The Original Creditor
You respond to a mailbox offer, internet ad, solicitation at school or work for a credit card that, based on the information sent you are led to believe their offer is for a low interest rate based on your good credit rating. The ad makes it real simple, just sign the card, include your social security number and a new credit card is on the way, ready to solve your cash flow problems, while giving a line of credit to meet your future monetary needs. It’s simple, easy and how can you pass up that fantastic low rate, so you sign and wait.
A week or two later the envelope shows up with your new credit card. Inside is information about your credit limit (oh my, it’s higher than I thought, I must have good credit) and the sticker urging you to call the 800# to activate the account. What you may not be paying close attention to is that cardholder’s agreement that is included with your card, you can tell which document it is because the font is real tiny, many may need to magnify it in order to read, but it’s the rules that govern that credit card and every item, detail figure, percentage, dollar amount is highly scrutinized by the card issuer so that it favors them in every respect. You of course are still elated at the card and how easy it was to activate the card, didn’t even talk to a real human, all done by computer.
The very first time you charged on that card, the agreement that accompanied it kicked in, obligating you to the terms and conditions that you likely never read, or if you did, gave up because you had no clue what they meant by all those confusing terms and statements. You quickly realized this was done purposely so you could not understand it, don’t fret, many Harvard educators were asked to explain a credit card agreement and they too gave up, citing the deliberate confusion contained in it.
Now you are ‘on the hook’ for whatever they want to do to you, especially my favorite line that reads: “We can change any terms on this agreement at anytime without notice” or the SCREW YOU clause as it is referred to. If that’s not bad enough, each time your monthly statement is mailed, it contains ‘stuffers’ which are addendums to your cardholder’s agreement that they did not want you to see when you applied for the card, so they waited until you were already indebted to you to change the terms that made it more costly to you and profitable to them. For example; most cards only offer a 25 (some at 20) day billing cycle NOT 30 days as many consumers think, also, if your payment is not recorded into their system by a certain hour of the due date, you will be assessed a late fee.
Late fees and over-limit fees are by far the single biggest profit center for credit cards. Those fees have now gone as high as $43.00 on some credit cards, with the average between $35.00 & $39.00 by most major issuers. Credit card issuers rake in more than $4 BILLION annually on late and over-limit fees, which is why you should pay close attention to your payment due dates. Not only are they expensive, late fees could trigger a ‘universal default’ whereby other card issuers can raise your rates to their now average rate of 33.99% a.p.r, take away any reward points you may have accumulated and decrease your credit line in one move. This is all purposely designed to increase their bottom line at your expense and if you think they care, guess again. This all about money, why would they care about you and your situation, no matter how dire the circumstances.
If you miss the due dates on three payments, they will shut your card off, declare it in default and make demand for payment in full. Your phone numbers will be placed on an auto-dialer where a dozen or more calls a day is considered normal for them to get you to pay. Thy will call you at home, where you work, your family, neighbors and anyone else they think may embarrass you into sending them payments. If you think they will offer you a hardship program, guess again, this is about money and the faster those fees and interest rates add up, the more profit they make. Your balance could balloon by 50% or more in the 180 days allowed by federal law to collect before that account is charged to profit and loss (P&L) where they take a hefty bottom line write off. You must never lose site of the fact that the system is deigned to screw you out of a large amount of money that favors the card issuer at each and every step. Their collectors will use any trick they can think of to get you to send them money including pulling your credit reports o see if there is room on another card, borrowing from relatives to placing another mortgage on your property. Remember, the name of the game is money; they don’t care about you or your circumstances.
If 180 days passes and no payments are made, federal law mandates that the accounts be charged off to profit and loss, that fact is reported to all three credit bureaus as an R-9 Rating (the worse one), then the accounts are turned over to collections. At this point the original creditor will usually stop all contact with you as their agreement with the collector is to pay them a commission of up to 33% to try and get the money.
It is VERY important that you have a record of the charge off date or ‘date of last activity’ as reported to the credit bureaus by the original creditor, so as to legally ascertain when your state statutes kick in. The best way to legally document this is by obtaining a copy of your credit reports that denote this fact, which could become an important document in future disputes or legal proceedings.
The next stop is the debt collector….
the term debt collector conjures up images ranging from single moms, college students, and dedicated professionals to conmen who are one step from a jail cell, out to fleece you of your money. Anyone who chooses to collect debts for a living has to be desperate for a job or has made a conscious decision to make money at the misery of others. The debt collector is now among the most hated professions in America. Their reputation pegs them as rude, inconsiderate, obnoxious, and unprofessional. Many routinely break the law in order to line their pockets. While there are both good and bad agencies operating across the country, the reputation of the lawbreakers paints the entire industry, deserved or not.
The American Collectors Association (ACA), Minneapolis, MN represents the debt collection industry. See:
www.acainternational.org They claim debt collectors returned $39.3 billion to the US economy in 2005
(Source: "Value of Third–Party Debt Collection to the U.S. Economy: Survey and Analysis," PricewaterhouseCoopers, June 2006.)
The ACA once enjoyed more credibility in its design and mission; today they appear to have concentrated primarily on inflating their numbers by recruitment rather than debt collections ethics and practice. The ACA appears to have shifted their priorities. At one time they performed extensive back ground checks on prospective members, ran their credit, visited their operations to confirm claims, asked for verifiable references, seeking only members who were credible and honest. They now appear to be doing the opposite, allowing anyone who can afford the dues to join. We uncovered several instances where debt collectors were admitted to the ACA who have felony convictions for drugs, spousal abuse and other crimes. In turn, the credit bureaus (Experian, Equifax and Trans Union) allow these same convicted felons not only access to your most personal information, but the ability to report information into their files. Remember, it’s all about the money!
Debt collectors are governed by a federal law called the Fair Debt Collection Practices Act (FDCPA) which controls their activities. (There is another law governing credit bureau reporting we will discuss in detail.) The FDCPA states what a collector may or may not due, read about them on our site at: http://budhibbs.com/debt_collector.htm
It's a matter of pure economics: Debt collectors who break the law make more money than those who do not. Fear is the universal tool used the debt collector to separate consumers from their money and if breaking the law means a bigger paycheck, greed overrides morality. Collectors are placed on commissions averaging about 20% of what they collect based on set goals. Reward is a fat pay check; failure means another job hunt. Collectors in such hot areas as Buffalo, NY, Atlanta, GA, Jacksonville, FL and Houston, TX can push the law past the limit due to the number of jobs available. Threats of pending legal actions are the most common, followed by contacting family and work place, which include constant telephone harassment that go a long way in making that fat pay check.
These are the types of debt collectors that will confront you:
Agency Collectors, who work for organizations considered professional, belong to and follow ACA standards, are trained in FDCPA procedures, have the requisite licensing and bonding requirements mandated by various state laws, treat their employees, clients and especially the consumers they collect from with respect and professionalism. Most have in-house compliance experts, attorneys and managers who recognize and defuse situations before they get out of hand. They are familiar with both debt collection and credit reporting procedures, are quick to respond to problems, have procedures in place to handle problems and enjoy the fruits of their work and reputation.
The other is the fast talking, sleazy conman, out to fleece you of every cent they can, under threat of litigation, imprisonment, third party disclosure and any other illegal method they can think of to instill fear in the consumer. The collection industry rags me constantly about portraying this image in the media as opposed to those who were mentioned previously and while some of their criticism is valid, self regulating organizations such as ACA ignore the bad ones, giving the entire industry a black eye. So until more productive steps are taken to clean them up, I feel justified exposing the industry with the image they have painted.
From the ‘credible’ agency we sink into the abyss of the debt buyer, collecting on accounts purchased for pennies. Known by such names as bottom feeders, junk debt buyers, vultures and parasites, these are the lowest end of the industry. Here is where you will find violation of law an art form. It’s not just lawlessness; they descend to depths of depravity that give everyone the shivers. Over the years, I have worked with network news and law enforcement on organizations featured on this site and. Some of the more bizarre scams we have come across include:
A Houston, TX bottom feeder using ‘pretexting’ to collect debts. They use a phone spoof program whereby the debtor gets a call, on the caller id the name reads; “Dallas County Sheriff” underneath is the telephone number belonging to them. The caller states a warrant has been issued and the only way the debtor can avoid being arrested is to wire transfer full payment to the debt collector that day. This situation caught the attention of the FBI who is going after the collectors.
Another was a phone call from a Buffalo, NY collector telling a neighbor of a debtor to hurry over and get her kids because the police were on their way to arrest her for credit card fraud. The collector then called and repeated the same threat to the terrified mother. Unknown to the collector was the neighbor had left her recorder on and everything was documented. The attorney representing the terrorized young mother sent an initial demand for settlement to the Buffalo agency for a settlement that exceeded six figures, which eventually settled out of court for less. The collector was fired; the collection organization has revamped its collection procedures.
Another Buffalo, NY lawyer who rents out his license for a commission found himself deep in litigation in Birmingham, AL based on threats made by the collectors who were renting his name. This attorney had a terrible reputation as a litigator before he rented out his license, so when he found himself paying sky high defense bills to an AL law firm (he still thinks they fly the Dixie flag there) he decided to fire them and defend the case himself. I heard he took out another mortgage to payoff the Plaintiffs who came after him, a hard lesson learned for being stupid, but we know the majority of lawyers who defend bottom feeders have the same problem. Most can be defeated just because they don’t have clue of what they are doing, many are lazy beyond belief, and most dumb fits a vast majority of them.
We tell you these stories not to alarm you, but to make you aware of their tactics in collection and the levels to which they will stoop. Next, we'lll discuss what do when you are sued or an arbitration claim is filed.
It is important that you tape any debt collector phone calls, where legal. A tape recording can not only make a debt go away, it can be used to clear it from your credit files, pay your attorney and even put money in your pocket. The benefits of taping will almost always play in your favor, so give that option special time and thought.
A question often asked of me in interviews is what mistakes do consumers make in dealing with the debt collector, here is what you need to know:
#1 Mistake: Giving a debt collector your banking or credit card information.
If you tell a collector to take $50 per month out of your account and on payday he empties your account of your entire balance, you are screwed. Why? Because the collector is going to say you gave permission and you will have hell trying to get a lawyer interested in helping you, so NEVER risk your money with a debt collector.
#2 Mistake: Not showing up in court, or answering a court suit, when served.
You automatically receive a default judgment (you lose by default). It goes on your record for seven years as a judgment. It will continue to accrue interest and follow you for at least an additional ten years. Many bottom feeder attorneys never show up in court because they know you likely will not, so it’s an easy payday for them, they've done their part by submitting the paperwork and truthfully, the court probably knows them because of their frequency. They've never heard of you. The judge thinks, the consumer doesn't care, why should I?
NEVER ignore a lawsuit; we can help you with referrals to local consumer law professionals. Don’t tell me you can’t afford a lawyer, you have no idea how easy it is to hire one, just contact me, I’ll explain.
#3 Mistake: Sending money to a debt collector when you have no paperwork showing who they are, what you owe, how they arrived at that figure. Many will say they were intimidated, in fear, panicked, etc, and that is understandable; however it is a dumb thing to do. If you feel threatened, contact us for assistance, it will keep your money safe in your bank account NOT with the collector.
#4 Mistake: Signing an agreement or legal document without consulting with an attorney. Don't do it, even if you are threatened. Again, get in touch with us; you have options, let’s discuss them.
#5 Mistake: Failure to dispute the validity of the debt and dispute any credit bureau reporting. These are important steps in protecting your rights, invoking the federal laws that protect you and making these bottom feeders back up their claims. We can offer you Dispute Validation Forms, credit disputing tips and access to the brightest consumer law professionals in the country. Debt collectors have to abide by the law, make them realize you know your rights, make them work for it.
As stated earlier, far too many consumers who are sued by a debt collector never respond to the suit, only to realize that a default judgment was rendered against them and the price they owe can double, triple and follow them for an additional ten years or more. The same is true with an arbitration claim; it too is a proceeding that will go against you unless you take steps to insure your rights are protected under the law.
When a lawsuit is filed in a court for a consumer debt, that suit must have valid information that details the debt can legally be litigated and the documents accompanying it must be accurate in every detail. This means the pleadings made and affidavits included must be truthful and meet the legal requirements of your state law. In most cases a suit for a consumer debt contains pleadings that detail the history of the account, a statement must include testimony that you are not currently on active military duty (where many lie) an affidavit usually is included where statements are made by someone who is supposed to have first-hand knowledge of the events. Those statements are then sworn to under penalty of perjury (a felony) and notarized under the signature of the affiant.
If all the people who ever lied on a consumer debt court filing were placed in prison for their lies, we would be having a serious increase in our prison population. I have seen debt filing documents where telling the truth was never an item, I have seen court documents where owners, presidents, vice presidents, media coordinators, lawyers, secretaries and many, many others have lied on documents. From Harvey Denis of First American Investments, Buffalo, NY, to Unifund, to NCO, to Wolpoff & Abramson, to Shekinah, to LVNV Funding & Resurgent Services, from Asset Acceptance to Fredrick J. Hanna, Citicorp and on and on they all seem to lie in court filings, pleadings and affidavits. They get away with it because you don’t hold them accountable. But once you learn they can be beaten the game changes. Just because they swear under oath does NOT mean it is truthful. LVNV Funding, previously known as Sherman Acquisitions and Alegis changed their court forms several times when it was discovered how many lies were being plead in their filings. One simple area to examine is when a collector claims in their pleadings that you are not currently a member of the military, yet only one organization I am aware of uses the required DOD form to prove the statement is truthful. Almost anytime a consumer attorney gets involved with a debt buyer on a court claim and they are made to legally back up their claims, the cases are dismissed. Why? Because you can’t go into court with lies, bogus documents and phony pleadings.
The same holds true with arbitration. Wolpoff & Abramson, Mann-Bracken, Collect America, Midland Funding, NCO and others have filed hundreds of thousands of arbitration claims with the National Arbitration Forum (NAF) using bogus forms they claim are proof you are liable to a Binding Mandatory Arbitration (BMA) clause in a consumer credit card agreement. The truth is that NAF is a scam, making millions based on bogus, illegal proceedings that insult the American judicial system. Are you aware that the arbitrators who rule against you are being paid $250/hour to ‘rubber stamp’ awards so they can earn extra money? Most arbitration claims are designed to favor the debt collectors who pay millions to get the awards; it is an unjust, corrupt and one sided system that will soon receive unprecedented publicity from top to bottom. If you are involved in arbitration, threatened with it, or have had a claim filed against you, get in touch with us, we have information and assistance available.
There is a way to deal with these problems; we are here to arm you with information and assistance to level the field. I am aware of thousands of court cases thrown out because consumers decided to fight back and you have already taken your first steps by reading this. Let me share with you some deeply moving words spoken by a consumer attorney that I admire for his honesty, integrity and professional litigation skills. He was facing a debt buyer in a Texas courtroom in front of a judge who had a solid reputation for knowing the law and being fair. At stake were more than 60 cases on the docket, which the judge was either going to proceed with or dismiss all of them. In arguing their claims and counter claims this valiant attorney stood in front of the judge and uttered these words that descended from our Constitution:
“YOUR HONOR, THIS IS NOT ABOUT WHETHER OR NOT MY
CLIENT OWES THIS DEBT, THIS IS ABOUT THE RULE OF LAW!”
(more than 60 cases were dismissed, they no longer file cases in Texas courts)
Today, consumers are being inundated with demands for payments on accounts from what the industry refers to as ‘Bottom-Feeders, Scavengers, Parasites, Debt Buyers and Blood Suckers.” These are debt collectors who purchase debts for pennies, then hope they can intimidate you to pay them, usually at an inflated price.
Some of the worst names in the ‘bottom-feeder’ debt buying/collecting business based on my experiences are:
Arrow Financial, Asset Acceptance, Calvary Investments, Collect America (CACH,CACV), Empire Recovery, Giove Law Office, First American Investment, Great Seneca Financial, Hanna Law Office, Hilco Receivables, Hosto & Buchan, LVNV Funding, Mann-Bracken, Midland Credit Management, National Arbitration Forum, NCO Financial, Palisades Collection, Performance Capital Management, Unifraud, Wolpoff & Abramson to name a few.
These entrepreneurs came to life in the mid 90’s and have
exploded on the scene ever since. They buy debts or portfolios from original
creditors, or used portfolios with lesser value from brokers. These portfolios
contain defaulted credit card, automotive, unpaid medical, utility, student
loans and other loans that went unpaid for a variety of reasons. The average
price they pay is 2-3¢ on the dollar and gamble they can convert them into a
profit. Many portfolios are outdated, meaning they are past the statute of
limitations for collecting in most states (usually about four years), or they
are in statute, meaning they can collect under your state laws. The fact that
they now own the debts does not always mean they can legally collect on them or
file lawsuits. There are many factors that must be evaluated and laws to adhere
to that include your state's statute of limitations, bonding and licensing
requirements and other criteria. We will attempt to explore some of the facts
and share experiences of dealing with these demons of the collection industry.
The bottom feeders are considered the low-lives of the debt
collection industry because of the trouble they cause and the bad reputations
they have aptly earned. Unfortunately the debt collectors who try to play by the
rules suffer the social stigma earned by these parasites. The collectors
bottom feeders hire to accomplish this are the industry cast offs. Most are seasoned veterans, whose battle ribbons include a long list
of former employers, former girlfriends, unpaid child support, used cars, bad
credit, a Friday meeting with a probation officer and a drug habit. In Buffalo,
NY some actually show up for work with ankle bracelets on. In Huntington Beach,
CA drug tests would create an unemployment problem. These are not your normal
office workers; most lack basic business ethics, are under educated, and to them a
day of yelling and screaming is considered normal. Their world is one of high
pressure all day, every day, living paycheck to paycheck and the allure of making
a fast buck on the next phone call. They work on a commission and are desperate
to make their next paycheck at your expense, with little or no regard for the
law or your rights. They scream, yell, threaten, intimidate and impersonate. Their motto is ‘WHATEVER IT TAKES’ as they have only one goal;
SEPARATING YOU
FROM YOUR MONEY!
Bottom feeder debt collectors are under incredible pressure to produce, their jobs depend on it. They are given weekly, monthly quotas to hit or they are fired once again. Most are given about 20% of what they collect, so the law is secondary to their own needs, hence the abuse they bring upon unsuspecting consumers. When you place people of desperation in a situation where they have access to your most personal information and turn up the pressure on them, they will do most anything to separate you from your money. What works for these con artists? They use the standard fare of lies, intimidation, threats and of course, extortion. They always want you to believe the deal MUST be done immediately, that you face grave problems of incalculable magnitudes if you fail to comply. Threats of a lawsuit, incarceration, wage garnishment, exposure, and seizure of assets are what bottom feeders use to extort monies from you. Reacting to that fear is what keeps these con men in business and your wallet empty. These are desperate people, their needs are paramount to your rights, they are like a drug user in need of a fix, they need it now, at any cost, regardless of the consequences. The money they bring in makes it all worthwhile. The law allows them access to your credit reports and almost all of your personal information. Think you can hide behind an unlisted phone number? Think they won’t call mom, dad, brother, sister, your ex, think again. How about telling your boss and coworkers you may be arrested? They do it every day!
My twenty plus years of experience in talk radio, television and this website, and as a member of NACA has afforded me first-hand experience in dealing with consumers across the country that these collectors have preyed upon. Having seen hundreds of cases filed by debt collectors, I can personally attest they lie, file false pleadings, manufacture documents to fit their cases and most have little or no idea of law, or the Fair Debt Collection Practices Act (FDCPA). Some, like Stewart & Associates, Hanna, most Collect America lawyers and others file affidavits so ripe with lies and falsehoods that you cannot believe they still have law licenses. They give the impression stealing money is okay, lying in court is acceptable and the rules of civil procedure don’t apply to them. Others are just so damn stupid they defy description. Their pleadings lack even elementary and basic information and many of the lazy lawyers filing them have no clue what they are doing. Many will fall all over themselves attempting to make a case on the information they are provided. For example; cases involving debt buyers frequently have an affidavit attached to prove up the case, in the event of a default. However the affidavit is nothing more than a bunch of conclusions, based on hearsay. The debt buyer has NO idea of whether any contract existed, or whether the consumer had an account with the original creditor. All they can do is make statements about what they may have read somewhere else. That is not enough for an affidavit.
Bottom feeders can be defeated easily; they
have NO legal claim on you. They purchased debts from creditors or middle-men
and are out to make a fast buck. The contracts from the original sale of these
defaulted accounts contained a clause whereby the buyer of them, agreed to NEVER
involve the original creditor or their employees in any legal actions resultant
from the sale of those accounts. That is why the purchasers and subsequent
owners/collectors of these accounts can NEVER attest in any legal setting to the
authenticity of what they plead in court papers. They hire these bargain
basement lawyers to file cases in the hopes you will never show up, which gives
them a default judgment and a legal right to come after you for a debt you may
have never legally owed them. That is why it is so important that anyone dealing
with this scum take an immediate and aggressive offensive stance in dealing with
them.
Federal law allows you the right to dispute the validity of a debt within thirty
days of initial contact by mail, from the collector. A debt collector is
required to send you a written notice within five days of their initial
telephone contact. It is MOST important that you file a debt validation notice
with the collector during that time. A debt validation notice allows you to make
demand for all documentation that substantiates their claim. Contrary to the
lies perpetrated by the bottom-feeder industry, they ARE debt collectors as
defined by law and MUST comply with law, the FDCPA, or cease all collection
activity. Your request must be in writing and they must be sent within thirty
days of your receipt of their written notice. I recommend you ask for anything
and everything associated with the agreement, including proof you may be party
to an arbitration agreement. A valid response should include a copy of the
original agreement with your signature attached. Authorized users should demand
proof they are part to the agreement via an agreement containing their
signatures. Do not be fooled by the lies of a debt collector, what you want to
see is what would be required in any legal proceedings to validate a debt. Make
them produce it, don’t be surprised when they can’t, because in the vast
majority of bottom feeder cases, these documents do not exist.
With large greedy bottom-feeder operations filing cases across the country,
experience has shown that they make mistakes you can capitalize on in a big way.
These assembly line court filers file affidavits that are mostly lies and
perjury. Some pleadings are more humorous than
legal. They say things like they have knowledge of events and circumstances
BEFORE they even acquired the debts, they sign and notarize these pleadings
under penalty of perjury, and they may have committed a felony in each and every
case.
One particularly aggressive consumer attorney I know has deposed many of these con artists who file these claims and in every case, they change their pleadings. One woman, an alleged employee for a major creditor, whose documents were filed in court pleadings, stated she didn’t even work for the entity she swore for under oath. Most claim they are under pressure to sign and file these cases and so without ever reading or having any personal knowledge of the events they are attesting to. Few even realize they could go to jail for committing perjury in such cases, most are being used by their greedy employers. Unfortunately for them, ignorance is not an excuse and some could be facing criminal charges for their involvement. These are serious situations that demand close scrutiny by the legal community, justice system, the public and the media. We are asking the public to forward us copies of these court filings, including the attached affidavits so we can publish the names of those involved on this site. Your names and information will not be used.