottom line.  Their reasoning to follow someone into a high-cost Arbitration, would be the strength of their case, and their odds of collection.  If the debt was $50k (they paid $2,500), and you had assets, employment etc.. then they will likely follow you into Arbitration.  It's difficult to say what they're threshold for risk/pain is, but typically for a JDB it's pretty low, for an OC it's significantly higher.

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