Christine

Case law re Equifax DLA, balances, Midland pre-purchase interest on appeal?

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I recently filed my opening brief in the 9th circuit court of appeals because I once again got railroaded in kangaroo court (Phoenix federal court).  The brief is posted at http://creditsuit.org  and involves numerous FDCPA, FCRA and discovery issues.   I worked on it for 2 weeks straight and bought the NCLC FCRA and FDCPA subscriptions,  but just ran out of time and am still looking for case law on several issues for my reply brief.

1) The importance of Equifax's date of first delinquency (aka date of last activity or DLA).

My claim got dismissed because they argued that as per FCRA they could have reported 6 months longer and the judge decided that the additional 1 month was insignificant.  However, my claims were NOT against Equifax for reporting too long,  but against Midland / MCM because they verified the incorrect DLA and against Equifax for lack of procedures.  Of course the more RECENT the DLA, the greater the damages as the most RECENT delinquency determines one's credit worthiness.   It would be nice to have some cases about that.

I can't afford depositions and if remanded, will obviously do written discovery with Equifax, but they will claim no knowledge regarding creditors' underwriting practices and I can't pay for expert witnesses.  So I need case law.

2) Midland WAIVED pre-judgment interest in state court, but verified the balances including the waived interest.

They argue that they can continue to report waived charges just like cases re debts dismissed for SOL.  I agree with regards to SOL dismissal, but this is different.   Many consumers negotiate settlements either pre suit or during litigation and I have NEVER seen a waived charge reported to a credit bureau.  

Midland had added interest on the account PRIOR to its purchase of the account from the date of charge-off.    Under AZ law they are entitled to 10% interest and it does not specify from what date, presumably from the date of purchase.     HSBC had stopped charging interest when it charged off and the Midland documents all state the charge-off balance as the purchase balance.   

Most credit card holders receive credits for late fees, interest etc. for one reason or another from the original creditor and I don't see why a subsequent purchaser of the account could add these charges.

The justice court dismissed my FDCPA counterclaim and denied my motion to amend because Midland stated in its motion for summary judgment that it WAIVED all pre-judgment interest.   I haven't found any cases about that, but am aware that creditors can "assign" an account with the chargeoff balance + interest, but nothing of that sort was ever provided by Midland and I recently found a collection letter from a collector on behalf of MCM with a settlement offer based on the charge-off amount / purchase balance without any mention of interest.

So there are TWO issues, one regarding the WAIVED interest during the Midland litigation against me and the other regarding the legality of Midland adding pre-purchase interest when creditors such as HSBC and Chase chose to not charge interest after the charge-off and the account is sold with a BALANCE = to date of chargeoff .

How specific does a CRA dispute have to be?

The district court judge reasoned that my balance disputes were NOT specific enough and that I was supposed to provide the correct balance according to my calculations.  I had checked the Equifax online dispute form option for "incorrect balance."   Of course I argued that in my  NUMEROUS court filings and discovery docs I had already provided Midland / MCM with the exact nature of the disputes and that it's not up to me to calculate the interest, but the judge didn't care.

I'll be doing a lot of research over the next couple months once I got caught up with planting etc., but greatly appreciate any relevant cases.

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2 hours ago, Christine said:

1) The importance of Equifax's date of first delinquency (aka date of last activity or DLA).

My claim got dismissed because they argued that as per FCRA they could have reported 6 months longer and the judge decided that the additional 1 month was insignificant.  However, my claims were NOT against Equifax for reporting too long,  but against Midland / MCM because they verified the incorrect DLA and against Equifax for lack of procedures.  Of course the more RECENT the DLA, the greater the damages as the most RECENT delinquency determines one's credit worthiness.   It would be nice to have some cases about that.

Did you specify your argument to the judge before they decided based on an argument you were not even making?  As long as you raised the issue in the case, you can bring it up again in appeal.  Sounds to me so far that you did raise your argument but the judge looked the other way and decided based upon other criteria.  The incorrect DLA is often difficult to fight.  It would be best if you have some kind of evidence showing that their stated DLA was not correct.  When you make the assertion, it then becomes your burden to show it.

2 hours ago, Christine said:

2) Midland WAIVED pre-judgment interest in state court, but verified the balances including the waived interest.

They argue that they can continue to report waived charges just like cases re debts dismissed for SOL.  I agree with regards to SOL dismissal, but this is different.   Many consumers negotiate settlements either pre suit or during litigation and I have NEVER seen a waived charge reported to a credit bureau.  

This one could be complex.  There is often a difference between what they claim you owe, and what they try to sue you for.  Verifying balances on your credit report is not the same as suing in court for a certain amount.  Of course, this could give rise to FDCPA issue, incorrectly identifying the amount supposedly due.  I do not know of any case law in your area off the bat, but will take a look to see what I find. 

2 hours ago, Christine said:

Midland had added interest on the account PRIOR to its purchase of the account from the date of charge-off.    Under AZ law they are entitled to 10% interest and it does not specify from what date, presumably from the date of purchase.     HSBC had stopped charging interest when it charged off and the Midland documents all state the charge-off balance as the purchase balance.   

This is a sticky issue.  I dealt with this recently myself.  I've found that generally speaking, a debt collector cannot add charges if the creditor at that time did not add them itself.  I spent several months arguing this same thing in my situation, and the end result was that the debt collector claimed falsely to me that the charges WERE added by the previous creditor.  Of course, their balance history shows that they added the charges themselves long after, but that one will end up in court one way or the other, as I am preparing to file against them myself.  Interest is allowed if it was allowed in the contract, but if the then-current creditor waived it, I'm pretty sure that the new debt collector cannot go back and add it back in like that. 

One case that might help you is Simkus v. Cavalry Portfolio Servs., LLC, et al., 2014 U.S. Dist. LEXIS 9470 (N.D. Ill. Jan. 27, 2014)  EVen though this is a case out of Illinois, Arizona law is discussed.  In that case, Calvary tried to add interest going back to the charge-off, and the original creditor had not added the interest.  The plaintiff's attorney successfully argued that since the OC waived that interest, the same may apply to the debt collector that comes afterward.  The court denied Calvary's MSJ, saying that under Arizona law,  there would have to be a trier of fact to determine if the OC had in fact waived that interest.  If it had, then Calvary would violate FDCPA by trying to collect it.  Some other states have ruled that it IS a violation of FDCPA.  I wish I could be more help to you on that one.

There's also an issue of TILA.  Truth in Lending Act requires that you receive proper disclosure whenever interest is charged to an account.  This would mean that the debt collector might be in violation if they do not provide periodic statements to you showing the interest charges.

 

EDIT--I would look for anything that would indicate that the OC had waived the interest after charge-off.  Did they report the same balance post-chargeoff on your credit reports each month?  Did they stop sending you monthly statements after charge-off?  These can be indications that that interest was in fact waived.  And if these are present in your situation, I would point to them as evidence that the interest post-charge-off was waived, and therefore the CA cannot try to collect it now.

 

 

2 hours ago, Christine said:

The justice court dismissed my FDCPA counterclaim and denied my motion to amend because Midland stated in its motion for summary judgment that it WAIVED all pre-judgment interest.  

This seems to me that the court let them have it both ways.  If they did waive the interest, then it is NOT due and owed on the account.  At the same time, if it is NOT due and owed on the account, then it's illegal for them to report it as owed to the CRAs.  That would also be a violation of FDCPA,  because it misrepresents the amount that they actually claim is due.  They are trying to have their cake and eat it too.  And that judge just handed them the fork and a napkin.

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Thanks so much,  kraftykrab, Simkus is exactly what I was looking for, although I don't like the dismissal of the FDCPA claims regarding the collection letters since IF the interest was deemed waived, they attempted to collect amounts illegally charged.   I just read all three Simkus opinions on Google Scholar and the many cites are a goldmine.  Once you found one relevant case, there seem to be hundreds.

Re.  DLA:

Quote

Did you specify your argument to the judge before they decided based on an argument you were not even making?  As long as you raised the issue in the case, you can bring it up again in appeal.  Sounds to me so far that you did raise your argument but the judge looked the other way and decided based upon other criteria.  The incorrect DLA is often difficult to fight.  It would be best if you have some kind of evidence showing that their stated DLA was not correct.  When you make the assertion, it then becomes your burden to show it.

The judge grasped at anything Equifax offered in its reply to its msj, it just floored me, as if he never read what I wrote.  Well, sometimes he referred to my arguments,  but stated that I "misunderstood" the law or the facts.   Midland's own exhibits clearly showed the date of last payment, but the judge just didn't think it matters.   So I'm looking for some cases that discuss the DLA or TU's date to delete.

Quote

This one could be complex.  There is often a difference between what they claim you owe, and what they try to sue you for.  Verifying balances on your credit report is not the same as suing in court for a certain amount.  Of course, this could give rise to FDCPA issue, incorrectly identifying the amount supposedly due.  I do not know of any case law in your area off the bat, but will take a look to see what I find. 

It is complex, but Simkus gave me everything I need to establish that 1) HSBC waived the interest (credit reporting, my testimony regarding their collection letters with balances not increasing, and MCM's collector's settlement offer), so it's a pretty sure thing that HSBC waived the interest.   However, too bad that it's a matter of jury decision in AZ (according to Simkus), although I'm prepared to take it to the jury.  I've never read of any AZ FDCPA or FCRA case making it to jury trial or any trial and there's probably several reasons, attorneys not good, don't have the money for many thousands in costs for depos, expert witnesses, etc.  and last but not least, several hateful anti consumer judges and conservative jurors.   I've been at it for so many years, I'd take it anywhere it needs to go if the case is remanded.

Simkus also explains EXPRESS waiver of charges and I'm sure that applies to the the waived interest by Midland when they sued me.   I'll be spending a lot of time going through all the cites, and I think at worst, it'll be another issue for the jury to decide.

If you have some spare time, please do read my opening brief.    I have not been able to look at it again since I filed it, read it so many times and then the day before filing LOST a bunch of revisions -- I really wish I'd had a couple more days to organize it better.  It was hard because I followed the judge's order dismissing my claims and he mixed up my claims against Equifax and Midland.    In my reply brief I want to make sure to address anything that might not be clear to someone not as involved as I am and I appreciate any pointers.

I've been using Scrivener to organize my research and lots of case law from Google and if you actually sue, I'll be glad to send you my Scrivener file, you can use the software for 30 NON consecutive days and there's only one nag screen when you start it up.  It's not perfect and I wrote the brief in Word (in several different docs due to the number of issues), but it sure helped to organize and summarize the cases I'd seen.

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19 hours ago, kraftykrab said:

There's also an issue of TILA.  Truth in Lending Act requires that you receive proper disclosure whenever interest is charged to an account.  This would mean that the debt collector might be in violation if they do not provide periodic statements to you showing the interest charges.

 

Unfortunately, TILA does not apply to JDBs.

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Whether you try to apply TILA or not, the same is still true under FDCPA anyways.  There are several cases around the country where courts have ruled that those same disclosures must be made and if they are not, then the JDB has violated 1692e(2)(A) and 1692f(1).  In Jones v. Midland Funding, a CT case from 2010, the court even ruled that Midland had violated 1692(g) where it kept increasing the balances listed in subsequent letters, but made no mention in those letters that interest was accruing.  Although, I think that last one is a bit of a stretch, because 1692(g) does not state that they must disclose that interest is accruing. 

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