How Debt Collectors Work by xtg87010

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									“Seniors & Debt Collection”


      May 15, 2008
                                                 TABLE OF CONTENTS

Debt Collection Overview ...............................................................................................    1-4

Attorney Disputed Debt Letter ........................................................................................      5

Pro Se Disputed Debt Letter..............................................................................................   6

Attorney Letter re Judgment Proof Client..........................................................................
       7-8

Pro Se No Contact Letter - Judgment Proof Client ..........................................................                 9

Demand Letter: Contact Violation ....................................................................................       10

Back Off Letter: Victim of ID Theft..................................................................................       11
DEBT COLLECTION

Debt Collection Abuse and Remedies
      Statutes:
      Federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §1692 et seq
      Cal. Civil Code §1788 et seq (The Rosenthal Act)
      Cal. Civil Code §1812.700 et seq (new notice requirement)

Coverage:
• Both statutes require that the collector „regularly‟ collect debts (Cal. Civil Code §1788.2(c); 15
U.S.C. §1692a(6)).
• Both statutes require consensual transactions [i.e. alleged shoplifting debts, alleged satellite
signal piracy debts, etc NOT covered]

The following charts show the coverage difference between the two statutes:

Type of collector                        Fed. FDCPA                                Cal. Rosenthal
Original creditors                       No                                        Yes

„Servicers‟ acquiring                    No                                        Yes
account before default
                                         Yes                                       No
Attorneys
                                         §1692f(6) only                            Yes*
Repo men (enforcers of
security interests)
                                         Yes                                       Yes
Third party debt collectors/
debt buyers post-default

*An unpublished Federal court case takes a contrary view. The decision contains no analysis and is contrary to the
plain language of the statute

Type of debt                          No consensual transaction (e.g. Fed. FDCPA
Returned (NSF) check (not             shoplifting „debt‟)             Yes
post-dated)
                                                                             Yes
Returned (NSF) check (post-
dated)                                                                       §1692f(6) only

Secured property (enforcement                                                Yes
of security interest)
                                                                             Yes
Debts resulting from consensual
credit transactions
                                                                             No
Debts resulting from consensual
non-credit transactions


                                                        1
Cal. Rosenthal                        Yes*
No
                                      Yes                                    No
Yes
                                      No

*An unpublished Federal court case takes a contrary view. The decision contains no analysis and is contrary to the
plain language of the statute




                                                        2
Attacking Unfair Debt Collection Practices

Because the Rosenthal Act incorporates almost all of the Federal Act by reference, and because
the Federal Act provides greater protection to consumers, the general rule is that any violation of
the Federal Act is a violation of the Rosenthal Act (with the exceptions specified below).

        FDCPA Affirmative Disclosure Requierments
The following disclosures are required by the Federal FDCPA, but not required of original
creditors subject to the Rosenthal Act. These are also the only affirmative disclosures required
by the FDCPA.

          The „g‟ or „validation‟ notice
          Within five days of the initial communication with the consumer (in practice, always the
first letter), the debt collector must send a notice with five disclosures:

       1) the amount of the debt
               • must state the exact amount as of the date of the notice; FDCPA is violated if the
               consumer cannot determine the amount without calling the debt collector (e.g.
               “$2,000 plus interest and fees” would violate the Act). (See Miller v. McCalla,
               214 F.3d 872 (7th Cir. 2000).

       2) the name of the creditor

       3) a statement that unless the consumer, within thirty days after receipt of the notice,
disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by
the debt collector
                • this disclosure must be complete. For instance, omission of either italicized
                phrase will lead to liability (See, e.g. Baker v. G.C. Services, 677 F.2d 775 (9th
                Cir. 1982).

               • demands for payment in a period of less than 30 days, or threats to take adverse
               action [such as litigation or negative credit reporting] within a period of less than
               30 days, violate this section by „overshadowing/contradicting‟ the disclosure,
               unless the debt collector provides additional information about the consumer‟s
               g(b) rights so that even the „least sophisticated consumer‟ would not be confused
               about their rights to dispute the debt and cease collection activity (see, e.g.
               Swanson v. Southern Oregon Credit Serv., 869 F.2d 1222 (9th Cir. 1988).

        4) a statement that if the consumer notifies the debt collector in writing within the
thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain
verification of the debt or a copy of a judgment* against the consumer and a copy of such
verification or judgment* will be mailed to the consumer by the debt collector; and

        5) a statement that, upon the consumer's written request within the thirty-day period, the
debt collector will provide the consumer with the name and address of the original creditor, if
different from the current creditor.*




                                                  3
* the debt collector need not make reference to a judgment if there is no judgment. The debt
collector need not make the g(5) disclosure if the creditor listed in the g(2) disclosure is the
original creditor

A consumer‟s dispute in response to the validation notice
        Although the consumer‟s rights under §g(b) need not be disclosed, they are important. If
a consumer sends a dispute within the 30 day period, the debt collector must cease all collection
activity (including litigation and credit reporting activity) until it responds with the requested
validation. The „validation‟ furnished by the debt collector should be responsive to the nature of
the dispute.

       A debt collector need not cease collection activity in response to a dispute sent after the
30 day period.


The „mini-Miranda‟: §e(11)
         In the first letter the debt collector must state “This is an attempt to collect a debt, and
any information will be used for that purpose.” In future communications, the collector must
identify itself as a „debt collector‟, although case law suggests that the disclosure can be omitted
it that fact is obvious.

PROHIBITIONS
       All „debt collectors‟ within the meaning of the FDCPA and Rosenthal Act are subject to
the Federal Act‟s prohibitions set forth in 15 U.S.C. §§1692b, c, d, e(1-10 & 12-16), f, h, i & j.

Selected common violations
       • telephone harassment in violation of §1692d (but often difficult to prove)

       • discussing the fact that a consumer owes a debt with anyone other than the consumer or
the consumer‟s spouse. While debt collectors are permitted to contact third parties to learn the
consumer‟s residence or workplace contact information, they are not permitted to discuss
anything more with those persons. See 15 USC §§ 1692a(7), b, c(b).

       • contacting the consumer at work after the consumer has indicated it is inconvenient to
receive calls at the workplace, in violation of §c(a)(1)

       • contacting the consumer after the consumer has sent a letter directing the collector to
cease communications in violation of §c(c).

       • false threats of litigation in violation of §e(5)

       • demands for fees not provided for by statute or contract §f(1)


State Disclosure Requirement
       Cal. Civil Code §1812.700 et seq. requires any third party debt collector subject to the
Federal Act to disclose the following information in its first letter:


                                                   4
        "The state Rosenthal Fair Debt Collection Practices Act and the federal Fair Debt
        Collection Practices Act require that, except under unusual circumstances,
        collectors may not contact you before 8 a.m. or after 9 p.m. They may not harass
        you by using threats of violence or arrest or by using obscene language.
        Collectors may not use false or misleading statements or call you at work if they
        know or have reason to know that you may not receive personal calls at work. For
        the most part, collectors may not tell another person, other than your attorney or
        spouse, about your debt. Collectors may contact another person to confirm your
        location or enforce a judgment. For more information about debt collection
        activities, you may contact the Federal Trade Commission at 1-877-FTC-HELP or
        www.ftc.gov."

If a debt collector‟s initial oral contact is in a language other than English, the debt collector
must provide the notice again in the consumer‟s language. Violations are treated as violations
of the Rosenthal Act.

REMEDIES
Federal Act Remedies (see §1692k)
       • actual damages (if any)
       • statutory damages of up to $1,000 (regardless of the number of violations)
       • one way attorneys fees and costs
       • class action provisions

Rosenthal Act Remedies
       • any violation of the Federal requirements incorporated by reference give rise to the
Federal remedies
       • for any willful and knowing violation of any aspect of the Rosenthal Act, an additional
amount between $100-$1,000

*****

California Identity Theft Protections

California has recently enacted a number of statutes to assist victims of identity theft, including
substantial amendments to the Rosenthal Fair Debt Collection Practices Act at Cal. Civil
1788.18. However, the most helpful of the enactments have to be the provisions codified at Cal.
Civil Code §§1798.92-.97. This statute:

• defines „victim of identity theft‟ to require that person to have filed a police report
• provides for declaratory relief actions that the victim did not incur the debt
• provides for injunctive relief requiring debt collectors and others from pursuing the victim
• provides for actual damages and attorneys fees in some circumstances
• provides for a penalty of up to $30,000 if
        * at least 30 days prior to filing suit, the victim provided written notice that a situation of
identity theft might exist and explaining why;
        * the entity attempting to collect failed to diligent investigate the victim‟s claim
        * the collector continue to pursue its claim


                                                  5
Practice pointer:
        • always advise clients who have been victimized by identity theft to immediately file a
police report and obtain a copy.
        • always notify creditors/debt collectors of facts relating to identity theft in writing

******************************************

Below are a series of pro se and attorney „cease communications‟ letters. In the event that a
judgment-proof senior is being sued (or has a judgment against her) I suggest adding the
following language:

BANK ACCOUNT EXEMPT
However, your client must not attempt to levy upon Ms. B‟s bank account. It receives direct
deposit from Social Security and is exempt under CCP §704.080. Under Czap v. Credit Bureau
of Santa Clara Valley, 7 Cal. App. 3d 1, a judgment creditor who attempts to levy on funds it
knows is exempt is liable for the tort of abuse of process.

WAGES EXEMPT
However, your client must not attempt to garnish Ms. B‟s wages, all of which are necessary to
support herself and her dependents. Under Czap v. Credit Bureau of Santa Clara Valley, 7 Cal.
App. 3d 1, a judgment creditor who attempts to garnish wages it knows is exempt is liable for the
tort of abuse of process.




                                                6
August 31, 2004

                                              VIA FAX & U.S. POSTAL SERVICE

Capitol One
Customer Relations
P.O. Box 85015
Richmond, VA 23285-5015
Fax:(888) 259-3021

       Re:    Marilyn Client
       Capitol One
       Acct.#: 4388 6418 xxxx
       Amount: $362.00

To Whom it May Concern:

Please note for your records that attorney Scott Maurer represent Ms. Client with respect to the
above-referenced account. Pursuant to Federal and California law, you are not to contact Ms.
Client directly. Please be advised that Ms. Client is a senior citizen and especially susceptible to
emotional distress stemming from unnecessary debt collection contacts.

The purpose of this correspondence is to request the validation of an alleged debt to Capitol One.
Please send an accounting showing that Ms. Client owes $362 (or any amount) on the account in
question. I have enclosed an Authorization to Release Information signed by Ms. Client.

Please note for your records that our client disputes the alleged debt. Therefore, you are directed
not to report any negative credit information regarding this account to any credit reporting
agency without also reporting that the account is disputed, as required by California Civil Code
Section 1785.25(c).

Thank you in advance for your attention to this matter.

                                                      Sincerely,

                                                      Reuben Castillo, Legal Assistant
                                                      Under the supervision of attorney
                                                      Scott Maurer
Encl (as stated)
cc: M. Client




                                                 7
Sender‟s:      _________________________
Address        _________________________



                                                      Date: _____________________


                                VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED

Recipient‟s:   _________________________
Address        _________________________
               _________________________

                                                                     Re. ____________________
                                                                     Acct. No. _______________

To Whom it May Concern:

I am writing to request that you cease all contact with me pursuant to 15 U.S.C § 1692c(c) of the
Federal Fair Debt Collection Practices Act.

I recognize that you may choose to refer this account to another collection agency or back to the
original creditor. Should you choose to do so, YOU MUST INCLUDE A COPY OF THIS
LETTER IN MY FILE, AND THE ACCOUNT MUST BE NOTATED THAT I DO NOT
WISH TO BE CONTACTED IN AN ATTEMPT TO COLLECT THE DEBT. If you fail to
comply with this request, I will consider it an intentional attempt to circumvent the requirements
of the Federal and State Fair Debt Collection Practices Act.

In addition, since I dispute the existence of any debt, you are directed not to report any negative
credit information regarding this account to any credit reporting agency without also reporting
that the account is disputed, as required by California Civil Code (CC) § 1785.25(c). PLEASE
BE AWARE THAT I AM A SENIOR CITIZEN AND ANY FURTHER CONTACTS WILL
CAUSE ME UNNECESSARY STRESS.

Thank you for your anticipated cooperation.

                                                      Sincerely,


                                                      ________________________________
                                                      (Sign Name)
                                                      ________________________________
                                                      (Print Name)




                                                 8
                                             May 18, 2011


                               VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED


[Creditor or Debt Collector‟s Correspondence Address]




                                                                               Re: Tonya Client
                                                     Account # : [Include Account Number Here]

To Whom it May Concern,

       I am representing Ms Client with regards to the above-referenced account, and all of her
debts. Please immediately note for your records that all further communications regarding this
account are to be directed to my office. Specifically, you are directed to change the address and
phone number information on the account to the address and phone number listed above.

        Ms. Client regrets the fact that she will not be able to make any further payments on this
debt. Ms. Client‟s only source of income is Social Security benefits, which are needed to pay her
necessities of life. She has no assets. Ms. Client‟s financial situation will not change for the
better. She is 76 years old.

        I have interviewed Ms. Client and determined that she is “judgment-proof”. Therefore it
will not be necessary for her to file for Bankruptcy. Please do not leave messages with my office
seeking “Bankruptcy information”. Such calls will not be returned because there will be no such
information to report. Under the circumstances, I would request that your company “charge off”
Ms. Client‟s debt. Ms. Client regrets that such a request must be made, but she simply has no
prospects of repaying the debt.

        My client is already aware that non-payment will result in cancellation of any credit
privileges and the reporting of negative credit information, therefore you need not contact me to
report such information. Ms. Client is also aware that you may choose to file suit on this debt.
Nevertheless, she has decided to accept the consequences on non-payment, and has authorized
me to reject any and all settlement offers from your company which would require her to make
any further payments. Therefore, do not contact me with any settlement offers.

        I am also aware that you may choose to refer this account to a collection agency. Should
you choose to do so, you must indicate that all contacts are to be directed to my office. MS.
Client‟s RESIDENTIAL ADDRESS AND TELEPHONE NUMBER ARE NOT TO BE
TRANSMITTED, AS I AM REPRESENTING HER WITH RESPECT TO THIS MATTER.


                                                9
Should you transfer this account to a collection agency without indicating that I am representing
Ms. Client, I will have no choice but to recommend to my client that she file suit against your
company for attempting to evade the provisions of California‟s Rosenthal Act.

        Please be advised that my client is elderly, therefore making her especially susceptible to
emotional distress. Therefore it is of the utmost importance that you not contact her
directly. California‟s Rosenthal Act requires that you cease communication with a consumer
when you are aware that the consumer is represented by an attorney. The Act provides for
statutory penalties. Cal. Civil Code §§1788.17; 1788.30. Furthermore, California Civil Code
§3345 provides for treble penalties when the victim of unlawful practices is known to be a senior
citizen and/or especially susceptible to injury due to age. Therefore, if you contact Ms. Client
directly after receiving this letter, I will advise her to file suit against your company, seeking
treble penalties pursuant to the above-referenced statutes.

        Pursuant to California Civil Code §1788.14(c), please direct all further inquiries
regarding this matter to me at the address listed above. I thank you in advance for your
anticipated cooperation in this matter.

                                                     Sincerely,


                                                     Scott Maurer

cc: Tonya Client




                                               10
                               _____________________________
                               _____________________________
                              ______________________________


                                             Date:_________________________


                               VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED

__________________________
__________________________
__________________________

                                                             RE: _________________________
                                                            Acct #________________________
To Whom it May Concern,

I am writing to request that you cease all contact with me pursuant to California Civil Code
§1788.17 and/or 15 USC §1692c(c), which require you to cease all contact with a consumer
when you receive a written request to do so.

I do not concede that I owe any “debt” to you. Even if I did, I could not afford to pay you.
Therefore, I will not make ANY further payments on the above-referenced account. I have
consulted with an attorney and I have been informed that I am “judgment-proof”. You may sue
me if you wish, but you will not be able to collect any money from me because I have no assets
or income that can be attached with a judgment.

I recognize that you may choose to refer this account to a collection agency, or some other entity.
Should you choose to do so, YOU MUST INCLUDE A COPY OF THIS LETTER IN MY FILE,
AND THE ACCOUNT MUST BE NOTATED THAT I DO NOT WISH TO BE CONTACTED
IN AN ATTEMPT TO COLLECT A DEBT. If you fail to comply with this request, I will
consider it an intentional attempt to circumvent California‟s Fair Debt Collection Practices Act.

PLEASE BE AWARE THAT I AM A SENIOR CITIZEN AND ANY FURTHER CONTACTS
WILL CAUSE ME UNNECESSARY STRESS. Thank you for your anticipated cooperation
with respect to my request that you cease any further contacts with me.

                                             Sincerely,




                                               11
                                              May 18, 2011

                                VIA FACSIMILE AND FIRST CLASS MAIL (610) 713-6190

NCO Financial Systems, Inc.
P.O. Box 41417
Dept. 99
Philadelphia, PA 19101
                                                                           Re: First USA Account
                                                                       Account # 43661310xxxxxx
To Whom it May Concern,

         This letter is in response to your letter addressed to Ms. Jane Doe dated March 6, 2002.
Our office previously sent NCO a letter informing NCO that we represented Ms. Doe. A copy of
that letter is enclosed.

NCO violated the California and Federal Fair Debt Collection Practices Acts
        Federal law prohibits debt collectors from contacting consumers known to be represented
by attorneys. 15 USC §1692c(a)(2). NCO violated that law by sending Ms. Doe the letter dated
March 6, 2002. Your letter to Ms. Doe also violated California Civil Code §1788.14(c), which
specifically prohibits contacts with a “debtor” when “the debt collector has been previously
notified in writing by the debtor‟s attorney that the debtor is represented by such attorney... and
such notice includes the attorney‟s name and address and a request by such attorney that all
communications regarding the consumer debt be addressed to such attorney”.

Demand for remedies pursuant to Federal and State Fair Debt Collection Practices Acts
The Federal and State Acts cited above provide for up to $3,000 in statutory penalties for
violations of their provisions. California Civil Code §§1788.17, 1788.30(b), 15 USC §1692k.
The Acts also provide for costs and attorneys fees. Therefore, to rectify your violations of Ms.
Doe‟s rights, please forward a check in the amount of $3,000 to my office. If Ms. Doe is
contacted again I will advise her to file suit seeking all available remedies, including attorney
fees.

Once again, I would like remind you to cease all communication with my client pursuant to 15
U.S.C. §1692c(a)(2) and Cal. Civ. Code §1788.14(c). I also remind you that my client is a
senior citizen and especially susceptible to emotional distress stemming from unnecessary debt
collection contacts. Please direct all future inquiries to this office at the address listed above.
We look forward to your prompt response.

                                              Sincerely,


                                              Scott Maurer
Encl.
cc: Jane Doe




                                                12
                                              September 27, 2004

                              VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED

[debt collector]
Los Angeles, California 90054-0549


       Re: F___ A Z
       File: *******

Dear Ms. Hastings:

Please be advised that this office is representing Ms. A-Z with respect to the above-referenced
account. Please direct all further communication on this account to the address listed above,
pursuant to Calif. Civ. Code §1788.14(c). above-referenced account. Pursuant to Federal and
California law, you are not to contact Ms. Client directly. Please be advised that Ms. Client is a
senior citizen and especially susceptible to emotional distress stemming from unnecessary debt
collection contacts.

Facts
Ms. A-Z believes that she is a victim of identity theft. At any rate, my client has never stolen
anything from K-Mart. Several months ago Ms. A-Z discovered that someone had been using
her social security number to procure employment, as evidenced by wages on her W-2 that are
not her own. Ms. A-Z also discovered criminal charges of theft on her record that are not her
own. Ms. A-Z subsequently filed a police report with the Santa Clara Police Department on
August 24, 2004. Enclosed is a copy of this police report. At this time, Ms. A-Z does not know
the true name or address of the thief.

Law
Calif. Civ. Code §1798.92 defines a “victim of identity theft” as:
         “a person who had his or her personal identifying information used without
        authorization by another to obtain, credit, goods, services, money, or property,
        and did not use or possess the credit, goods, services, money or property obtained
        by the identity theft, and filed a police report in this regard pursuant to Section
        530.5 of the Penal Code.”




                                               13
Please consider this notice of Ms. A-Z‟s status as a victim of identity theft and be
advisedthat Calif. Civ. Code §1798.93(b)(6) provides for statutory damages of up to
thirty thousand dollars against a claimant that fails to diligently investigate the victim‟s
notification of a possible identity theft and continues to pursue its claim.

I trust this information and the enclosed police report will satisfy you that my client is not
the person you are seeking. If you have any questions, please do not hesitate to contact
this office at the number listed above.

                                               Sincerely,



                                               G M,
                                               Law Student under the supervision of
                                               Attorney Scott Maurer

Encls: As stated above
cc: Felipa A Z (w/o encl.)




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