Sued by Velocity - Does this clause mean I can't ask for arbitration?

[shadow99]

I received a summons/Warrant in Debt in the mail today (first class, not certified) from an attorney's office representing Velocity for an old Prosper loan.

It gives a court date near the end of March, dates the summons as 12/23/2019 (today is 1/4/2020)), and has a box checked that I must appear at the court date if I plan to dispute to set a trial date.

It has a stamp on it that says a private service company will perform the service.

I checked the Virginia Courts information and the case is not yet on the docket for that date.

After pulling up my contract and reading the arbitration section carefully, I see the following. Does this mean I can't select arbitration?

(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.

 

1. Who is the named plaintiff in the suit?  Velocity Investments LLC

2. What is the name of the law firm handling the suit? (should be listed at the top of the complaint.)  Protas, Spivok & Collins, LLC

3. How much are you being sued for? 2834.73

4. Who is the original creditor? (if not the Plaintiff) Prosper / Web Bank

5. How do you know you are being sued? (You were served, right?) first-class mail so far

6. How were you served? (Mail, In person, Notice on door) mail

7. Was the service legal as required by your state? not yet

Process Service Requirements by State - Summons Complaint

8. What was your correspondence (if any) with the people suing you before you think you were being sued? They have sent mail. I have not spoken to anyone. I sent a letter asking for validation with no response.

9. What state and county do you live in?  Chesterfield County, Virginia

10. When is the last time you paid on this account? (looking to establish if you are outside of the statute of limitations) August 2018

11. What is the SOL on the debt? To find out: 6 yrs

Statute of Limitations on Debts

12. What is the status of your case? Suit served? Motions filed? You can find this by a) calling the court or b) looking it up online (many states have this information posted - when you find the online court site, search by case number or your name).  No status yet.

13. Have you disputed the debt with the credit bureaus (both the original creditor and the collection agency?)No

14. Did you request debt validation before the suit was filed? Note: if you haven't sent a debt validation request, don't bother doing this now - it's too late. Yes

15. How long do you have to respond to the suit? Until the March court date. (This should be in your paperwork).

In 99% of the cases, they will require you to answer the summons, and each point they are claiming. We need to know what the "charges" are. Please post what they are claiming.

Only that I owe $2834.73

 

Did you receive an interrogatory (questionnaire) regarding the lawsuit?  No.

Here is an example of what the summons/complaint may look like: Sued by a Debt Collector - Learn How to Fight Debt Lawsuits

16. What evidence did they send with the summons? An affidavit? Statements from the OC? Contract? List anything else they attached as exhibits. Nothing

 

 

[shadow99]

I reread and think I understand.

(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 [WebBank] agree
not to invoke your [WebBank's] right to elect arbitration of an individual Claim filed by me [borrower] in a small claims or similar court (if any), so long as the Claim is
pending on an individual basis only in such court.

Any other advice would be very welcome!

I'm sure I won't be able to avoid service. Will processing companies let you just come pick up the paperwork?

[Harry Seaward]

1 hour ago, shadow99 said:

Will processing companies let you just come pick up the paperwork?

Probably not, but you can file a waiver of service with the court.  But if the case is not even on the docket yet, what's the rush?  It isn't very common, but cases have been dismissed due to failure to serve.

FYI, your interpretation of the arbitration agreement is correct.  They are saying they won't push for arbitration if a case is filed in small claims court, but it doesn't prevent you from using arbitration against them in a small claims lawsuit.  It's a moot point in your case, though, because the lawsuit against you couldn't have been filed in Small Claims court (attorneys are not allowed in VA small claims court).

[shadow99]

Thank you for your response, and that's a very good point. The paperwork clearly states Attorney for the Plaintiffs.

I found this under Virginia Small Claims Court Procedure:

A corporate or partnership plaintiff or defendant may be represented by an owner, a general partner, an officer or an employee of that corporation or partnership. An attorney may serve in this capacity if he is appearing pro se, but he may not serve in a representative capacity “unless he is doing so for the sole purpose of removing the case to the general district court.”

Could it be that this isn't small claims court even though it's for less than $5000?

What type of person normally represents a debt collector in small claims court?

If they list an attorney, does the attorney have to show up? Or does it just look scary then a normal employee shows up at court. I guess there's no way to tell until I get there.

Another question. If chain of ownership comes into question, the paperwork says Velocity assignee of Prosper assignee of WebBank. Is that correct for one of these collectors who purchases bad debt? 

The date is weird on the warrant in debt. They typed the hearing date as O3/19/2O, 09:00 AM on the two places it's entered. The claim date is December, 23, 2019. They can't be so careless that they used the letter O and the number 0 so consistently. Is this a loophole for them if they never send the paperwork to court? There's no date in "date issued" or a clerk/magistrate signature. Just a return date and time. Maybe just a tactic to get me to call?

 

[Harry Seaward]

1 hour ago, shadow99 said:

Could it be that this isn't small claims court even though it's for less than $5000?

Yes. It can't legally be small claims court if they have a lawyer representing them.

1 hour ago, shadow99 said:

What type of person normally represents a debt collector in small claims court?

According to the rule you posted, it would have to be the owner, a partner, officer, or employee. I've never seen that happen. These guys use attorneys. The summons they sent you should have the name of who is representing them in court. I'll bet anything it's an attorney. 

1 hour ago, shadow99 said:

Another question. If chain of ownership comes into question, the paperwork says Velocity assignee of Prosper assignee of WebBank. Is that correct for one of these collectors who purchases bad debt? 

It's not uncommon for the debt to change hands multiple times.

1 hour ago, shadow99 said:

There's no date in "date issued" or a clerk/magistrate signature. Just a return date and time. Maybe just a tactic to get me to call?

Possibly. It's strange that they can send out that warrant without having a case filed with the court. You can call the court on Monday and see if they have anything filed, but if it were me, I'd do nothing and just wait. 

[shadow99]

7 minutes ago, Harry Seaward said:

Possibly. It's strange that they can send out that warrant without having a case filed with the court. You can call the court on Monday and see if they have anything filed, but if it were me, I'd do nothing and just wait. 

Thanks - I'm searching through my mountain of paperwork for where I sent Velocity a certified letter asking for proof of the debt along with the documentation back from the post office.

So far, I've found an earlier letter from this lawyer's office stating they are representing Velocity and again giving the 30 days to dispute verbiage. Am I supposed to ask both of them to prove the debt? Or was this Velocity's way of saying they didn't try to collect again without answering my letter?

I'm full of questions, but I think your advice to be patient and wait is sound.

[BV80]

8 minutes ago, shadow99 said:

So far, I've found an earlier letter from this lawyer's office stating they are representing Velocity and again giving the 30 days to dispute verbiage. Am I supposed to ask both of them to prove the debt? Or was this Velocity's way of saying they didn't try to collect again without answering my letter?

Did you send your validation request within 30 days of receiving that letter that contained the 30 days to dispute verbiage?

[shadow99]

4 minutes ago, BV80 said:

Did you send your validation request within 30 days of receiving that letter that contained the 30 days to dispute verbiage?

On the first letter from Velocity, yes via certified mail and received a return receipt. For the letter from the lawyer representing Velocity nearly a year later, no, I did not.

I will have to find my proof that I did that though. I had it all in a large brown envelope in my laptop bag, but it's not there now. It might be on or in my desk at work.

[BV80]

10 minutes ago, shadow99 said:

On the first letter from Velocity, yes via certified mail and received a return receipt. For the letter from the lawyer representing Velocity nearly a year later, no, I did not.

I will have to find my proof that I did that though. I had it all in a large brown envelope in my laptop bag, but it's not there now. It might be on or in my desk at work.

Did Velocity send you a response to your request?  

[shadow99]

34 minutes ago, BV80 said:

Did Velocity send you a response to your request?  

They did not.

[BV80]

Just now, shadow99 said:

They did not.

Well, if you can prove it, you have an FDCPA violation against them for filing suit without validating the debt.  The downside is that they can claim they did send validation.  

[shadow99]

23 minutes ago, BV80 said:

Well, if you can prove it, you have an FDCPA violation against them for filing suit without validating the debt.  The downside is that they can claim they did send validation.  

Thank you. I guess it's good leverage to have if I can find the paperwork. It's probably in my desk at work.

 

[Harry Seaward]

Before you go to far down the court path, you should look at using arbitration, considering you're being sued by a debt buyer. 

https://www.creditinfocenter.com/community/topic/329436-arbitration-overview-and-strategy-2018-most-up-to-date-info/

 

[shadow99]

44 minutes ago, Harry Seaward said:

Before you go to far down the court path, you should look at using arbitration, considering you're being sued by a debt buyer. 

https://www.creditinfocenter.com/community/topic/329436-arbitration-overview-and-strategy-2018-most-up-to-date-info/

 

Thank you. I keep reminding myself of that. I've read a lot of that thread. It has excellent information.

When I get closer, I'm sure I'll have more questions about the technical details of preparing for court.

[Harry Seaward]

The thing you need to know is that many jurisdictions will find that you have waived your right to arbitration by participating in court litigation. If you plan to use arbitration, you're going to want to minimize the amount of stuff you do in court. 

[shadow99]

22 minutes ago, Harry Seaward said:

The thing you need to know is that many jurisdictions will find that you have waived your right to arbitration by participating in court litigation. If you plan to use arbitration, you're going to want to minimize the amount of stuff you do in court. 

I've read the document I received about a dozen times. There's no instructions to respond, nothing to deny - just instructions to show up at the return date if I want to dispute the claim so that a trial can be scheduled. This is simply a check box. I don't think I could participate very much in court litigation even if I wanted to at this point.

I plan to just show up with a motion to compel arbitration so I'm asking for that from the start.

The more I look at this, the more I think it's not actually filed. There's nothing in the clerk's signature box and no issue date. Maybe they mailed it in, but you'd think with a March court date, they'd just wait to get their copies back before mailing me anything.Of course, they still have plenty of time to file it for real and still get that March court date. 

Is that legal? to send someone paperwork that looks like a lawsuit but never file it?

[Harry Seaward]

I'm not from VA so I'm not positive, but from what i can tell, they have to serve you in person (not mail) in order for the service to be legal.

[shadow99]

19 hours ago, Harry Seaward said:

I'm not from VA so I'm not positive, but from what i can tell, they have to serve you in person (not mail) in order for the service to be legal.

In VA, they have to either serve you in person, give the paperwork to someone over 16 at your home, or post it on your door.

If they can't find you, I think it's acceptable to serve at whatever address is tied to your driver's license at the DMV since you're legally supposed to change that within so many weeks of moving.

If you don't have a driver's license and they can't find you, I guess that's when they run into a problem.

Either they have the sheriff's office serve the paperwork or they hire a private service company. They've stamped the paperwork stating private service and the companies name.

I don't think they're in a hurry to serve me - I think they have the date out so far to see if they can get me to contact them since I've ignored all their phone calls. But, I'm sure they'll eventually file it and serve me. They haven't sued anyone in my county for close to a year, so I'm guessing they have a stack waiting.

[Harry Seaward]

Honestly. I would not contact them. They may not bother. 

[shadow99]

Just now, Harry Seaward said:

Honestly. I would not contact them. They may not bother. 

I'm not going to contact them - I'll just sit tight for now and read up on arbitration, defense strategies, etc.

I did read a good one the other day from a paper a professor wrote about unjust enrichment and litigation for profit.

Basically, it stated that the junk debt buyers shouldn't be awarded much more than they paid for the debt in court. Otherwise, it encourages litigation for profit, which I guess is not good.

He was also talking about how the bill of sale shown in court should show how much the debt was purchased for, etc.

It was an old paper, intended for defense attorneys, but very interesting. Just tucking it away in case I have to go to court and my motion for arbitration is denied/ignored. I have no idea if those ideas hold water or not.

 

 

[Harry Seaward]

47 minutes ago, shadow99 said:

Basically, it stated that the junk debt buyers shouldn't be awarded much more than they paid for the debt in court.

While i don't disagree with this in principal (for JDBs), the fact is that what they do is legal in every jurisdiction in the US. It's been litigated numerous times and every time, appellate courts have ruled that a successor in interest "steps into the shoes" of the predecessor. They inherit all rights and responsibilities that were afforded to the original owner of the debt. 

That's not to say there aren't 'rogue' courts that go against the grain from time to time, but if your court happened to do so, and velocity were to appeal it, the your court's ruling would get reversed in Velocity's favor.

[WhoCares1000]

First off, don't worry about any supposed games you can play in court to win. A law professor saying something in a paper is not the same thing as an actual court ruling.

In any case, I would wait for service. If you know when the court date is, get your MTC ready to file along with an answer stating that the court lacks jurisdiction due to the arbitration clause in the contract. If they don't serve you, show up in court anyways on the day they say and inform the court that you were not served but are willing to file your papers that day.

Also, once you get the approval for arbitration, you can include the FDCPA violation as part of your arbitration claim. It will make it more likely that Velocity will want a deal to make this "go away." @fisthardcheese can help you with that.

[Clydesmom]

1 hour ago, shadow99 said:

It was an old paper,

Based on what you posted my educated guess is it is from 2008 or earlier.  Those tactics used to work prior to the digital era.  Back then JDBs didn't buy the supporting documents only the spreadsheet of the debts. 

1 hour ago, shadow99 said:

He was also talking about how the bill of sale shown in court should show how much the debt was purchased for, etc.

That has never been true.  When bad debts are bought and sold it is for a lump sum for a pool of accounts not in a purchase price for each account.  The total pooled amount when divided by the number of accounts purchased  yields and approximate price per account but not actual per account price.

It doesn't matter because under basic contract law the JDB gets all rights and responsibilities of the creditor they purchased it from.  They can legally sue you for the full value of the account as provided under the contract you entered when you opened the account.

1 hour ago, shadow99 said:

Basically, it stated that the junk debt buyers shouldn't be awarded much more than they paid for the debt in court. Otherwise, it encourages litigation for profit, which I guess is not good.

If you take out a credit card with AMEX or Discover and default and they sue you themselves and prevail they would be awarded their costs and post judgment interest which could amount to a profit.  That is legal.  After all they charge you interest on the credit you use which is doing business for a profit.

The business model works only because consumers default.  The JDBs rely on the 95% default judgment rate.  Walking away from the 2% of the consumers who defend the action or having to actually litigate on the other 3% is offset by the 95%.

1 hour ago, shadow99 said:

I have no idea if those ideas hold water or not.

They don't anymore.  Focus on arbitration.  We have enough anecdotal evidence they will fold when faced with an approved MTC.

[shadow99]

Thanks to both of you guys. Arbitration is the plan.

I'll update the post if and when I get served.

[shadow99]

1 hour ago, WhoCares1000 said:

 If they don't serve you, show up in court anyways on the day they say and inform the court that you were not served but are willing to file your papers that day.

What if they don't file that paperwork with the court before the court date?

Is it a violation of something to only pretend you're suing someone with official-looking paperwork?

I realize there's a slim chance of that happening, but the document doesn't look 100% complete and it's not on the docket yet.