Need help holding off aggressive, sue-happy collections until I'm eligible for bankruptcy!

[HelpFJ]

Good afternoon- I thank you so much for your help and will try to be as succinct as possible.

1. We live in Illinois and are planning to file for Chapter 7 Bankruptcy on July 1st, 2018.  We are currently waiting for that date because my income is artificially high due to a bonus, and we are $2,000 over the median income for our family and do not want to have to go through the scrutiny of the means test.

2. Our objective is to avoid lawsuits and wage garnishments until that date: July 1st, 2018.  

3. Here is who we are dealing with and what has transpired thus far:

- Notice of Sale on December 21st in the amount of $1389.16 from Credit One to LVNV Funding.  We have NOT received a letter from them yet.
- Capital One has sent both our balances of $1976.99 and $2950.36 to 3rd party collections agencies.  We admitted nothing, but have agreed to pay $15 temporarily per month and this has satisfied them, as long as they said we call back this summer to make higher payments or discuss other options.
- Notice of Sale on January 1st, 2018 in the amount of $823.14 from Synchrony to Portfolio Recovery Associates.  We have NOT received a letter from them yet.
- Notice of sale on January 1st, 2018 in the amount of $2029.13 from Synchrony to Midland Funding LLC.  We have NOT received a letter from them yet.
- A letter from Kohn Law Firm on January 2, 2018, to collect on $1208.42 from Synchrony and Midland.  We have not yet responded, which is why we are here.

Again, we will be filing Bankruptcy due to other debts and such, but are waiting until July 1st.  We just want to avoid wage garnishment until then.  We are obviously most worried about Midland and Kohn...  We do not know what time frames they operate on or how to respond to delay them- if that's even possible.  We had heard that you can scare them away by requesting arbitration per the Synchrony contract, but do not know if that is too preemptive or if it will even work in our case.

Thank you very much for your assistance.  I really appreciate it and will follow whatever directions you give me.

Best,

FJ

[Goody_Ouchless]

25 minutes ago, HelpFJ said:

- Notice of Sale on January 1st, 2018 in the amount of $823.14 from Synchrony to Portfolio Recovery Associates.  We have NOT received a letter from them yet.
- Notice of sale on January 1st, 2018 in the amount of $2029.13 from Synchrony to Midland Funding LLC.  We have NOT received a letter from them yet.
- A letter from Kohn Law Firm on January 2, 2018, to collect on $1208.42 from Synchrony and Midland.  We have not yet responded, which is why we are here.

Synchrony arbitration clauses are very debtor-friendly, so consider those un-collectible if you play your cards right. If/when they sue, we can help you move for arbitration and Midland/PRA will drop these suits and you won't owe anything.

 

[Clydesmom]

37 minutes ago, HelpFJ said:

1. We live in Illinois and are planning to file for Chapter 7 Bankruptcy on July 1st, 2018.  We are currently waiting for that date because my income is artificially high due to a bonus, and we are $2,000 over the median income for our family and do not want to have to go through the scrutiny of the means test.

Have you consulted a BK attorney or 2?  If not you need to ASAP.

ANYONE filing Chapter 7 has to pass the means test.  There is no escaping that scrutiny.  Add to that you have to produce your tax returns for the past 2-3 years.  Waiting 6 months may not qualify you any more than you do now.  Consult a lawyer ASAP.

39 minutes ago, HelpFJ said:

We just want to avoid wage garnishment until then.  We are obviously most worried about Midland and Kohn...  We do not know what time frames they operate on or how to respond to delay them- if that's even possible. 

Chances of them suing, winning and garnishing within 6 months are low.  They will send demand for payment letters for at least 6 months to a year before suing in most cases.  Lay low and start interviewing BK firms.  If they sue, come back here for help in answering, defending, delaying or using arbitration.

[WhoCares1000]

As others have said, the ones with Synchrony are the least to worry about as you can make most JDBs abandon those debts via arbitration.

I would get the Credit ONE agreement and see if there is an arbitration clause in that one. If so, you might be able to fight this one away too.

The Capital One balances are the worrisome ones but if they are satisfied with $15/month until summer. Since the balances will probably be nearer to $6k - $7k, you would probably need to come up with $4k minimum to settle those which you would need to do because those will not disappear and they will follow into arbitration.

As others have said, you should consult with a BK attorney now to make sure your plan will work. If it won't work, you will have to come up with a non-BK plan.

[Clydesmom]

23 minutes ago, WhoCares1000 said:

I would get the Credit ONE agreement and see if there is an arbitration clause in that one. If so, you might be able to fight this one away too.

The Capital One balances are the worrisome ones but if they are satisfied with $15/month until summer. Since the balances will probably be nearer to $6k - $7k, you would probably need to come up with $4k minimum to settle those which you would need to do because those will not disappear and they will follow into arbitration.

Credit One has a carve out for small claims and since all their cards are low limit fee harvesting cards it will be small claims.  Arbitration won't be an option.

Cap1 also will not follow in.  They removed arbitration as an option from all their agreements in 2010.

 

[Harry Seaward]

2 hours ago, Clydesmom said:

Credit One has a carve out for small claims and since all their cards are low limit fee harvesting cards it will be small claims.  Arbitration won't be an option.

The problem for the card issuers/JDBs is they first have to raise a "small claims" argument if a consumer motions to compel arbitration. Second, the burden shifts to the plaintiff to prove the case was brought in a "small claims court" or "equivalent" court to whatever jurisdiction the agreement is drafted for. They can't just slap the words "small claims" in an agreement and 'wham bam thank you ma'am' the arbitration clause into oblivion. There are hoops they have to jump through to have "small claims" mean something in any particular lawsuit.

[HelpFJ]

Yeah Capital One is being very reasonably in working with me for the time being. I told them I would be paid more in the summer.

Should I send debt verification letters yet or is that going to raise alerts?

I will meet with an attorney. The only reason I'm waiting is my income drops below the state median and I'll automatically pass the means test.

Right now it's higher than normal due to a bonus, but my wife agrees with you and said that I could still be eligible to file now and not have to deal with all this waiting nonsense.

 

Also, many thanks for your help. You people are awesome and so generous with your time.

[WhoCares1000]

If you are within the 30 days where they are required to validate is requested then certainly validate. That will at least buy you a month before they start calling again. How a collector is going to act is something we cannot predict so it does not make sense to not exercise your rights. Even if they were to take you to court tomorrow, it takes 2 months minimum to get a default judgement and if you put up a defense, then it takes even longer.

[Goody_Ouchless]

11 hours ago, HelpFJ said:

Should I send debt verification letters yet or is that going to raise alerts?

I'll take a contrarian view, as the bar for verification is so low (they already more than verify with the most basic collection letter) that the only tangible effect is that is tells them that they reached the right person at the right address.

[BV80]

40 minutes ago, Goody_Ouchless said:

I'll take a contrarian view, as the bar for verification is so low (they already more than verify with the most basic collection letter) that the only tangible effect is that is tells them that they reached the right person at the right address.

An initial communication can't validate a debt.  If a consumer sends a DV request within 30 days of the initial communication, no matter what information was in that communication, a CA is still obligated to respond with another letter if it wants to continue collection activities. 

Also, no court has ruled that validation can consist of merely repeating what was in the initial communication.  In fact, several courts have specifically ruled otherwise.

The computer printouts provided to Graziano were sufficient to inform him of the amounts of his debts, the services provided, and the dates on which the debts were incurred. Summary judgment was appropriate for Harrison on this issue.  Graziano v. Harrison, 950 F.2d 107, 113 (3d Cir.1991).

The verification provision must be interpreted to provide the consumer with notice of how and when the debt was originally incurred or other sufficient notice from which the consumer could sufficiently dispute the payment obligation. This information does not have to be extensive. It should provide the date and nature of the transaction that led to the debt, such as a purchase on a particular date, a missed rental payment for a specific month, a fee for a particular service provided at a specified time, or a fine for a particular offense assessed on a certain date. Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC, 758 F.3d 777, 786 (6th Cir. 2014).

Brown v. Apothaker & Associates, PC - MD Pennsylvania, 2011

"To verify is not merely to state the creditor identity and the amount owed. To verify is to show the creditor's grounds for the claim, to support the claim with an explanation for the assertion of the existence of the debt. It does not accomplish an affirmation of the truth of the debt to say that the creditor says that its claim is a true claim. Rather, the truth of the claim is verified by making an adequate showing of the factual basis for the claim."

Simply repeating second-or third-hand information in the debt collector's file . . . is insufficient under the statute.  Semper v. JBC Legal Group, No. C04-2240L, 2005 WL 2172377, at *14 (W.D. Wash. Sept. 6, 2005).

We often cite Chaudhry v. Gallerizzo (4th Circuit Court of Appeals) in order to show how little is required to validate a debt:  "[V]erification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt."

However, the 4th Circuit Court did not say that simply repeating the name of the OC and amount owed is sufficient validation.  The court's ruling was based upon what was provided to the plaintiff.  Here's a statement by the court.

On Count III, the district court held that Gallerizzo was not "required to provide the degree of detail that was contained in the time sheets" and that Defendants' actions in redacting the legal fees was proper. The court ruled that "[v]erification only requires a debt collector to confirm with his client that a particular amount is actually being claimed, not to vouch for the validity of the underlying debt." For the same reasons stated above in support of the court's ruling on Count II, we agree with the court's determination on Count III.

Notice the 4th Circuit agreed with the lower court that "a debt collector must confirm with his client that a particular amount is actually being claimed".   Merely repeating an amount in a response doesn't show that the debt collector has confirmed the amount with his client. 

Now, in the event a JDB directly contacts a consumer, there is no "client".   But note that should not be construed as to determine that no confirmation of any kind is required to show a particular amount.  

Think about it.  A JDB sends you an initial communication for a $1000 debt.  You DV and the response merely repeats the information in the first communication.  Well, what if the debt is not $1000?   What if it's only $850?   You might say that they've added interest and fees, but if what if they're not allowed to do so?

1692g(a) requires that a debt collector provide the name of the OC and the amount owed.  If repeating that information constituted validation, why would the FDCPA allow for validation requests in 1692g(b)?   That alone shows that the law requires more than mere repetition.   The law requires more than "because we say so".

As an added note, one must determine how or if his courts have ruled on JDBs as debt collectors since the SCOTUS ruling in Henson v. Santander Consumer.

 

 

[Harry Seaward]

7 hours ago, BV80 said:

The law requires more than "because we say so".

The only practical way a consumer will ever know whether or not any particular validation is "say so" vs. going back to the source is if the consumer sues the debt collector and the debt collector is honest during discovery and admits they didn't actually go back to the source.

For a consumer that isn't in 'FDCPA entrapment' mode from the get-go, I personally think the "30-day validation window" is a more useful benefit to sending a DV. It keeps the honest debt collectors from doing anything for those 30 days, and sets up a bit of negotiating leverage against the dishonest ones.

[fisthardcheese]

You can make all of that go away for $0 except for the Cap1 accounts.

Arbitration is your ticket.

[WhoCares1000]

17 hours ago, fisthardcheese said:

You can make all of that go away for $0 except for the Cap1 accounts.

Arbitration is your ticket.

The issue is, the OP has mentioned other debts which are not listed here. For the accounts other than Cap 1 however, arb would be great way to hold them back until the OP can either save enough funds to settle with Cap 1 and the other debts or they can declare BK which they might have to anyways.

[BV80]

@HelpFJ

Are the debts mentioned in your first post the only ones you have?

[fisthardcheese]

7 hours ago, WhoCares1000 said:

The issue is, the OP has mentioned other debts which are not listed here. For the accounts other than Cap 1 however, arb would be great way to hold them back until the OP can either save enough funds to settle with Cap 1 and the other debts or they can declare BK which they might have to anyways.

I can only go by the debts they listed, however, by employing an offensive arbitration strategy there is always the potential for collecting settlement checks that can then in turn be used to pay off a lump sum settlement with Cap1.  That's how I erased all my debt a few years ago - with enough left over to put a down payment on a new house to boot.

[WhoCares1000]

3 hours ago, fisthardcheese said:

I can only go by the debts they listed, however, by employing an offensive arbitration strategy there is always the potential for collecting settlement checks that can then in turn be used to pay off a lump sum settlement with Cap1.  That's how I erased all my debt a few years ago - with enough left over to put a down payment on a new house to boot.

That might be true in your case but I remember the OP stating other debts than the ones listed. That could be anything from $100 in library fines to a collector aggressively going after them for a underwater foreclosure. If toward the later side, then BK might not be avoidable regardless of whether the OP does arb or not. The purpose of arb in this case would be to buy time to do the BK.