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Not Paying a Payday Loan is NOT Criminal

Taking out a Payday Loan is a simple affair. You tell them how much you want, and they pretend that you have money in your bank account, because you have a Job.

Then, payday comes and you have other bills to pay, so you don’t pay them. First you get a polite call, then they get more aggressive, until finally, they threaten JAIL.
Should you be worried? Not even a little but. It is illegal in most states to write a check knowing that you do not have sufficient funds, with fraudulent intent. (For example: Virginia Code and Californian Penal Code.

But a Payday loan is different. You know there is no money there. They know there is no money there. If everyone knows there is no money, there can be no fraudulent intent.

Payday Loan Collectors Are Subject To The Same Rules As Other Collectors

Payday loan collectors are collecting a loan that was made for you to buy groceries, or gas, or pay the electric bill. A loan for personal expenses. A loan for family use. A loan for household expenses. That makes this a loan that is subject to the Fair Debt Collection Practices Act. And the collectors have to play by the rules. Not that they will, but they have to not be abusive or harassing, not say things that are false or misleading, and not say anything that is unfair or deceptive. You have certain rights when dealing with them, primarily to be treated with some respect.

You can even Make Them Stop.

Payday Loans Are Includable In Bankruptcy

Sometimes even good people need to file for bankruptcy. And some even have Payday loans.
Some payday lenders try to put in their contract that you will not include them in your Bankruptcy.
Some payday lenders tell you that you cannot Bankrupt that debt.
Some payday lenders just ignore the law, and tell you that they can collect anyway.
They are all wrong.

The US Constitution has a provision in it that CONGRESS has the exclusive right to set the rules of Bankruptcy. That means that you have a Constitutional right to file for Bankruptcy, and you cannot contract that right away.

The Bankruptcy code has a section on what is not dischargeable in a Bankruptcy. A check is not one of the things in that list.

The Bankruptcy code has a section on what is not stopped by the filing of the Bankruptcy. A check is not on that list.

Criminal “Bad Check” Is Different From A Payday Loan

As I mentioned above, most states have a criminal bad check law. Virginia, California, even Federal Law .

All of them have an important element. Intent.

When you write a check at the grocery store, there is a presumption in most states that if the check does not clear, that you had the intent to pass a bad check, to obtain money, or products or services intending not to pay for them.

This is not the same as a payday loan. A payday loan is based on the idea that you HOPE that money will be in the bank when the loan comes due. Isn’t that the same as any other loan? If you had the money, you wouldn’t have needed to borrow money, you would have paid cash. (Note: paying cash is always a better choice than a loan. It just may not be practical.) When you borrow money for a car loan, you hope that you will have the money to make the car payments. When you borrow money for a credit card, you hope that you will have the money for the minimum payments, or maybe, a little bit more. When you get a payday loan, you hope that you will have enough money to pay the payday loan back.

In each of these cases, everyone knows that you don’t have the money today. Even with the payday loan.

Now there is one exception to this, that is the one thing to worry about. An account that was closed before you took out the payday loan. If the account is closed, it is a different situation. You gave them false information so they would loan you the money. But the only time this exception applies is to accounts that were closed before the loan. If it was closed after, or if it just didn’t have enough money, then there can be no crime.

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.
YOU MUST BE A VIRGINIA RESIDENT.

OUR FEES: Our fees are controlled by the local rules and your situation. They may vary from “free” or probono representation to a flat fee to an hourly fee, depending on your situation.

If you are not a Virginia Resident, click here to find a lawyer near you.

Contact us by e-mail or by telephone or fax or US Mail.
You can call us: 804.303.0204
You can fax us: 804.303.0209
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
5310 Markel Rd.
Suite 102
Richmond, VA 23230

13 COLLECTION MYTHS BUSTED

Many people believe the common myths of collections. Most of them are myths that are as effective as an ostrich sticking its head in the sand.  Don’t be an ostrich.

• 1.     If I make a payment they will leave me alone.

FALSE.  Usually, if you make a payment, it means that they know that you have some money, and will pay more.  They will bother you more, not less.

• 2.     If I make any payment at all, they cannot sue me.

FALSE.  In fact, making a payment may restart an expired statute of limitations. You may make it so that if they could not sue before, they can sue now.

• 3.     If I settle, it will improve my credit rating.

FALSE. If you make a payment, it may decrease your score, because there is now recent activity on a negative account.  Eventually, the score may go back up, but for the short term, the score will be lower.

• 4.     All debt collectors sue.

FALSE.  Most debt collectors do not sue. Check to see if the debt collectors are located in your state of residence (we are talking about Virginia here), and if they are licensed as a lawyer there. If they are not licensed in your state, then they cannot sue, they cannot get a judgment, and they cannot attach your wages or bank account.

• 5.     If I get sued, I can lose my house or my car.

USUALY FALSE. There are circumstances where people can lose their house or car, but those are relatively rare. Cars have an automatic exemption in Virginia for $6,000.  Houses do not have an automatic exemption, but most homes do not have enough equity in them to be at risk.

• 6.     If I get sued, my spouse’s wages can be garnished.

FALSE.  Only you are responsible for the debts that you owe.  Virginia is not a community property state, so spouses are only responsible for the debts that they sign for, or are for medically necessary expenses.

• 7.     If I get sued, my spouse will be liable for my debts.

FALSE.  Only you are responsible for the debts that you owe.  Virginia is not a community property state, so spouses are only responsible for the debts that they sign for, or are for medically necessary expenses.

• 8.     If I get sued and don’t go to court, they can’t get a judgment.

FALSE. You only are entitled to get notice and have a fair hearing.  If you do not show up, then it is your problem.

• 9.     If I move and don’t tell them, they can’t sue me.

FALSE.  A creditor can sue and get a judgment based on service at an address you used to live at, if you do not keep them in the loop about where you live.

• 10.If they get a judgment, my entire wages can be attached.

FALSE.  Under Federal law, your wages can only have 25% taken, except for certain debts, like taxes and child support.

• 11.If they get a judgment, they can take my social security money.

FALSE. Social Security Disability and Supplemental Security Income cannot be taken, even if it is in your Bank account. In fact, the Federal Regulations have been recently changed, and the bank must protect, automatically, 2 months of SSD or SSI benefits.

• 12.If I don’t pay, they can put me in jail.

FALSE. Almost all debts, including credit cards and payday loans, are civil matters, for which the failure to pay is not criminal. It is not fraud to fail to pay almost any debt.  Of course, there are exceptions, for example, child support and taxes can put you in jail, and a payday loan taken on an account that was closed when you took out the loan.

• 13.If my car is repossessed, I don’t owe any more money.

FALSE.  Under the laws of most states, you owe the difference between the balance of what was owed and the amount they got when they sold the car.  Of course, there are some exceptions, and time limits.

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES. 

YOU MUST BE A VIRGINIA RESIDENT.

If you are not a Virginia Resident, click here to find a lawyer near you.

OUR FEES: Our fees are controlled by the local rules and your situation.  They may vary from “free” or probono representation to a flat fee to an hourly fee, depending on your situation.

Contact us by e-mail or by telephone or fax or US Mail.

You can call us: 804.303.0204
You can fax us: 804.303.0209
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
5310 Markel Rd.
Suite 102
Richmond, VA 23230

There is a lot of false information regarding bankruptcy. Here is a list of the most common myths we’ve encountered.

1. My employer will find out and fire me, or my potential future employer will not hire me because I filed for bankruptcy.
Usually FALSE. Discrimination solely because you filed for bankruptcy is prohibited under the U.S. Bankruptcy Code. Certain persons with security clearance and sensitive financial positions can have issues with bankruptcy, though even then, a Bankruptcy can show that you are dealing with the problem, and enable you to have the security clearance or sensitive financial position. The exceptions to this are positions that tend to handle money, like bank tellers.

2. I have to be broke or behind on my bills to file bankruptcy.
FALSE. Do not wait until you’ve drained out your savings, or 401(K), or borrowed more money from relatives and friends. There are no rules that say you have to be behind or broke to file for bankruptcy. In fact, draining your retirement account may be a serious problem if done immediately before the filing of the Bankruptcy. Consult with a bankruptcy attorney right away if you do not see a way out of your current financial situation, BEFORE you do something.

3. Bankruptcy is not affordable.
FALSE. We do our best to provide reasonable time to pay attorneys’ fees and costs. In fact, many clients find that stopping payments to credit cards for a couple of months cover attorneys’ fees. In Chapter 13, usually part of the fees are paid up front and some through the plan payments. Additionally, because many of our clients have violations of the law, they end of getting their money back from the debt collectors who come after them.

4. I will lose my home.
Usually FALSE. In Chapter 7, as long as you are current on your payments and meet the equity limits, you can keep your home. In Virginia, there is an exemption up to the following amounts:
(1) $5,000 for each debtor.
(2) an additional $500 per child under age 18.
Refer to Virginia Exemption Chart.
You are given the same equity limits in Chapter 13 as Chapter 7. But you do not have to be current on your mortgage. In Chapter 13, you are given up to 5 years to repay the missed mortgage payments.

5. My credit is destroyed forever.
FALSE. Bankruptcy is reported on your credit report for up to10 years (see 15 US Code section 1681c). Most people mistakenly believe that they get a Scarlett Letter stamped on their forehead and won’t be able to get credit for 10 years (or some even believe for life). In fact, most of our clients get credit offers within a few months after filing. Bankruptcy stops the bleeding and places you in a position to rebuild your credit worthiness. Clients usually start with credit cards with smaller limits. They use these wisely (never carrying a balance), and get higher limits. The credit score increases and permits more extensive credit such as car loans. It’s similar to building credit for the first time like a high school or college student graduate. Additionally, Krumbein Consumer Legal Services is one of the few law firms with the experience and skills to help make sure that your credit is accurate. With Bankruptcy, your debts should stay in the past, not follow you along forever.

6. I will never get a home, an apartment or car.
FALSE. People do rebuild their credit after bankruptcy and go on to buy homes and/or cars. Your credit score may actually increase after bankruptcy, especially since bankruptcy will have a positive effect on your debt-to-income ratio. Additionally, some clients have purchased a home because of the efforts of Krumbein Consumer Legal Services to correct the errors on their credit report.

7. You can’t go bankrupt anymore since the new law.
FALSE. As the business and consumer bankruptcy filings that have exceeded well over 1 million people per year show, this is not the case. The 2005 changes to the bankruptcy laws made it more difficult to file for bankruptcy, but we have spent a significant amount of time using the amendments to our clients’ benefit. Consult with a Richmond bankruptcy attorney from Krumbein Consumer Legal Services to determine how you qualify.

8. The new law says you have to pay everything back.
FALSE. In Chapter 7 bankruptcy, debts are wiped out completely with the exception of certain taxes, child support/alimony, student loans and specially designated debts. In Chapter 13, the amount you repay is based on your disposable income (money left after your expenses are subtracted from your income) or liquidation analysis (property that we cannot exempt). In most situations, 100% repayment is not required.

9. It will be in the newspaper.
Usually FALSE. We suppose this could change, but this does not occur in the Richmond Area unless you are generally a news maker. As it stands, your bankruptcy filing will not be announced in a publication. However, it is public information, and anyone that wants to can go to the Bankruptcy Court and request your file. Additionally, the information is available on a Federal Bankruptcy database. To access it, you must have an account and pay to view it per page. Hearings related to your case are also posted on the court’s website for a brief time, however a person would have to know that they should look.

10. I hear “you can’t go bankruptcy on credit cards any more”.
FALSE. Credit cards are unsecured debts and will generally be discharged by bankruptcy. Credit cards and medical debts are the debt we discharge the most often.

11. After you take a credit counseling course you must wait 6 months before you can file a bankruptcy.
No, in fact it’s the opposite. One you take the credit counseling course and receive the certificate, the certificate is valid for 180 days. You must file bankruptcy within that 180 day period to use the credit counseling certificate. If you wait too long and the credit counseling certificate expires, you will have to take another credit counseling course and get a new certificate. Check with the US Trustee’s Website for authorized Credit Counseling courses. We provide clients with information about credit counseling providers that we find are cost-effective and consumer friendly. Under most circumstances, the credit counseling course is included in the cost of the Bankruptcy through us.
In short, there is no waiting requirement after completing credit counseling to file for bankruptcy.

12. If I file for bankruptcy I’m a failure.
Well then so are your family, friends, co-workers and the businesses you visit. Our clients are doctors, teachers, constructions workers, retail workers, hair stylists, police officers, bankers, rich, poor, blue collar, white collar…you get the idea. Plenty of famous and successful people filed for bankruptcy. For those struggling with the idea of filing, ask yourself whether you want a society of people in indentured servitude that die poor paying their debts, or people free from debt that can be productive and active members of society? Certainly we all want to pay our debts if we can. But sometimes it’s just too overwhelming.

13. There’s a secret way to make your creditors accept a fraction of the debt.
ABSOLUTELY FALSE, and don’t let wishful thinking make you believe promises made by debt settlement companies and others feeding off your sense of fear or guilt. It is true that oftentimes credit card companies will settle on stale debts. Sometimes they don’t. The settlement amounts vary from 5% of the debt to 99% of the debt. Moreover, creditors may (and often do) sue you. Unless you have a valid defense for the lawsuit, you may lose the case (see our information about defending collection lawsuits). They can get a judgment against you and garnish your wages, take your money in your bank account or put a lien on your property.
Assuming they do settle, what the creditors and debt settlement companies don’t tell you is this: the amount forgiven will be considered income to you and you may be taxed on the amount forgiven. It’s better to owe your credit card money than the IRS because you can discharge the credit card debt in bankruptcy much more easily, and debts discharged in Bankruptcy are deemed not income for purposes of your tax return. (see 26 US Code 108(a)(1))

14. I’ve hired a debt settlement firm to help me pay off all of my debts at a deep discount in 3 years or less and now I won’t have to file for bankruptcy.
See #13. It is common for our clients to be scammed by these companies. There is some promise to settle debts for pennies on the dollar. Creditors, however, do not have to settle with you at all; there is nothing special about the relationships between debt settlement companies and credit cards/debt collectors that guarantee settlements. Most of the time, the debt settlement companies will keep most of the money for themselves, leaving little for the actual settlement. They can’t do anything for you that you can’t already do for yourself – not pay your creditors then work out a settlement.
If you do decide to hire a debt settlement company, please be sure to check with the FTC and Attorney General office of the state the company is located. There are lots of warnings issued by governmental agencies regarding the dangers of hiring a debt settlement companies. We also see the United States Trustee that oversees bankruptcy sometimes go after debt settlement companies for scamming consumers.  Also, many of the debt settlement companies are scams.  They take your money and give you nothing in return.

15. My friend told me as long as I am going bankrupt I might as well max out my credit cards and use up what is left.
Accumulating debt with an anticipation of filing for bankruptcy may be considered fraud. Bankruptcy is for the unfortunate but honest debtor.

16. I should “leave one card out” of the bankruptcy.
ALL debts must be listed on the bankruptcy petition. Everyone you owe money to must be listed. This includes friends and families. Intentionally leaving a creditor out is grounds to deny you a Discharge, and may be an act of Bankruptcy fraud. Please note that Bankruptcy fraud is investigated by the FBI, and carries penalties up to and including jail and big fines.

17. “But my credit score will go down!”
See #5. If you are at serious risk of needing Bankruptcy, your credit score is already depressed. If you have defaulted on credit cards, home loans, car loans or student loans, they will already be reporting negatively on your credit report. Bankruptcy draws a line in the sand, and tells everyone that those debts are in the past. The credit reporting guidelines say that accounts that are included in a Bankruptcy are not scored, but all those charge-offs and delinquencies lower your score. A single missed payment can lower your score by as much as 150 points. But a Bankruptcy draws that line in the sand, and makes it go away.

18. I’ll never get credit again, or another, I won’t be able to get credit for 7 years.
After filing for bankruptcy, your debt-to-income ratio improves. This will help your credit score. Additionally, you cannot file again for 8 years (in case of Chapter 7) so you’re actually a “safe bet” for the creditors. Most of our clients report being able to get a secured credit card immediately after bankruptcy and an unsecured credit card with a modest credit limit within several months. This fluctuates with how banks extend credit. How long you have to wait to get a credit card will depend on your individual circumstances such as your income, work history and the banks’ lending practices at the time you apply.

19. Bankruptcy does not apply to certain creditors like Bank of America.
Bankruptcy applies to Bank of America as well as all other banks. Individual banks and persons do not get special passes. Read more about Chapter 7 and Chapter 13 to learn about which debts are discharged.

20. I will be making a better financial plan to suffer through and pay it back than to file for Bankruptcy.
Ask yourself, what will it take for me to get out of debt? Use this calculator to figure it out. Most people continue to make the minimum payments not realizing the amount of money it will actually take to get out of debt. Do not make the mistake of getting trapped in the cycle of making minimum payments – never being able to live debt free.
We suggest that you do a simple bit of math. Figure out your monthly living expense without paying on your debts. Figure out how much you have in income each month. Subtract the amount you have to spend from the amount you have for income (income-expenses). Take the total amount of your debt, and divide by 24. If the income-expenses number is not higher than your debt divided by 24, then when you try to pay it off, you will be forever paying mostly interest, and you will never get out.

If you will never be debt free, how can you ever get ahead?

Special thanks to Jeena Cho, of the JC Law Group, in San Francisco.

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.
YOU MUST BE A VIRGINIA RESIDENT.

OUR FEES: Our fees are controlled by the local rules and your situation. They may vary from “free” or probono representation to a flat fee to an hourly fee, depending on your situation.

If you are not a Virginia Resident, click here to find a lawyer near you.

Contact us by e-mail or by telephone or fax or US Mail.
You can call us: 804.303.0204
You can fax us: 804.303.0209
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
5310 Markel Rd.
Suite 102
Richmond, VA 23230

Debt collectors sometimes make mistakes. They contact people who don’t owe the money.  Not that no one owes the money, but the person they are contacting does not owe the money.  They are just simply calling the wrong person.

The Fair Debt Collection Practices Act has some things to say about this.  First- tell the collector that you are not the person they are looking for. Give them the information so they can see it is true.  Make them give you the last 4 digits of the person’s social security number, then give them the last 4 of yours.  Why do you wait for them to give you the last 4? That ensures that they do not go about changing the system first.  The last thing you need is them to make it look like you, as an “update”.  You should be tracking the calls on your call log.

Once they know it is not yours, they should not be calling back. You can double check this, by sending the collector a letter, by certified mail, return receipt requested, in which they are instructed to cease communications with you.  This letter is commonly called (incorrectly) a “cease and desist letter.”  Right thought, wrong words.  A sample letter can be found here.  Make sure you track all the calls on your call log.

Once they are notified not to call you again, they are permitted no further contact.  If they do contact you, you should immediately contact a lawyer to assist you.

If you have been impacted by anything we mentioned here, you can make an appointment to see us.

NO FEE IN YOUR FDCPA CASE UNLESS WE RECOVER!!

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.

YOU MUST BE A VIRGINIA RESIDENT.

If you are not a Virginia Resident, click here to find a lawyer near you.

OUR LEGAL FEES:

The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.

Contact us by e-mail or by telephone or fax or US Mail.
You can call us: 804.303.0204
You can fax us: 804.303.0209
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
5310 Markel Rd.
Suite 102
Richmond, VA 23230

Last time I talked about how to deal with collectors, and I mentioned an order of payment. Here is why the order is important.  The order, from last time, is: 1- Food, 2- car and house payment, 3- Utilities, 4- Current bills, and 5- Luxury expenses.

The food always comes first in the order of payment.  If there is no food, the reason for a house, a car, utilities, credit card payment, etc is pointless.

The house and car payments come next.  It is much easier for a lawyer to fix the problem of unsecured debt (debt where there is no right to repossess a thing), than a secured debt.  Your secured creditors are hard to solve, often requiring that you make deals to pay them much more than you ordinarily would.  Unsecured creditors will often settle for pennies on the dollar, over long periods of time, because payments to them are so much more tenuous.  You can have defenses, or file Bankruptcy, or just not pay, and there is often very little they can do.

The utilities and taxes come next.  The utilities will cut you off, and the tax man will come get things, but neither of those things happens quickly.

Then comes the unsecured bills- the medical bills, the credit cards, etc.  When they get paid it will be good enough.

Lastly comes the luxury expenses- vacation, jewelry, etc.  If you are able to pay all of your other bills, then there may be money left in your budget for luxury goods and services.  They are not things that you need, but might want.  Instead of a vacation, try a stay-cation.  You get the time off, but not the expense of travel.  Instead of expensive jewelry, try costume jewelry.  You get some of the look, but not the expense.

Consult a lawyer and maybe a financial planner.  You need to know your rights, and how to get out of this mess.  Above all, don’t play ostrich. Sticking your head in the sand and saying “I can’t see you” will not make the problem go away.

If you have been impacted by anything we mentioned here, please make an appointment to see us.

NO FEE IN YOUR FDCPA CASE UNLESS WE RECOVER!!

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.

YOU MUST BE A VIRGINIA RESIDENT.

If you are not a Virginia Resident, click here to find a lawyer near you.

OUR LEGAL FEES:

The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.

Contact us by e-mail or by telephone or fax or US Mail.
You can call us: 804.303.0204
You can fax us: 804.303.0209
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
5310 Markel Rd.
Suite 102
Richmond, VA 23230

Dealing with debt collectors

People often ask how to deal with a debt collector.  Here are some simple rules that will help control the situation.

1.  Pay your bills if you can. The easiest way to deal with a debt collector is to not need to- that is, pay your bills on time every month. By the way, this also means that your credit score will be as high as it can be in your situation.  (there is more  to a credit score than payment history, but history is the biggest part).

2. Talk to the lender before you miss payments.  If you fall behind on your bills, it is often easier to deal directly with the creditor to help you fix the situation than if the account is turned over for collections, so as soon as you realize you are going to have a problem, contact the lender. Sometimes they will work with you, sometimes they will not.

3. Prioritize your debts. If you have tried dealing with the lender, the next thing to do is prioritize who gets paid first, and who gets paid last.  I will talk about why this is the order next week.

a. Food comes first. If you don’t have enough money for food, then no one gets anything.  Don’t be ashamed to apply for food stamps (called SNAP) and other government assistance.

b. Your car and home payments come second. This does not include second homes, second cars, etc, but does include the payment on your first and second mortgage on your home.  These assets are important, because you need a roof over your head, and a way to get to work.

c. Utilities (lights, water, gas) come third. It is much easier to maintain your ability to have a roof, and a car if there is heat and air conditioning, water, etc.

d. Current bills.  Medical bills, credit cards, store cards, etc.

e. Luxury expenses.  Vacations, jewelry, etc.  If you are paying for these things, you should be paying all of your bills. If you are not paying all of your bills, you should not spend money on luxury expenses.

4. Reduce your expenses. This is much more important for a long term problem than a short term issue.  If you are out of work, but going back, conserve your cash, and keep going. If you are at a new, lower paying job, reducing your expenses is much more important.  Downsize your house, downgrade the car.  You need to look for a less expensive solution.

5. Communicate with the debt collectors.  That first call or letter will not be the last if you don’t respond.  Request verification of the debt. Start with making sure they are collecting an account that you owe.  Dealing with a mistaken identity or ID theft is different from dealing with your own accounts. Verify the amounts they are requesting.

6. Consult a lawyer and maybe a financial planner.  You need to know your rights, and how to get out of this mess.  Above all, don’t play ostrich. Sticking your head in the sand and saying I can’t see you will not make the problem go away.

If you have been impacted by anything we mentioned here, please make an appointment to see us.

NO FEE IN YOUR FDCPA CASE UNLESS WE RECOVER!!

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.

YOU MUST BE A VIRGINIA RESIDENT.

If you are not a Virginia Resident, click here to find a lawyer near you.

OUR LEGAL FEES:

The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or
party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.

Contact us by e-mail or by telephone or fax or US Mail.

You can call us: 804.303.0204
You can fax us: 804.303.0209
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
5310 Markel Rd.
Suite 102
Richmond, VA 23230

One of my friends is a debt collector, and I asked him what advice he would give to his mother for how to deal with a debt collector. Here is what he said.  First, the best way is to never need to deal with them, by paying your bills, but if you are forced into a situation where you must, here is what you should do.

1.  Talk with the collectors.  Ostrich technique does not work with debt collectors, they tend to get more aggressive, and eventually sue.  That first call or letter will not be the last if you don’t respond.  Request verification of the debt.  Start with making sure they are collecting an account that you owe.  Dealing with a mistaken identity or ID theft is different from dealing with your own accounts. Verify the amounts they are requesting.

My comments: I agree, but with a variation.  You should communicate in writing.  It makes the record so much clearer.

2. There may be tax consequences if you settle a debt, rather than pay the full balance.  Debt collectors cannot give tax advice, and if they write down the debt by more than $600, they are required to send a 1099 to the IRS, and you could pay taxes on the money.

My comments: Yes, that is true, but if you are going to compromise a debt, tax consequences should be discussed with the collector before the deal is inked.  Some collectors have authority to discuss tax consequences, some do not.  Be on the lookout for a 1099 for the entire balance, or the forgiven balance, as this is not correct.  You should not pay taxes on the interest, only the principal. Consult a tax professional for the details on that.

3. If you have problems, complain to the Federal Trade Commission customer service hotline.

My comment: And the Attorney General of the US, the Attorney General of your state, and you should find a lawyer who deals in collection abuse, like us.

4. Request a supervisor.  If you are trying to pay, but the collector on the phone cannot make the deal you can afford, request a supervisor, who may be able to make a better deal.

My comment: If you cannot make a deal pretty quickly on the phone, you should not be talking to them on the phone. It is pretty rare that a supervisor can make a deal that a line collector cannot, and they often are just another line collector on the phone anyway.  Better to send them a letter that says that you request no more phone calls, and that all communications should be in writing. Better still is a letter telling them to communicate with your lawyer.

If you have been impacted by anything we mentioned here, please make an appointment to see us.

NO FEE IN YOUR FDCPA CASE UNLESS WE RECOVER!!

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.

YOU MUST BE A VIRGINIA RESIDENT.

If you are not a Virginia Resident, click here to find a lawyer near you.

OUR LEGAL FEES:

The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.

Contact us by e-mail or by telephone or fax or US Mail.

You can call us: 804.303.0204
You can fax us: 804.303.0209
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
5310 Markel Rd.
Suite 102
Richmond, VA 23230

It is legal to record phone calls, but we advise that you do not, and we suggest that this article is a good starting point on why not.

A summary of Herring and Watts article is that in some states where collectors operate, it is illegal to record without the consent of all parties, and it is not strictly necessary- your testimony is admissible.

Virginia law is that any party to a conversation may record.  VA Code §19.2-62.

Federal law is that any party to a conversation may record.  18 U.S.C. §2511.

There are 10 states that require that all parties to a conversation must consent, or the recording is criminal.  California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, Pennsylvania, and Washington each require the consent of all parties to record.  The balance allow anyone who is a party to the conversation to record.

In ALL states and by Federal law, recording a conversation that you are not a party to (eg: recording your next door neighbor’s conversation) is criminal.  There are exceptions in criminal justice, when the government obtains a warrant for a wiretap, but generally, it is illegal.

It is often very difficult to determine what state the collector is located.  Further, even if you are located in a 1 party state, and they are located in a 2 party state, the question then becomes what law applies.

As a result, we agree with Herring and Watts, and say that even though it is legal, we advise that you should not record your conversations. In the event that you do record, we advise that you disclose that you are recording, and tell the collector that by staying on the phone that they are consenting to being recorded.

Your notes of a call are perfectly good records of what happened.  Here is a link to a form for tracking calls, and making notes of what happened.

Also, you can have other people listen to your side of the conversation, or even participate in the conversation.

If you have been impacted by anything we mentioned here, you can make an appointment to see us.

NO FEE IN YOUR FDCPA CASE UNLESS WE RECOVER!!

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.

YOU MUST BE A VIRGINIA RESIDENT.

If you are not a Virginia Resident, click here to find a lawyer near you.

OUR LEGAL FEES:

The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.

Contact us by e-mail or by telephone or fax or US Mail.

You can call us: 804.303.0204

You can fax us: 804.303.0209

You can contact us by US MAIL:

Krumbein Consumer Legal Services, Inc.

5310 Markel Rd.

Suite 102

Richmond, VA 23230

A potential client called today, and complained that he had hired a lawyer to do some work for him, and that the lawyer was now suing him for his fees.

He complained, not because the attorney was suing for his fees (there are some lawyers who do this, even though this is discouraged),  but because the lawyer had not played fair in suing him.  Apparently, the lawyer had sued, and then sued again, and the potential had not gotten served properly, but the lawyer had taken judgment against him.  The potential was very upset, and contacted the lawyer, and made payment arrangements, and made some of the payments.  Then he checked his credit report, and discovered that the lawyer had gotten a judgment, and the judgment was on his credit report.  So he called, and communicated with the lawyer, and the lawyer had stated he would take care of it.  Then it appears, he marked the judgment satisfied.  But the client was unhappy, and he refused to pay any more.  So the lawyer sued again.

I turned this case down. The lawyer was collecting a debt owed to him.  One of the important features of the Fair Debt Collection Practices Act is that it only covers third party collectors.  That means that although lawyers are covered when they are collecting money owed to someone else, if the money is originally owed to them (for example for fees earned), they are not debt collectors, and not subject to the act.

Remember, if you are being harassed by a debt collector, you need to know your rights. But remember that they have very powerful options, too.  Virginia has very limited consumer rights.  Most of the rights are given to creditors.

If you have been impacted by anything we mentioned here, you can make an appointment to see us.

NO FEE IN YOUR FDCPA CASE UNLESS WE RECOVER!!

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.

YOU MUST BE A VIRGINIA RESIDENT.

If you are not a Virginia Resident, click here to find a lawyer near you.

OUR LEGAL FEES:

The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.

Contact us by e-mail or by telephone or fax or US Mail.

You can call us: 804.303.0204

You can fax us: 804.303.0209

You can contact us by US MAIL:

Krumbein Consumer Legal Services, Inc.

5310 Markel Rd.

Suite 102

Richmond, VA 23230

Attorney debt collectors are not exempt from the law just because they are lawyers. They actually have a slightly higher standard of care that they must engage in to comply with the law.  They must make sure that what they do to collect not only complies with the rules of collection, but also the rules of ethics.

The statute of limitations is a rule that sets the time for a someone to sue to collect. It is not a time limit to collect, or garnish, or take other collection activities, but to file the lawsuit.  And the time varies from jurisdiction to jurisdiction and circumstance to circumstance.  The time to sue on a credit card in Virginia is different from the time to sue on a defaulted car note in California.  Beyond that time, the debt is barred by the statute of limitations.

The Fair Debt Collection Practices Act prohibits misrepresenting the amount, character or legal status of a debt in an effort to collect on that debt.

But on a regular basis, they do sue on debts that are time barred.  For example, in this article, National Credit Adjusters threatened to sue on time barred debt. Here is another article on time barred debt.

When they sue, they are representing to you and the court that they have the legal right to sue.  That the time has not passed.  But if it has passed, they are making a false representation.

It is not unethical to sue on a time barred debt in Virginia.  Do not make the mistake of making a complaint to the state bar.  This is because in Virginia, the statute of limitations is an affirmative defense.  That means that YOU must bring it up to be an effective bar against collection.

Krumbein Consumer Legal Services, Inc., is happy to help consumers who have been impacted by debt collection attorneys who have sued after the expiration of the time to sue.  The facts and law vary from case to case, so it is important to contact a lawyer before the gavel falls, so if you are sued in Virginia, make an appointment to see us soon.

If you have been impacted by anything we mentioned here, you can make an appointment to see us.

NO FEE IN YOUR FDCPA CASE UNLESS WE RECOVER!!

KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.

YOU MUST BE A VIRGINIA RESIDENT.

If you are not a Virginia Resident, click here to find a lawyer near you.

OUR LEGAL FEES:

The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.

Contact us by e-mail or by telephone or fax or US Mail.

You can call us: 804.303.0204

You can fax us: 804.303.0209

You can contact us by US MAIL:

Krumbein Consumer Legal Services, Inc.

5310 Markel Rd.

Suite 102

Richmond, VA 23230