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

I just saw a fairly recent post from a "The Credit InfoCenter Blog." It was arrogantly entitled "Now I'm Giving Advice to Consumer Attorneys." To me, this post highlighted why a consumer ought not to seek legal advice from someone who is not an attorney.

In this person's post, she suggests that a debt should counter sue a creditor who files a suit without the proper documentation to prove the debt. Here is the problem. The law in this area has already been decided. If you review my previous posts (May 4, 2008 entitled "Attorneys for Debt Buyers beware...they are on to us!), you will see that unless a debtor drafts a lawsuit to allege fraud against the creditor, that such a counterclaim will necessarily fail. After all, the purpose of a trial is to determine who is right. A creditor bears the burden of proving the debt. If the creditor comes to trial without the necessary documents to prove his debt, he does not violate the Fair Debt Collection Practices Act. He merely loses a trial. But....if the creditor has a history of pursuing debtors without having the necessary docs to back up his claim, well then, he may be engaging in a pattern of fraud. Its a subtle but important distinction. Again, I have laid out the 2 major lines of cases in this instance in my May 4, 2008 post.

If the debtor's counterclaim fails and the court believes that the counterclaim was baseless, the debtor may get hit with sanctions. How angry would the debtor be at having a judgment entered against him for both the balance due on the complaint plus sanctions??!!!

Bottom Line: Please be very careful when reviewing advice from non lawyers. The CreditInfocenter Blog seem to be very well intentioned. However, they should not give advice and further still, ought not to hold themselves out as giving advice to attorneys. You can almost always find a Consumer Rights Lawyer that will spend some time with you for free. Get the right advice from the right people.

My fellow blogger and debt collection attorney, Michael Herrin, recently wrote a blog entry about bogus defenses to debt collection. His blog entry can be found here. He has come across the following defenses from debtors who believe that these defenses are good. He and I have both heard debtors attempt to use these defenses. Unfortunately, they are invalid. Mr. Herrin lists the following bogus defenses:

1. I haven’t heard anything about this debt for several years and therefore you can’t sue
me for it.

2. You can’t sue me because you don’t have a signed contract.

3. I have never heard of the company that is contacting me or suing me and I have no agreement with them, therefore I don’t have to pay them.

4. You can’t sue me because I am making payments.

None of these defenses is valid. I would like to add the following to the list of defenses that are simply not valid:

5. The credit card company has written off the debt so they cannot pursue me. People may see on their credit report that a company has written a debt that was owed by the consumer. The consumer then makes the mistake of thinking that because the credit card company wrote off the debt that this means that no one else may pursue the debt. Remember the credit card debt is transferable. Another company usually purchases the debt and hires a collection law firm to pursue it.

6. In my divorce decree, the court ordered by ex spouse to pay the debt. This is a very common mistake that is even made by some judges. Remember that when you get a credit card from a bank, you enter into a contract with the bank to repay that debt. That is your obligation. Just because your ex spouse has has ordered to pay the debt, does not relieve you of your obligation to the bank.

Bottom Line: If you get sued for a debt, DON'T SIMPLY CAVE IN AND PAY IT. Contact a collection attorney to see if the Plaintiff can sustain its burden at trial (see prior blog posts). If the debt appears to be valid, then have your attorney negotiate a settlement and payment plan. Your attorney can almost always negotiate a better payment plan than you can. She will charge you an hourly fee, but she should be very cost effective.

Every so often an article relating to some self proclaimed expert in debt collection cross my desk. This morning it was Julio Martinez-Clark, who has written a book entitled How to Legally Beat Debt Collectors. He is putting out some very bad, if not dangerous information to the public.

I represent debtors and creditors in debt collection. I enjoy working both sides of the proverbial fence because it makes me a better lawyer. After all, if you are a debtor, wouldn't you want your lawyer to know what the creditor is thinking and how it is going to proceed? Well, I do. If you have followed my blog, you will see that I have put out a lot of very good and helpful information for debtors who are battling debt collectors. Mr. Martinez-Clark, unfortunately, is not helping anyone except for himself. For example, Mr. Martinez-Clark states:

1. Credit Card Contracts are usually not transferable. This is absolutely wrong. Just about any debt, especially consumer debt, is transferable.

2. Corporations must be prepared to show that their charters authorize lawsuits. Nope. In my 20 years of suing consumers who have been defended by very astute defense attorneys, this has never been an issue. Corporate charters (Articles of Incorporation here in Michigan) usually do not address a corporation's ability to sue a party. What corporation would ever limit its own ability to sue someone or some entity that owed it money, especially a consumer lending type corporation? Common sense, anyone?

3. After judgment, there must always be an action in rem. Nope. Some debtors actually do the right thing and either make payment arrangements or pay the judgment. Moreover, while an action in rem is an action against property, a debt collector can also continue to pursue the debtor personally. I like to prepare and use creditors examination subpoenas. With this device, I have a debtor served with a subpoena wherein he is ordered to appear in court with his tax returns and other financial information. Then with this information, if I still have no cooperation, I then proceed against his property.

4. 99.99% of debt collection cases are done improperly and you can win. Nope. This is where Mr. Martinez-Clark cross the line from reality into make-believe. In Michigan, if you get sued by one of our debt collection law firms, your chances of beating the case are not 99.99%. While all hope is not lost if you get sued, and many cases are in fact defensible, that does not translate into the statistic that Mr. Martinez-Clark pulled out of his....hat. (?)

I could go on and on, but I have given enough time and attention to Mr. Martinez-Clark's shameful efforts to raise money. I, on the other hand, simply want to raise awareness that there are plenty of snake oil salesmen giving debtors bad advice over the internet on how to get out their debt. Mr. Martinez-Clark is one such author.

Moral of the story - There is no substitution for professional legal assistance when dealing with debt collectors.

OK. I just saw this Youtube entry from some backwater redneck in a polyester suit. He was advising people that collection attorneys (referred to as bottom feeders) cannot collect debt that was charged off by a bank or credit union because the institution took a credit for it on its tax return. This is the second time that I heard this argument this year. This guy has inspired me to create a new category for my blog entitled Bad Collection info floating around the 'net.

Anyway, the bottom line is that just because the bank charged off your debt does not mean that you get to skate from the bill. You still owe the bill. The bank can sell the debt and you still owe the entire amount of the bill plus interest, costs and attorneys' fees if you get sued. Banks frequently charge off debt because they are governed by regulations and regulators that frequently look at their books and records. These regulations do not allow banks to keep non collectible debts on the banks books in the collectible column.

The FDCPA has nothing to do with this issue, no matter what Billy Bob from YouTube says. The FDCPA only protects you if the debt was a consumer debt and if new collector or debt owner attempts to collect it from you.

If you want advise on collecting a debt or how to work with a collector so you do not get bullied, call a lawyer. Yuk yuks like this guy are only going to get you into trouble.