Michigan Collection Law Blog

I was approached by email, last week, by "Lance Davidson" who represented himself as a Gulf war vet living in Indonesia. He presented a passport picture and a semi-burned promissory note allegedly signed by a well known and respected businessman here in Michigan who died a few years back. What are the chances, right? Sorry, I am not buying into this crap. I respectfully declined to represent him and then he went ballistic. This morning, he sent me the following email in which he demanded $150,000 from me or he would file a grievance against me. Beware of this person whoever he really is. The emails says:

RE: Pro Se Settlement Out Of Court Offer $150k

Let me know if your willing to settle out of court before I submit this grievance report

My name is Lance Thomas Davidson; I am a current gulf war-era veteran and I live in Bali, Indonesia. On or about 21JULY, I contacted Gary Nitzkin with the prospects of allocating his legal services for the purposes of collecting a debt that is owed to me.
Gary Nitzkin operates under the assumed name of Gary Nitzkin & Associates; his official Michigan corporate name is Gary D. Nitzkin P.C. Also, his registered corporate identification number is: 404325. Gary Nitzkin’s office is located at: 22142 West Nine Mile Road, Southfield Michigan 48034

Indonesia does not have a good reputation for international trade. It is in many ways it is stereo-typed as a country that is prevalent with fraud and white collar crime. Although the reputation may be somewhat deserved, it should not serve as the basis in which a single person is PROFILED. Just as racial profiling is unethical and violates ones civil rights, so is discriminating against a person based on which country they live. I am an American citizen, one by birth, whose American rights and freedoms are protected by the U.S. Constitution and the Bill of Rights. John Fitzgerald Kennedy once said, “The rights of every man are diminished when the rights of one man are threatened”. Holding a license from The State Bar of Michigan to practice law is a privilege, and one that should not be taken lightly sanctity of the law always on one’s mind . Gary D. Nitzkin did not perform his duties as a licensed attorney, within the State of Michigan in an ethical manner…
By accusing me of fraud, performing private investigations on me, then having that private (unsecured) data sent to his Blackberry hand phone, he (personally and professionally) violated my rights to seek and secure proper legal representation. What’s more; he shared his opinions about me with others including contacting the F.B.I. for which there was no evidence of wrongdoing… He did everything in his unethical powers to destroy me, defame my reputation, and my rights to seek and secure proper legal representation.
By contacting others and speaking about the details of my claim in a defaming tone with the F.B.I and contacting my debtor’s attorney’s without a signed retainer contract; I now cannot find a collection attorney in Southfield, Michigan to take my case; furthermore, my chances to submit evidence, secure the testimony of others, and to hire a reputable attorney for the purposes of having my case presented in court and tried in an unbiased setting before a judge and jury--- Are substantially damaged – if not completely destroyed. By his imprudent actions, he singly, side-stepped the complete due processes of law by accusing me of crime that I did not commit. Once more, he substantially damaged my ability to seek and obtain proper legal representation; thus disgracing the State Bar Of Michigan, The U.S. Constitution, The Bill of Rights, and my beloved - United States of America.

By showing a disgust and lack of reverence for the office in which he was appointed to by The State Bar of Michigan, I humbly request that he be disbarred with no chances of practicing law again within the State of Michigan.

the Civil Rights Act of 1866, which was originally declared unconstitutional but then upheld when reenacted in 1870, after the ratification of the Fourteenth Amendment. All citizens, the act declared, "have the right to make and enforce contracts, to sue, be parties and give evidence; to inherit, purchase, lease, sell, hold, and convey real property, and to full and equal benefit of all laws and proceedings for the security of person and property." All governments then, state and federal, are required to protect the rights of person, property, and contract, without interfering with rights of inheritance, property, judicial action, etc.
Complementing civil rights is the conception of civil law. Civil actions consist of legal actions by private citizens against private citizens: Civil wrongs are breaches of contract or torts, wrongs specified in common law and case law but not, originally, by statute law. Civil wrongs are remedied by monetary damages paid to the plaintiff. Typically, the criterion of judgment in civil cases is less stringent than in criminal cases, that a verdict is to be based on the "preponderance of the evidence" rather than "beyond a reasonable doubt."

He may be a legitimate psycho. I don't know, but he is out there.

I was recently interviewed by National Public Radio ("NRP" to you nerds who regularly listen to it...o.k. I listen to it, too). The reporter from NPR was doing a story about how social media has affected the debt collection profession. As a debt collector, let me just get this out in the open once and for all, because I really don't care what the bleeding heart liberals of NPR think.

YES, MY OFFICE USES SOCIAL MEDIA TO TRACK DOWN DEBTORS. Yeah, I said it. What are you going to do about, NPR? I tell you, my dear readers, what they did do. NPR did the story and painted me as something beyond callous hard hearted. They characterized me as a violator of the Fair Debt Collection Practices Act ("FDCPA"). Well guess what, NPR, the joke is on you because I am an expert under the FDCPA and I am right in what I am doing. I may be a heartless debt collector (or "bottom feeder" as some of you like to say...but sticks and stones, right?), but I am good at my job and I do it well.

Continue reading "Who looks silly, now, NPR?" »

In a recent opinion in Green v Ziegelman, 282 Mich App 292 (2009), the Michigan Court of Appeals took up the case of whether a creditor can pierce the corporate veil of a corporate creditor pursuant to the Proceedings Supplementary to Judgment Act and enter a judgment against the shareholder of that corporate judgment debtor. In an astonishing reversal, the Court of Appeals held that the creditor may NOT do so.

Continue reading "Has the Michigan Court of Appeals given safe harbor to would be debtors?" »

The Supreme Court ruled today, in a 7-2 ruling in JERMAN v. CARLISLE, McNELLIE, RINI, KRAMER & ULRICH LPA. held that the Bona Fide Error Defense ("BFE") in the Fair Debt Collection Practices Act ("FDCPA") does not apply to mistakes of law.

Continue reading "The Supreme Court Rules that the Bona Fide Error Defense does NOT apply to mistakes of law" »

In the last few months, I have noticed that I have been getting similar emails from people who claim to be stuck over seas (usually in Japan, they say) and would like me to enforce their divorce settlement. This mornings' read like this:

Name: Jennifer Lunyang Email: aaxtos@yahoo.com Phone: +81-3-3423-8001 Interested In: Dear Counsel,

I am contacting your firm in regards to my divorce settlement with my ex husband (Frank McCain) who resides in your country. I am currently relocated to Japan because of financial problems which I encountered after he abandoned us in Europe. We had an out of court agreement for him to pay $380,000.00 plus legal fees. He has only paid me $24,000 since which was not enough to settle the bills,legal fees and the childrens school fees .I am hereby seeking your firm to represent me in collecting the balance from him.

He has agreed already to pay me the balance but it is my belief that a Law firm like yours is needed to help me collect the payment faster from my ex-husband or litigate this matter if he fails to pay as promised. The payment has been overdue for over 3months.

I await your urgent response and also let me know what your rates are as well as your agreement /retainer form.

Sincerely,

Jennifer Lunyang

I highly doubt that there is a Jennifer Lunyang in Japan. Her account is at yahoo.com. I would suspect that if she were stuck in Japan, that she would have a more Japanese sounding ISP hosting her free email account.

I dont know for a fact as to how the scam works, but I can easily see her having me send a demand letter to her "ex- spouse" and magically, i get a check for a huge amount of money. Presciently, she notifies me that she learns that her ex has sent me the money and then tells me a sob story about how she is destitute and needs her share as soon as possible and if wouldn't mind send it her ASAP. It would only be after I deposited the check and sent her the share, that I learned that the underlying check is bogus.

Attorneys - please be careful of this scan. its the newest flavor for getting hurt.

In Foti v NCO Financial 424 F. Supp2d 643 (S.D.N.Y. 2006), the United States District Court in New York properly held that all communications from a debt collector must contain a warning that it is a communication from a debt collector. The Fair Debt Collection Practices Act (FDCPA) , itself, at 15 U.S.C. 1622e requires this. However, the FDCPA also prohibits a debt collector from communicating about the debt with anyone other than the debtor, the debtor's spouse or attorney at 15 U.S.C. 1892(c)(b). In Foti, the debt collector attempted to reach the debtor by leaving a message. The court held:

"Thus, .given the choice of language by Congress, the FDCPA should be interpreted to cover communications that convey, directly or indirectly, any information relating to a debt, and not just when the debt collector discloses specific information about the particular debt being collected.

The court's language in Foti would appear to taint any voicemail message left by a debt collector as a violation of the FDCPA. This may be, indeed an incredibly broad view of the word "communication: under the FDCPA and this court's opinion has no formal binding precedential value outside of 2nd Circuit...BUT....the law in this area is far from settled and the District Court in 2nd Circuit stepped up to the plate and rendered an opinion. Any other circuit that is presented with this same issue will undoubtedly review the Foti case and its well reasoned opinion in formulating its own holding. This case is one large strike against debt collectors leaving messages. In my opinion, I would not wait for strikes 2 and 3 before advising my consumer debt collector clients to NOT leave messages on debt collectors' phones.

My question is then, is why would any debt collector in his or her right mind ever leave a voicemail message for a debtor? I think the short answer is that no collector with some familiarity with Foti would ever leave a message for a debtor. Yes, I understand that the telephone is still the number one tool for collect debts without litigation. I also understand the value of auto dialers in debt collection agencies. What I don't understand is why a collector would leave a message for a call back today.

Here is my best advice to you Consumer Debt Collectors and Attorneys who collect consumer debt - DON'T LEAVE VOICEMAIL MESSAGES FOR YOUR DEBTORS. Its just not worth the risk of getting hit with an FDCPA action.

Mr. Yaple, a California collection attorney represents (or may be represented) a California collection agency called TK Financial. Ms. Vlach, an Ohio consumer received a letter from Attorney Yaple in May of 2008 in which he informed her that he had been retained by TK Financial to pursue a debt against her. The letter also said that he intended to sue her and collect costs of the litigation and attorneys' fees. The letter was not signed by Mr. Yaple himself, but rather a typed signature. She is suing Mr. Yaple for violation of the Fair Debt Collection Practices Act.

She also presented the court with two emails that purportedly came from Yaple that represented that he intended to file a lawsuit against her.

Mr. Yaple contends that he did not compose these communications. Rather, he states that a rogue collector at TK Financial had created mock letterhead and set up an email account. In any event, he is now in trouble whether he is culpable or not. Although he is a California attorney, he was to defend himself in federal court in Ohio as a defendant in a class action. The case has since been settled and dismissed. Missing from the court's docket was Mr. Yaple's third party complaint against TK Financial and the allegedly rogue collector. This glaring omission speaks to whether there was truly a rogue collector or whether Mr. Yaple was pimping out his letterhead.

Continue reading "Collection Attorneys - Do NOT pimp out your letterhead to your collection agency clients" »

Today my good friend and occasional opposing counsel, Charity A. Olson and I gave a speech to the Oakland County Bench/Bar convention. I sue debt collectors under the Fair Debt Collection Practices Act and Charity defends them. She is as good as it gets when it comes to defense counsel. We presented a joint talk from both of our perspectives. Its was great fun, until....I took a question from Chiara F. Mattieson. She is a collection attorney with Holzman, Ritter and Corkery, PLLC.

During my speech, I informed the crowd how I had located a ghost debtor on Facebook. A ghost debtor is someone who is off the grid. He has no home address that I could find, no car registered in his name and no real estate. I could not find this guy until I found him on Facebook and then I was able to locate all sorts of information on him. Anyways, I sent this debtor a friend invitation which he accepted. Ms. Mattieson then asked me "Weren't you required to give him the mini-Miranda when you send your friend invitation on FB?" This requirement under the FDCPA is where you have to warn a debtor that your communication to him is from a debt collector.

Boy...she got me right there...on the spot...uh...uh....may be. She might have been right. But, as I thought about it through lunch, it occurred to me that no, I did not need to give this guy the mini-Miranda when I sent him a friend invitation through FB because my communication was not in connection with the collection of a debt.

After lunch, I saw Chiara in the parking lot. As some of you may know, I hold a first degree black belt in karate. I told Chiara that as long as we were in the parking lot....that I had an answer for her question. She was as gracious and friendly as could me as we discussed the pros and cons of the Fair Debt Collection Practices Act.

Kudos to Holzman Ritter and Corkery for hiring as an intelligent and astute attorney as Chiara Mattieson. Chiara, if you read this post, I want you to know that it is attorneys like you that make me proud to be part of our profession. You intellectually challenged me and by making me thinking through an answer, you made me that much of a better lawyer. Thank you.

I will be ready for yournquestions next time! :)

For the past several years, I have blogged about issues affecting debt collectors and their opponents, consumers. Some people have taken issue with the fact that I help both the proverbial Coyote and Road Runner. Too bad. Running a successful law firm such as Nitzkin and Associates has its advantages such as taking the cases that I want to take and representing the people that I want to represent.

I have decided to form an division in my firm dedicated strictly to helping consumers; its called Michigan Consumer Credit Lawyers. The website is still under construction. When it is complete, I will let you know. I anticipate that it will be live in the next few weeks. This new website will contain several self help videos for consumers on issues from what to do when they get sued to how to handle an abusive debt collector. Take heart as we also republishing our Nitzkin and Associates website with many instructional videos too.

The MCCL blog is already up at www.micreditlawyerblog.com. On this new blog, I will talk only about issues that affect consumers who have been wronged by debt collectors, banks, credit reporting agencies and anyone else that would treat a consumer like crap. MCCL's website will be up shortly to coach consumers on what to do when they are faced down by their larger and financially better heeled opponents. We are here for them to even those odds.

We are still and will always be debt collection attorneys. However, we mostly represent businesses and do commercial debt collection and hence, we really have no conflict of interest. I, Gary Nitzkin, will continue to write this blog coaching debt collectors on how to avoid violating the FDCPA and the FCRA.

If you have any questions, please feel free to email me, Attorney Gary Nitzkin or call me, tool free at 877-293-2882.

Attorneys, when you file a complaint under the Fair Credit Reporting Act ("FCRA"), be sure that you can make the following allegations in good faith:

a. Your client posited its consumer dispute with the credit reporting agency (and not just the creditor/furnisher directly). You or your client's failure to notify the credit reporting agency of your client's dispute is fatal to your FCRA claim. You see, under the statute, a credit reporting agency's duty to conduct a reasonable reinvestigation does not begin until it receives notice of the dispute. Notifying the furnisher of the dispute is insufficient to trigger any duty to conduct a reasonable reinvestigation by the credit reporting agency.

b. Be sure to plead that that the credit reporting agency notified the furnisher of your dispute. If you are uncertain as to whether this happened, look for facts that would support a good faith believe to allege that this happened "upon information and belief." Under the FCRA, a furnisher's duty to conduct its reinvestigation is not triggered until the credit reporting agency notifies it of your client's dispute. Some courts do not require this to be pled in the complaint, but yet, some courts do. For example, Judge Avern Cohen who sits in the United States District Court for the Eastern District of Michigan requires this allegation in FCRA complaints. I just finished reading an opinion in which he dismissed the Plaintiff's complaint for failing to allege that the credit reporting agency notified the furnisher. I have a world of respect for Judge Cohen and his opinions. I can safely say that he is an incredibly intelligent man and history will undoubtedly remember him as an excellent jurist. BUT......if you are going to file an FCRA complaint in the Eastern District of Michigan and your case is assigned to Judge Cohen, be sure that you follow my advice.

My colleague, David Lerner, has been described by our mutual friends as "blisteringly smart." I have cross swords with Mr. Lerner and have a great deal of respect for his abilities as do most attorneys that know him. Mr. Lerner made the cover of Michigan Lawyers Weekly on February 8, 2010 for his commentary on the case of In Re: Wingerter.

In this case, the debtors had challenged a proof of claim that had been filed by a debt buyer. When the debt buyer could not produce the original documents to support the claim, it withdrew its claim. The debtors were not happy with that result, alone. The debtors asked the court for sanctions against B-Line, the debt buyer for not adequately investigating its claim prior to filing it, pursuant to Bankruptcy Rule 9011(b). B-Line dodged a bullet in the trial court as the judge said that B-Line in fact did not adequately investigate its claim but did not award sanctions.

On appeal, the 6th Circuit court reversed the lower court and held that B-Line's pre-filing investigation was reasonable. The court found the fact that B-Line received a warranty as to the validity of claims it purchased, coupled with B-Line's cursory review of the claims, as persuasive that the claims that B-Line filed in the bankruptcy court, were filed in good faith and in compliance with its pre-filing obligations under Rule 9011(b). While the court did not find that these claims were, in fact valid, the court did find that having received such warranties from its seller, made B-Line's reliance upon the validity of these claims, reasonable and hence, its pre-filing investigation requirements were met in good faith.

Moral of the story to those filing claims on purchased debt in the bankruptcy court.- I am no fan of purchased debt. But if you are filing proofs of claims on these debts in bankruptcy court, be sure that the debt buyer's purchase agreement through which it bought these debts contains warranties that the claims are valid. Furthermore, be sure that your client has thoroughly vetted these claims for obvious anomalies such as incorrect social security numbers and bad addresses.

Query for you consumer lawyers: If this case had gone the other way and the 6th Circuit held that B-Line had violated its duties under Bankruptcy Rule 9011(b), do you think the debtors would be potential plaintiffs for a claim under Fair Debt Collection Practices Act?

The United States Supreme Court has taken up the issue of whether the Bona Fide Error (“BFE”) defense under the Fair Debt Collection Practices Act (“FDCPA”) applies to mistakes of law committed by debt collectors.
In Jerman v Carlisle, et al, the defendant law firm transmitted a collection letter to Ms. Jerman that may not have complied with the FDCPA. It was a minor error in their demand letter that caused this brouhaha. The defendant law firm’s demand letter informed Ms. Jerman (and others as they had sent this letter to other debtors as well) that unless they disputed the debt in writing, that the law firm would assume that the debt was valid. The FDCPA makes no requirement for a debtor to posit such a dispute in writing. You can read the oral argument before the Supreme Court by clicking on Jerman v Carlisle. This lawsuit was certified as a class action which may explain why the Supreme Court took this case.

The Sixth Circuit Court of Appeals dismissed the case by holding that the BFE defense applies to mistakes of law as well as mistakes of fact Jerman v Carlisle, 538 F.3d 469 (2008). The Sixth Circuit held that a plain reading of the FDPCA shows that the BFE defense does not exclude mistakes of law and so, neither should the court. This is a very interesting holding, indeed. Cases that have examined the BFE defense under the FDCPA, have mostly held that this defense applies only to errors of fact. The Sixth Circuit holding in Jerman was really breaking new ground with this holding.

So why did the United States Supreme Court accept this case for review? Ms. Jerman had turned her FDPCA lawsuit into a class action against the defendant law firm. If the defendant loses this case, it stands to pay a huge sum in attorneys’ fees plus class action damages of $500,000 or 1% of the law firm’s net worth, whichever is lesser. As I read the oral argument, it became apparent to me that at least one Justice had an agenda for protecting attorneys.

Three attorneys argued this case before the Supreme Court. Mr. Kevin Russell argued on behalf of Karen Jerman, the Plaintiff/Petitioner. Mr. William Jay argued on behalf of the Solicitor General, Department of Justice, supporting Ms. Jerman’s position. Finally Mr. George Coakley argued on behalf of the Defendant/Respondent law firm.

In my opinion, Justice Breyer’s pointed questions and comments indicated that he was interested in protecting lawyers. In my opinion, he seemed to be leaning towards affirming the Sixth Circuit. Unfortunately, I think that Mssrs. Russell and Jay had the better arguments before the court. I found Mr. Russell’s arguments quite persuasive when he pointed out that:

 The bona fide error defense speaks only to mistakes of fact and not to mistakes of law;
 Had Congress intended to include mistakes of law in the Bona Fide Error Defense, it would have expressly included such language in the statutue;
 Courts should not expand the Bona Fide Error Defense to include mistakes of law simply because it may result in an unfair consequence to the lawyer defendants;

Mr. Jay advanced an excellent argument against extending the BFE defense to include mistakes of law. He noted that several other statutes, including the Truth in Lending Act, a companion consumer credit statute, include a BFE Defense and none of the other statutes or the cases construing them have included mistakes of law as part of those BFE defenses.

As a collection attorney, I was rooting for Mr. Coakley. My colleagues and I are depending upon him to represent us and convince the Supreme Court that the Sixth Circuit decision in Jerman was correct. Unfortunately, I did not find Mr. Coakley’s arguments nearly as persuasive as Mssrs Russell’s or Mr. Jay’s.

Mr. Coakley began his argument by looking at a plain reading of the statute and then moved quickly into conceptual analogies that were more heady than persuasive. He then argued that some courts had construed the TILA’s BFE defense to include mistakes of law as well as fact. He then argued that Congress amended the TILA to definitively exclude mistakes of law from the TILA’s BFE defense. Although Mr. Coakley properly argued that this indicated that Congress intended to treat the FDPCA and the TILA as different statutes, this argument proved too much and subsequently, was Mr. Coakley’s undoing.

Justice Scalia noted that there were no appellate decisions construing the TILA BFE defense to include mistakes of law prior to the 1980 Congressional amendment to that statute. Justice Scalia then accused Mr. Coakley of misleading the court by implying that Congress had amended the TILA in light of court decisions construing that statute’s BFE defense as including mistakes of law. Any litigator knows that his ability to persuade a court is directly tied to his credibility. If the judge does not trust you, the court will put little credence in what you have to say. Mr. Coakley, in my opinion, shot himself in the foot by advancing the argument that Congress amended TILA’s BFE defense due to court decisions construing that defense as including mistakes of law.

I will let you know when the court rules on this case.