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

I am a collection attorney. I represent collection agencies...most of the time. Last month, I filed three lawsuits against three different collection agencies for blatently ignoring the FDCPA. I don't file frivolous lawsuits. These collection agencies egregiously violated the FDCPA. For example, one agency's collector threatened ME with legal action that she could not take. When I informed her that she violated the FDCPA for threatening to turn a $500 debt into a $3,000 debt after judgment, I did not sue this agency. After firing off a nasty letter to the agency, they cancelled my client's debt. I also had a long conversation with agency owners about how to training their collectors on the stricturs of the Fair Debt Collection Practices Act.

Another agency out of New York was pointedly told by my client to not contact her at work anymore. Did they listen? Nooooooooo. I sued them. Did they pay my client $1,000 in damages, plus costs and my attorneys' fees? Yeeeeessss. Are they going to think twice before contacting her again? I would tend to think so. Mind you, these cases make vey little money for our firm. These cases are more in the nature of pro bono. We file these lawsuits to "fight the good fight." There is a large number of collection agencies that take the time to train their collectors properly. Unfortunately, there appears to be a growing number of agencies that like to simply run rough shod over debtors. The collectors at these poorly run agencies give our profession a bad name and reputation.

Lets face it. Without debt collectors, you would not have the marvelous credit card in your wallet. Credit would only be granted on a heavily secured basis, if at all. Imagine a world with little credit and you should picture yourself living in a cave.

I have never filed so many FDCPA actions in such a short period of time. But beware, just because I am a collection attorney and usually represent creditors and collection agencies doesn't mean that I will sit on the sidelines while collectors misuse their telephones and positions of authority to mistreat people. Today, more people than ever are falling on hard times. I am seeing more and more people that have had jobs for the past several years losing these jobs and their life savings. Yes, I collect debts for a living, but I will not ever treat a debtor disrespectfully. Indeed, I will step in and defend anyone who is bullied at the hands of a debt collector.

I am sure that some of my collection agency clients will care for this post. To those who may not like my position on FDCPA abuses, I can only say "Too bad... Train your staff to treat debtors as human beings and accord them the respect and rights that Congress has told you to under the FDCPA and then we will have no problem." If you need help training your staff on FDCPA strictures, just call me. I will set up an appointment with you and get your staff trained and flying right. A little common sense and courtesy will avoid a great deal of issues under the Act.

If you have a problem with a debt collector or a collection agency, call me. I am a debt collector and I speak their language. It may be that I can get your problem handled with a telephone call or a letter. Who better to fight your fight with a collection agency than a collection attorney?

Just last month (November 2006), the 600 pound gorilla of debt collection, Muller Muller Richard Harms Myers and Sgroi, P.C., lost an important round in an FDCPA action entitled Stolicker v Muller Muller. Get this....Ms. Stolicker had a Capital One credit card. The agreement she signed with Capital One says that if they have to collect against her, Capital One can also collect attorneys' fees and costs of collection. Thats reasonable, right? Not really.

After the Muller firm sued her and she failed to answer, the Muller firm took a default against Stolicker. The Muller firm filed an affidavit stating that Stolicker owed a sum certain. The Muller firm, in its affidavit, stated that Stolicker owed $776.68 as attorneys fee (25% of the principal debt). The United States District Court held that this affidavit was false. By adding attorneys fees in a sum certain when the contract between Stolicker and Capital One did not specify that amount or any particular amount of attorneys fees, amounted to a fundamental change of the underlying contract. The Muller firm is now battling a very large class action suite under the FDCPA . Under the FDCPA, damages in a class action can go as high as $500,000 or 1% of the debt collectors' net worth.

Moral of the Story for Debt Collectors - If you are collecting on any consumer contract that contains a provision for attorneys fees you must make an election to either 1. Prepare a default without the calculation of damages. Have a hearing on damages if your client/witness is local or if it is cost justified to have the client/witness attend such a hearing; or 2. Simply walk away from the amount of attorneys fees.

In this case, the Muller firm was seeking damages against Stolicker for $3,985.25. This is in addition to attorneys' fees of $776.68. This $776.68 will probably be the most expensive money that the firm ever attempted to collect and in the end, it is most unlikely that Muller or its client will see any portion of this $776.68.

On a personal note, I can't say that what the Muller firm did was foreseeably incorrect. I have a great deal of respect for that firm and for Steve Harms. Mr. Harms is a guru in our industry and the author of a book that many of us debt collectors affectionately refer to as "the Bible." While it would seem to me that if a debtor signs a contract agreeing to pay costs and attorneys fees and those fees are charged on a contingency basis of 25%, they should be added to the debtor's account. However, the defense to this position would state that the 25% fee is a contingency fee that only gets paid if money is collected and if no money is collected, then the Capital One suffered no additional costs by way of attorneys fees.

This case illuminates an interesting conundrum. In order to safely steer through the murkey if not altogether dangerous depths of the FDCPA, the better course would be to avoid the attorneys' fees entirely and simply go for the statutorily based damages.