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Received letter from Lawyer for JDB


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I'm looking for advice on best way to proceed.  My husband was out of a job for some time and fell behind on a loan with OC.  By the time we had the funds to attempt to start making payments again they had charged off and sold the debt.  (Approximately July 2017)  This week he received a letter from lawyer on behalf of JDB (who bought the debt from OC).  I believe this to be their first attempt to contact us. The amount is listed at over $8k.  We do have assets they could attach and/or wages they could garnish, and we really want to avoid that.  I've read both that he should send a DV letter at this point, as well as that he should NOT as it will alert them to his willingness to address this.  From what I've read, due to how recent the charge off is, the amount, and that it is apparently the first time the debt was sold, they are very, very likely to sue.  He would like to settle the debt for a lower amount, but it would take 4-6 months for us to save enough to settle for 50%, which is a best case scenario from what I've read.  Any advice?

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Send the DV anyways. The JDB then cannot sue until they have answered it. That will buy you at least 2 months to begin with. Beyond that, it is up to you to decide on how you want to settle. This is probably way too new for them to settle at even 50% but many times, they do not run to the court right away. Also, DV does not mean you are willing to settle. In fact, if the letter is properly done, it usually tells them that you intend to protect your rights. I would do the DV anyways.

Check to see if there is an arbitration agreement. If so, that might help you keep them at bay for a long time after they file in court, to the point where you can save up a decent settlement.

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There is, from what I can tell, and arbitration agreement, copied below.  I have read that arbitration almost always favors the creditor though, so in my case it could be worse?

18. Arbitration. RESOLUTION OF DISPUTES: I HAVE READ THIS PROVISION CAREFULLY, AND UNDERSTAND THAT IT LIMITS MY
RIGHTS IN THE EVENT OF A DISPUTE BETWEEN YOU AND ME. I UNDERSTAND THAT I HAVE THE RIGHT TO REJECT THIS PROVISION,
AS PROVIDED IN PARAGRAPH (i) BELOW.
(a) In this Resolution of Disputes provision:
(i) "I," "me" and "my" mean the promisor under this Note, as well as any person claiming through such promisor;
(ii) "You" and "your" mean WebBank, any person servicing this Note for WebBank, any subsequent holders of this Note or any interest in this Note,
any person servicing this Note for such subsequent holder of this note, and each of their respective parents, subsidiaries, affiliates, predecessors,
successors, and assigns, as well as the officers, directors, and employees of each of them; and
(iii) "Claim" means any dispute, claim, or controversy (whether based on contract, tort, intentional tort, constitution, statute, ordinance, common
law, or equity, whether pre-existing, present, or future, and whether seeking monetary, injunctive, declaratory, or any other relief) arising from or
relating to this Note or the relationship between you and me (including claims arising prior to or after the date of the Note, and claims that are
currently the subject of purported class action litigation in which I am not a member of a certified class), and includes claims that are brought as
counterclaims, cross claims, third party claims or otherwise, as well as disputes about the validity or enforceability of this Note or the validity or
enforceability of this Section
(b) Any Claim shall be resolved, upon the election of either you or me, by binding arbitration administered by the American Arbitration Association
or JAMS, under the applicable arbitration rules of the administrator in effect at the time a Claim is filed ("Rules"). Any arbitration under this
arbitration agreement will take place on an individual basis; class arbitrations and class actions are not permitted. If I file a claim, I may
choose the administrator; if you file a claim, you may choose the administrator, but you agree to change to the other permitted administrator at my
request (assuming that the other administrator is available). I can obtain the Rules and other information about initiating arbitration by contacting
the American Arbitration Association at 1633 Broadway, 10th Floor, New York, NY 10019, (800) 778-7879, www.adr.org; or by contacting JAMS at
1920 Main Street, Suite 300, Irvine, CA 92614, (949) 224-1810, www.jamsadr.com. Your address for serving any arbitration demand or claim is
WebBank, c/o Prosper Marketplace, Inc., 221 Main Street, Third Floor, San Francisco, CA 94105, Attention: Legal Department.
(c) Claims will be arbitrated by a single, neutral arbitrator, who shall be a retired judge or a lawyer with at least ten years’ experience. You agree not
to invoke your right to elect arbitration of an individual Claim filed by me in a small claims or similar court (if any), so long as the Claim is pending
on an individual basis only in such court.
(d) You will pay all filing and administration fees charged by the administrator and arbitrator fees up to $1,000, and you will consider my request to
pay any additional arbitration costs. If an arbitrator issues an award in your favor, I will not be required to reimburse you for any fees you have
previously paid to the administrator or for which you are responsible. If I receive an award from the arbitrator, you will reimburse me for any fees
paid by me to the administrator or arbitrator. Each party shall bear its own attorney’s, expert’s and witness fees, which shall not be considered
costs of arbitration; however, if a statute gives me the right to recover these fees, or fees paid to the administrator or arbitrator, then these statutory
rights will apply in arbitration.
(e) Any in-person arbitration hearing will be held in the city with the federal district court closest to my residence, or in such other location as you
and we may mutually agree. The arbitrator shall apply applicable substantive law consistent with the Federal Arbitration Act, 9 U.S.C. § 1-16, and,
if requested by either party, provide written reasoned findings of fact and conclusions of law. The arbitrator shall have the power to award any relief
authorized under applicable law. Any appropriate court may enter judgment upon the arbitrator’s award. The arbitrator’s decision will be final and
binding except that: (1) any party may exercise any appeal right under the FAA; and (2) any party may appeal any award relating to a claim for
more than $100,000 to a three-arbitrator panel appointed by the administrator, which will reconsider de novo any aspect of the appealed award.
The panel’s decision will be final and binding, except for any appeal right under the FAA. Unless applicable law provides otherwise, the appealing
party will pay the appeal’s cost, regardless of its outcome. However, you will consider any reasonable written request by me for you to bear the
cost.
(f) YOU AND I AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN OUR INDIVIDUAL CAPACITY, AND NOT AS A
PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Further, unless both you and I agree
otherwise in writing, the arbitrator may not consolidate more than one person’s claims. The arbitrator shall have no power to arbitrate any Claims
on a class action basis or Claims brought in a purported representative capacity on behalf of the general public, other borrowers, or other persons
similarly situated. The validity and effect of this paragraph (f) shall be determined exclusively by a court, and not by the administrator or any
arbitrator.
(g) If any portion of this Section 18 is deemed invalid or unenforceable for any reason, it shall not invalidate the remaining portions of this section.
However, if paragraph (f) of this Section 18 is deemed invalid or unenforceable in whole or in part, then this entire Section 18 shall be deemed
invalid and unenforceable. The terms of this Section 18 will prevail if there is any conflict between the Rules and this section.
(h) YOU AND I AGREE THAT, BY ENTERING INTO THIS NOTE, THE PARTIES ARE EACH WAIVING THE RIGHT TO A TRIAL BY JURY OR
TO PARTICIPATE IN A CLASS ACTION. YOU AND I ACKNOWLEDGE THAT ARBITRATION WILL LIMIT OUR LEGAL RIGHTS, INCLUDING
THE RIGHT TO PARTICIPATE IN A CLASS ACTION, THE RIGHT TO A JURY TRIAL, THE RIGHT TO CONDUCT FULL DISCOVERY, AND
THE RIGHT TO APPEAL (EXCEPT AS PERMITTED IN PARAGRAPH (e) OR UNDER THE FEDERAL ARBITRATION ACT).
(i) I understand that I may reject the provisions of this Section 18, in which case neither you nor I will have the right to elect arbitration. Rejection of
this Section 18 will not affect the remaining parts of this Note. To reject this Section 18, I must send you written notice of my rejection within 30
days after the date that this Note was made. I must include my name, address, and account number. The notice of rejection must be mailed to
WebBank, c/o Prosper Marketplace, Inc., 221 Main Street, San Francisco, CA 94105, Attention: Legal Department. This is the only way that I can
reject this Section 18.
(j) You and I acknowledge and agree that the arbitration agreement set forth in this Section 18 is made pursuant to a transaction involving
interstate commerce, and thus the Federal Arbitration Act shall govern the interpretation and enforcement of this Section 18. This Section 18 shall
survive the termination of this Note and the repayment of any or all amounts borrowed thereunder.

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1 hour ago, piratesinco said:

I have read that arbitration almost always favors the creditor though, so in my case it could be worse?

While this used to be true, it's irrelevant either way.  Understand that Absolute Resolutions has very little invested in this debt.  They buy thousands of debts together for a very VERY discounted lump sum.  Arbitration costs you a maximum of $250, but costs Absolute a minimum $2,500.  Then the proceedings are a wild card for them in that they get dinged for fees each time there is a hearing and you could request hearings each time you have a dispute during the proceedings.  Long story short, they will dismiss the case and walk away rather than follow you into arbitration.

The only caveat I would issue is that Absolute Resolutions is not a major debt buyer and may not be familiar with the potential costs they may incur, meaning they may unwittingly follow you into arbitration before they realize they are in over their 'bottom line' head.  I would just make it very clear to them from the get-go what their costs will be.

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That is great advice.  Does this section limit their exposure then?:

 

(d) You will pay all filing and administration fees charged by the administrator and arbitrator fees up to $1,000, and you will consider my request to
pay any additional arbitration costs. If an arbitrator issues an award in your favor, I will not be required to reimburse you for any fees you have
previously paid to the administrator or for which you are responsible. If I receive an award from the arbitrator, you will reimburse me for any fees
paid by me to the administrator or arbitrator. Each party shall bear its own attorney’s, expert’s and witness fees, which shall not be considered
costs of arbitration; however, if a statute gives me the right to recover these fees, or fees paid to the administrator or arbitrator, then these statutory
rights will apply in arbitration.

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The wording of that agreement is arguably moronic with their use of "you" and "I". I've never seen anything like It.  It appears that "I" is you, the consumer and "you" is the creditor. What's confusing under that interpretation is they don't get to limit the fees charged to them by the arbitrator.  So what I think they are saying is they will pay "all filling fees", including yours (consumer), up to $1,000, and if your (consumer) fees go over $1,000, the next part of that sentence kicks in which says they (creditor) will consider your (consumer) request to cover your (consumer) additional fees.

But as @nobk4me said, your (consumer) fees are capped by the arbitration rules at $250, so the $1,000 limit stated in the agreement a moot point. I'm guessing it's there in the event arbitrators raise their rates down the road. 

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1 hour ago, piratesinco said:

DV letter with a request for JAMS.

Just FYI, there is no legal basis to the theory that they cannot sue you after you request arbitration in a DV.  At most, you're giving them a heads up of your intentions if they do decide to sue.  Nothing wrong with that, and it may even be beneficial to you, but I just didn't want you thinking you had FDCPA violation leverage if they sued anyway.

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I was using this post, which I see could be somewhat outdated, but can someone tell me if it is no longer true that to sue you after you exercise the arbitration clause to sue is a violation of the FDCPA?

This post will cover pre-lawsuit exercise of arbitration.

You get a dunning letter from debt collector/lawyer.

You respond with an excellent DV advice from this site.

If you insert the clause in the DV, "If there is an underlying arbitration clause associated with this claim, I hereby exercise it, and waive your litigation rights to this claim, per the underlying arbitration clause."

You should also make a demand for the contract with the arbitration clause.

Point #1) You are not required to file an arbitration by doing this.

Point #2.)You have provided notice of your dispute resolution intentions, if they sue you in court, they have violated the FDCPA...by exercising a legal right that does not exist...ergo arbitration election waives other parties right to litigate.

What options are left if debt collector cannot litigate claim?

Debt collector can arbitrate.

There are only 3 arbitration forums available in 99% of all credit card contracts. NAF, AAA, JAMS. (some have 1 forum named, some have 2 of the 3 forums named, and somtimes clause has all 3 forums named as options.)

Debt collector MUST file with one of these arbitration forums if debt collector intends to use any legal process to recover the debt.

1.) National Arbitration forum (NAF)---Are prohibited by MN AG to accept any credit card arbitrations. NAF could be criminally prosecuted if they do by MN AG consent decree.

2.) American Arbitration Association (AAA)---is out of credit card arbitration business, voluntarily, until it drafts rules to protect consumers. They will refuse any credit card arbitration filing by bank or JDB. They did this because they fear fate of NAF if they are perceived as being unfair to consumers.

3.) Judicial Arbitration Mediation Service (JAMS)---JAMS Chief legal counsel, Jay Welsh, said at FTC hearing 9/29/09, JAMS doesn't do debt collection arbitration. I have confirmed that JAMS will not accept credit card debt collection arbitrations. (I am am still investigating whether JAMS accepts countercliams for debt when consumer slaps bank in JAMS with a big complaint.)

Jay Welsh's full statement: http://www.debt-consolidation-credit-repair-service.com/forums/showpost.php?p=1030024&postcount=4

So debt collector cannot arbitrate pre-suit.

What is the debt collectors options pre-suit, after you slap them with arbitration "election" in your DV?:

1.) Debt collector/OC could get an agreement from consumer on an alternate arbitration forum. This is about as likely as time travel to Pluto.

2.) Debt collector/OC could file suit. This would violate the FDCPA and give you cause of action against lawyer and law firm. you can still compel court to arbitrate suit with a dismissal or permanent stay. (See next post on post lawsuit arbitration exercise.)

3.) Debt collector/OC could, instead of filing suit, seek a declatory judgment from a court to strike their client's own arbitration clause. "Declatory Judgment" is a fancy term that they got a court to say the arbitration clause cannot be enforced against them by you. I believe this would also violate the FDCPA in several ways. A.) debt collector/OC represented the contract to you for private right of resolution (arbitration) which they are trying to now deprive you of; through such a motion. B.) Challenges to the arbitration clause in the contract IS LITIGATION, which violates FDCPA because you waived their right to litigate on all contractual disputes!!!!!! (This is poetic justice because consumers used to litigate to escape arbitration, but creditors did not have FDCPA to protect them when creditors waived consumers out of court and the consumer continued litigation!!! So its not as easy for the creditor to get clause struck as it was for the consumer!)

PRE-DISPUTE EXERCISE PUTS THEM IN A PICKLE OF A BOX! I HIGHLY URGE IT TO MAXIMIZE FDCPA VIOLATIONS!!!!

I will do a 2ND post on what happens when you exercise arbitration clause post-Summons and Complaint.

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The post you quoted is completely incorrect. Just follow this:

Respond to their collection letter with a "DV" letter, which is really just a simple dispute letter.  The letter should read "I dispute this alleged debt".  Period. Done. That's all. Nothing more.

After that, wait for their response.

The arbitration clause is a good one.  It is free JAMS - it costs you nothing.  You can file in JAMS now, before they sue and hope to get an agreement with them to release you of all liability (wipe out the alleged debt) in exchange for dropping your arbitration case. Or they may ignore the arbitration and sue anyway, which you then file a Motion to Compel Arbitration with the court.  Or they ignore arbitration and do nothing and the debt ends up passing SOL.

Saying "I elect arbitration" or anything like that is meaningless.  If you actually FILE a case in arbitration and then they sue, yes, it's a violation of FDCPA which you can then add to your claims against them in arbitration.  But you still have to file the MTC in court.

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  • 2 weeks later...

Unless they have violated any consumer laws yet, I don't like to open a JAMS case at this time.  I would wait until you have a collections or credit reporting violation you can use against them to file in JAMS.  When they respond you may find them.  I would get free copies of all 3 credit reports in the meantime and look them over very carefully to see if any inaccuracies exists.  Those can also be used to file claims against them in arbitration. 

If they sue - which they could potentially do even after you had filed in JAMS anyway - you will file a motion to compel arbitration with the court.  By using the arbitration strategy, you should be able to get this to go away for $0 if it is played right.

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Main thing, at this point, is to research your local statues and rules concerning arbitration. This varies by State. If they sue, you want to make sure you follow those rules so they can't argue that you "waived your right." For example, I believe FL is a State where an answer containing anything other than an election of arbitration is considered to be a decision to litigate in court.

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  • 5 months later...

Good morning,

So, I received a response from the attorney with a ton of paperwork and information from the original creditor as validation of the debt.  Can you please advise what would be my next, most appropriate response to this so that I can follow the steps, ultimately to arbitration, to make this go away?

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I would send a debt validation request disputing the claim before settling.  They'll send you back proof if they have it.  Check closely to ensure they didn't manufacture cc statements as alleged proof.  I've recently received similar JDB collection letter and they sent back bs for proof.  Remember if you settle with them you're still on the hook for income tax on the entire amount in dispute e.g. if you owe $10,000 and settle for $4,000, you have to pay income tax on the other $6,000.  This awareness prevented me from considering settlement as anything but a last ditch forced option.  just my opinion and I'm not an attorney and am still in dispute.  

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21 hours ago, piratesinco said:

Good morning,

So, I received a response from the attorney with a ton of paperwork and information from the original creditor as validation of the debt.  Can you please advise what would be my next, most appropriate response to this so that I can follow the steps, ultimately to arbitration, to make this go away?

It is up to you whether you want to start arbitration now or wait to see if they sue and then go through with arbitration.  Filing in JAMS now may or may not prevent them from filing a suit, there is really no way to know.  So it just depends on how you want to handle it.

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1 hour ago, piratesinco said:

They did send me all of the paperwork for validation.  Is there any benefit of filing JAMS now, or am I better off to just wait and file a motion for arbitration if/when they sue?

If this were me, I would go ahead and file the JAMS case now before they sued.  There is a chance they may just give up on this and move on without suing and won't bother you any more.  Even if this is a small 10% chance, I would give it a shot to avoid having to deal with court if possible.  Also, if they do ignore JAMS and file suit in court anyway, this gives you a solid claim to add to your JAMS case against them and give you more leverage for a resolution in your favor.  I would send no money to JAMS when filing but send a cover letter stating that you are requesting that the other party pay the consumer filing fee per the contract.  Let JAMS take it from there to bill appropriately. I would also list the JDB as the Respondent and this attorney you got the letter from as their representative on the JAMS Demand Form.

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