Michigan Collection Law Blog published By Michigan Creditor Lawyers Nitzkin & Associates

My neighbor got into a dispute with Detroit Edison ("DTE"). They had sent him a bill that he thought was outrageous ($565 for digging a hole in his yard and repairing some cable). My hard headed neighbor refused to pay the bill. I talked him into offering to pay half of it since if he didn't, it would necessarily mean that I would have to fight this in court if he got sued.

I sent a letter to DTE's collection law firm from North Carolina (no, I won't disclose its name). The law firm, through its collector, called my office. I spoke with the collector on Friday, November 10, 2006.

The first thing that she told me that it was illegal for my neighbor to "so much as dig a hole for a flower in his yard without contacting DTE." I informed that that was simply untrue because there is no such law in Michigan requiring any property owner to seek another permission to dig flower holes. She sarcastically asked me if Michigan's laws are different than the laws in the rest of country where its illegal to dig holes without contacting the utilities. I informed her that I am only licensed as a lawyer in Michigan and that I can only comment on Michigan law. I informed her again that she was wrong. HERE IS WHERE SHE GOT INTO TROUBLE....

After she refused my settlement offer of $250, she informed me that she was going to place this debt with local counsel in Michigan and that the debt would easily become a judgment of at least "$1,500 to $2,000." I asked her how that was possible since I am a collection attorney and I have NEVER been able to transform a $565 claim into a judgment of $1,500 to $2,000. "Attorneys' fees" she summarily responded. I told her that she just violated the Fair Debt Collection Practices Act ("FDCPA")as DTE would not be able to get more than $150 in attorneys fees in Michigan without having a signed contract or a statute. Under the FDCPA, a collector cannot threaten to take action that it does not legally have the right to take. A collector cannot mislead or lie to a consumer! But "Gary", you are thinking, you are a lawyer! You were not misled. You knew that this collector was wrong!" And yes, you would be right...but...Under the FDCPA, the standard for determining whether a collector violated the FDCPA is the "Least Sophisticated Consumer." This means that my actual knowledge of FDCPA is irrelevant. If what the collector did would have a tendency to mislead a unsophisticated consumer, then the collector's actions violate the FDCPA.

DAMAGES UNDER FDCPA - a party who violates the FDCPA is liable to a consumer for the greater of $1,000 or actual damages plus reasonable attorneys fees.

LESSONS TO BE LEARNED:

If you are collection agency or in this case, a collection law firm, TRAIN YOUR COLLECTORS IN FDCPA. Spend the time necessary to make them understand how the FDCPA works. In this case, the collection law firm is going to either pay us for violating FDCPA or its going to be embarrassed in front of its client and end up paying even more in attorneys fees. Either way, the North Carolina Law Firm could have easily avoided this mess by simply taking a little time and spending a little money to give their collectors an education.

Mr. Patrick Lunsford of CollectionIndustry.com wrote the following article:

A man in Indiana has filed suit against a hospital and a collection agency – and their respective parent groups — over a security lapse that exposed the personal information of some 260,000 patients.

The litigant, Michael Chaney, claims that The Sisters of St. Francis Health Services and its collection agency, Advanced Receivables Strategy (ARS), violated HIPAA regulations and failed to effectively notify potential victims that their information was exposed.

The breach stems from an incident in July involving an employee of ARS. When returning a computer bag to a store, the employee apparently left several data disks in the bag that contained patients’ names and Social Security numbers. The hospital did not notify the patients until October.

Chaney’s lawyers are seeking class action status for the suit. They are claiming that each member of the class is entitled to no less than $5,000.

ARS is owned by Perot Systems.

Continue reading "HIPPA Violation may lead to class action" »

Last year, I wrote a number of articles for the lay/business person about how one can effectively protect one's rights in the collection arena. I recently posted these articles to my website. These articles, are entitled:

1. Collection law firm v Collection agency - where you should place your account.
2. Telltale signs that your customer is not going to pay you;
3. Three things your attorney should discuss with you before you file a lawsuit;
4. How to handle a debt collector who is dunning you for money;
5. To sue or not to sue....that is the question.
6. Pitfalls for the business owner to avoid.

While these articles are not scholarly, they are certainly loaded with good practical information for a business owner or laymen to use. Please peruse and enjoy!