Debt Lawsuits, Garnishments, False Affidavits of Service on the Rise
April 21, 2010
A good article about consumer debt collection recently appeared in the New York Times: More Struggling Borrowers Face Pay Garnishment.
The article discusses the dramatic rise in debt lawsuits and wage and bank account garnishments. It also discusses as the importance of responding to debt lawsuits.
Most interestingly, it discusses the problem of consumers’ not being properly served with notice of these lawsuits.
I would say this is an epidemic in Maryland. Several times a week I speak to consumers whose court summons paperwork has been left on their front porch or in their mailbox. This does not constitute adequate service.
The process server then submits a false affidavit of service to the court stating that he personally served the defendant or the defendant’s family member.
Unfortunately, many consumers don’t know they can challenge the insufficient service. But, even if the service is thrown out, you can be served again. So, you still have to deal with the underlying lawsuit. Consequently, many consumers don’t challenge the bad service.
But, it seems to be common knowledge in Maryland that certain process servers routinely submit false affidavits of service. It is a mystery why debt collection firms continue to use these process servers.
Consumers who were improperly served should consider whether they can make a motion to the court to quash the bad service. If nothing else, doing so will put the courts on notice that certain debt collection firms routinely use process servers who submit false affidavits.
Chapter 7 Bankruptcy Timeline: From Filing Date to Discharge
April 11, 2010
A Chapter 7 bankruptcy typically takes 3-4 months from filing date to discharge date. This post discusses what happens during that time.
Bankruptcy events
Notices from the court: You will receive several notices from the court by mail.
Your meeting of the Creditors: Your will receive a notice from the court telling you the date and time of your Meeting of the Creditors (also called a 341 Meeting.) It is very important that you attend this meeting.
Financial management course: You will need to complete a financial management course within 45 days after your Meeting of the Creditors. This course can be completed online.
Final discharge papers: About 80-90 days after your Meeting of the Creditors, you will receive your final bankruptcy discharge papers. Please save these papers. If creditors later try to collect on a debt you included in the bankruptcy, you will need to show the creditor your bankruptcy discharge papers to prove that you no longer owe the debt.
Debts and expenses while you are in bankruptcy
Unsecured debt payments: You will stop making payments on the unsecured debts that were included in your bankruptcy.
Secured debt payments: It is very important to stay current on your secured debt payments while you are in bankruptcy. If you fall behind, the creditor will ask the court for permission to proceed with foreclosure or repossession.
Automatic debits and electronic payments: You will not be able to pay your secured debts using automated debit or electronic payment. Plan to pay your secured debt payments by check.
Selling assets: You will not be able to sell any of the assets in your bankruptcy estate without the permission of of the trustee.
“New” debts: Debts you incur after your filing date are not discharged by the bankruptcy. In other words, you will still be liable for paying those debts.
Expenditures: During the time your case is in progress, you will need to limit your expenditures to reasonable living expenses only.
Significant changes in your financial situation: You must notify the Trustee if you win the lottery, come into an inheritance, or have any other significant change in your financial position while your case is in bankruptcy and for six months after your bankruptcy discharge.
Creditor contacts, debt lawsuits, and garnishments while you are in bankruptcy
The automatic stay: The automatic stay goes into effect when you file. The automatic stay is the court order that tells creditors and debt collectors to stop contacting you.
Creditor contacts: If creditors contact you, this is a violation of the automatic stay. Make notes of the name and contact information of any creditors contacting you. Notify your attorney of any creditor contacts.
Pending debt lawsuits: If you have any pending debt collection lawsuits, they will be suspended while you are in bankruptcy.
If you successfully complete the bankruptcy, the cases will be terminated. If you do not successfully complete the bankruptcy, the cases will be re-activated.
Court cases not related to your debts will be affected differently. Be sure to discuss with your attorney the effects the bankruptcy will have on any court cases you have pending.
Garnishments: Most garnishments will be terminated when you file bankruptcy.
How to Defend Credit Card or Debt Collection Lawsuits
February 23, 2010
I recently came across a great article by Pennsylvania attorney Jim Kutkowski. It discusses how to defend credit card lawsuits.
While the article is based on Pennsylvania law and court procedures, things work much the same in Maryland. In Maryland, most credit card lawsuits are heard by the District Court, which operates similarly to Pennsylvania’s Magistrate Court.
The article discusses evidence in credit card lawsuits and the back and forth that goes on in Magistrate (PA) and District (MD) court.
In Maryland, the courts often seem to put the burden on defendants to prove that the account wasn’t theirs instead of forcing the Plaintiff to prove that it was. This is an unusual allocation of the burdens of proof in a court case, but it happens.
Read Mr. Kutkowski’s article for valuable information on defending debt collection lawsuits: Credit Card Lawsuits and How to Beat Them
Mann Bracken’s Cases Dismissed, But Consumers Should Remain Vigilant
January 16, 2010
Debt collection law firm Mann Bracken’s pending lawsuits are being dismissed without prejudice in Maryland courts.
If your case is supposed to be dismissed, be sure to follow up and ensure that it is actually dismissed. There is going to be a lot of confusion in the court system as a result of the mass dismissals. Stay on top of your case and verify that it has in fact been dismissed.
Mann Bracken LLC Ordered to Cease Collection Activities in Maryland
January 14, 2010
The Maryland Commissioner of Financial Regulation has suspended Mann Bracken’s collection agency license in the state of Maryland and ordered it to immediately cease all collection activities, including pending litigation.
Defendants in cases for which Mann Bracken is Plaintiff’s counsel should consider how this affects their cases, garnishments, or settlements.
Please see text of order at this link:Â mann-bracken-cease-and-desist-1-11-10
U.S. District Judge Finds Midland Credit Management Submitted False Affidavits in Debt Lawsuits
October 4, 2009
It hasn’t been a good couple of weeks for Midland Credit and its various related entities.
Earlier, Midland Portfolio Services LLC, and its parent company, Encore Capital Group, Inc. were ordered to cease all collection activity in Maryland, including pending court cases. See this link for more information.
U.S. District Judge for the Northern District of Ohio David Katz recently ruled that Midland Funding LLC and Midland Credit Management Inc. have been routinely submitting false affidavits in filing debt collection cases. Read more about this case at this link.
Specifically, Judge Katz found that clerks at Midland Credit routinely signed affidavits stating that the individual clerk had Âpersonal knowledge of the debt being collected when they did not have such knowledge.
This situation is common in Maryland court filings as well. Many of the debt collectors submit affidavits that cannot possibly be based on the clerk’s personal knowledge of the debt– after all, the clerks are the employees of the debt purchaser / collector, and not the original creditor.
And, it is very unlikely the clerks review the accounts in question before signing the affidavit saying they have “personal knowledge” the debt is calculated correctly and is actually owed by the Defendant.
It is a mystery as to why the debt collector’s attorneys are willing to put these obviously false affidavits into evidence.
In an effort to try to get around this problem, some debt collection attorneys attempt to put old credit card statements into evidence as “self-authenticating” records.
But, for the records to be self-authenticating, a very specific procedure must be used under Maryland Rule 5-902(b). Among other steps, the rule requires the so-called “self-authenticating” records to be certified by an affidavit from the Custodian of Records. Many of these affidavits– if they are produced at all– include false statements.
But whose Custodian of Records must submit the Certification of Records affidavit? It would seem the required language of the Affidavit of Certification could only be truthful if signed by the Custodian of Records of the original creditor.
See Maryland Rule 5-902(b)(2) for the required language. You will need to click on the “Maryland Rules” FOLDER (in the middle of the list), then “Evidence,” then “Title 5,” then “Rule 5-902.”
But, in order to object to the faulty self-authentication of old account statements, the Defendant must act very quickly to (1) examine the documents in question (this may require a trip to the debt collector’s attorney’s office) and (2) file a written objection to the faulty self-authentication. Read Maryland Rule 5-902 here.
But, remember: even if a Defendant successfully challenges the faulty use of affidavits, the debt collection attorneys still have the option of proving their case the old fashioned way– by producing witnesses to authenticate any evidence they want to put into the record. (But do they have any evidence? That’s another question for another post.)
But, because they file hundreds and even thousands of cases each month, debt collection attorneys try to streamline the process as much as possible by relying on affidavits rather than producing witnesses for every case. This is understandable.
But the use of false affidavits is not.
Thank you to Minneapolis Consumer Attorney Sam Glover for the link to this story.
Midland Funding Ordered to Cease Unlicensed Collection Activities in Maryland; Statute of Limitations and FDCPA Issues Also Addressed
October 3, 2009
The Maryland Department of Labor, Licensing and Regulation recently issued a Cease and Desist Order to a group of San Diego-based debt collectors alleged to have engaged in extensive unlicensed and illegal collection activities in Maryland.
The Order also addresses statute of limitations and Fair Debt Collection Practices Act requirements.
All Collection Activities Must Stop
Midland Credit Management, Inc., Midland Funding, Midland Portfolio Services LLC, and their parent company, Encore Capital Group, Inc. were ordered to immediately stop all collection activities in Maryland.
The order requires the companies to suspend (or “stay”) all current court cases filed against consumers in Maryland state courts.
The companies must also stop making collection phone calls and sending collection letters to Maryland residents.
Statute of Limitations Issue and Possible Fair Debt Collection Practices Act Violations
In addition to the licensing issue, the Cease and Desist order requires the companies to cooperate in a review of the companies’ files to identify any cases that were filed past the Maryland statute of limitations. The order also requires a review of the companies’ debt validation procedures.
However, the Order does not make clear exactly what triggered the DLLR file reviews.
What if I sent money to one of these companies or their attorneys when the companies were conducting unlicensed collection activity?
The companies have the right to an administrative hearing on the issue, but could eventually be required to pay penalties and restitution of more than $40 million.
In other words, they may be required to eventually return at least some of the collected funds to consumers.
What if I have a pending court case with Midland as a Plaintiff?
The Cease and Desist Order requires Midland Fundling LLC to submit court motions “staying” every case in which it is a Plaintiff. You can check your court file online to see if the required motion has been filed in your case.
What if you are contacted by one of these business entities or their attorneys while the cease and desist order is in effect?
Notify the Maryland Department of Labor, Licensing and Regulation immediatly. Use this link to file a complaint with the Maryland Department of Labor, Licensing, and Regulation.
How do I know if I have been contacted by an unlicensed debt collector?
Check here to check whether the debt collector who contacted you is licensed in Maryland.
Foreclosure Proceedings in Maryland: What Happens When
January 29, 2009
Below is a link to an article published by the Maryland State Bar Association. It gives detailed information about the mechanics of the foreclosure process in Maryland:
Foreclosure Proceedings in Maryland
Laws Regulating Debt Collectors: FAQ
January 11, 2009
Below are some questions our office frequently receives.
The collection agent I spoke to was very threatening and called me in the middle of the night. Is this legal?
No, such collection techniques are not legal.
Collection agencies must by law follow certain detailed procedures when contacting a consumer by mail or phone. Collection agencies must also by law provide you with certain information about your rights.
You can sue a collection agency if it breaks these laws in its communications with you.
How can I prove a debt collector broke the law?
To help you prove your case, it is very important that you save all letters and voicemails from collection agencies.
You should also save all old statements, the original account agreement, and any other documents you have for the account.
We do not recommend dealing with collection agencies over the phone. But, if you decide to speak with a collection agency over the phone, you may want to consider taping all phone calls. In Maryland, you must by law get the other partyÂs permission before recording a call.
Also, save any recorded phone messages from collection agencies. If you speak with a collection agent over the phone, make detailed notes about the phone call as soon as you hang up, even if you are recording the call.
And, if you have an attorney, the collection agency must by law (1) stop contacting you about the account and (2) direct all communications about the account to your attorney.
What kinds of debt collector contacts are prohibited by law?
Many state and federal laws regulate debt collection activities. In some cases, a consumer can sue a debt collector if it violates these laws. Below is a partial list of illegal debt collector activities.
You should contact an attorney for more information if you think a debt collector has behaved inappropriately or made suspicious statements to you.
Even if you donÂt see a description below that fits your situation, there may be other laws that apply.
Harassment. A debt collector may not:
- Threaten violence or harm.
- Refuse to identify him- or herself and the fact he or she is a debt collector.
- Advertise or publish a debt. (Exception: it usually may report the debt to credit bureaus.)
- Use obscene language.
- Call very early, very late, or in an otherwise harassing pattern.
- Contact you by postcard in an attempt to embarrass you.
- Charge you for collect calls.
- Contact neighbors, employers, or family members about your debt. (This is illegal in most cases.)
- Continue to contact you about a debt after you have informed the collector that an attorney represents you.
False Statements Prohibited. A debt collector may not make false statements when trying to collect a debt. Some examples are:
- Falsely implying that a debt collector is an attorney, police officer, or government representative.
- Falsely implying that a consumer can be arrested or imprisoned for not paying a debt.
- Falsely claiming or implying to be affiliated with a credit bureau.
- Misrepresenting the amount or legal status of the debt.
- Sending fake Âlegal papers in an attempt to collect on a debt.
- Telling a consumer that a letter is not a legal document when it is.
- Telling a consumer a lawsuit is in progress when that is not true.
- Telling a consumer the debt collector will seize the consumerÂs property or wages. (This is an illegal threat unless the debt collector both has the legal right to do so and intends to do so soon.)
- Telling a consumer the debt collector will garnish his or her paycheck “immediately” or “next week,” when there is no final legal judgment in place. Garnishments usually cannot take place until a creditor or debt collector gets a final court judgment against the consumer.
- Telling a consumer she or he will be sued. (This is an illegal threat unless the debt collector both has legal grounds to sue and intends to do so soon not months or years later.)
- Making contradictory statements about a consumerÂs legal rights. For example: in one paragraph, a collectorÂs notice might inform a consumer of his legal rights, but in the next paragraph the collector might write, Âyou waive all of the above rights if we donÂt hear from you in 30 days.Â
Consumer Stories Needed: Participate in Arbitration Fairness Day April 29, 2009
January 10, 2009
The National Association of Consumer Advocates (NACA) is looking for consumers willing to share their experiences dealing with mandatory binding arbitration.
Specifically, NACA is looking for potential participants for Arbitration Fairness Day. They need more participants from the Maryland/Virginia region.
Arbitration Fairness Day is Wednesday, April 29th, 2009. The purpose of the lobby day is to tell Congress, the press, and the American public why binding mandatory arbitration is a biased system that denies accountability and justice.
There will be a morning press conference featuring Congressional co-sponsors of the arbitration fairness bills and select consumers who will tell their first-hand stories.
Following the press conference, consumers and advocates will meet with their Representatives and Senators.
NACA may be able to cover some transportation and lodging costs for consumers traveling to Washington, D.C.
If you are interesting in participating, please contact our office and we will forward your information to NACA.
[This post was excerpted from an email alert from the National Association of Consumer Advocates.]
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