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debtsmanship.com

home of
Bill-Collector Confidential
by ex-bill collector Steve Katz
and George Trinkaus


from Chapter 7

 Sue the Bastards

The laws by which you can sue reside in the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA). Delinquent debtor, these acts are your friends. (However, if your debt is not a consumer but a business debt, FDCPA does not apply, though FCRA does apply.) State and local governments may provide even more protections.

Collectors regard these hard-won consumer protections with contempt, and often disregard them . . . 

How much can you collect?
FDCPA limits awards to actual damages or $1,000 per suit, plus court costs, whichever is greater. Suits under FCRA carry statutory damages of only $100 to $1000 per suit, depending on how generous the judge happens to be. Still one can make a little career out of suing these bastards and accumulate some wealth . . .

Who is subject to the Fair Debt
Collection Practices Act?

All collectors who are not employees of the original creditor are subject to FDCPA. Your commercial (business) debts are not subject to FDCPA. Nor are: original creditors, account servicers and factors (companies that purchase debts) or accounts that are not yet past-due, also government officials, nonprofit credit counseling agencies, and process servers. FDCPA prohibits: harassment or abuse, false or misleading representations, unfair practice... (See especially sections § 806, §807 and §808.) Your own litigation becomes the weapon of enforcement, encouraging recalcitrant creditors to settle debts and to obey the law, to report accurately and fairly, to pull a credit report only when permissible, and to treat consumers with respect.

How to Sue

Since both laws limit statutory damages to only $1000 per suit, you will find it difficult to get an attorney to represent you, but it also means the collector will not spend much to defend himself.

Consider all possible outcomes before you file. You may push the other side into punitive actions you did not intend. The possibility of a countersuit is always there. Creditors know when to sue and when not to. The debtsman develops the same sense.

Try to reach some agreement before it gets to a suit, and document your attempts. Judges don't like their courtrooms to be the first place the case is argued out; it should be the last. Offer one last chance to talk before you head for the courthouse.

Before you sue you need to build your case. Has there been a violation of law or a breach of contract? If it's a breach of law, know the exact provision . . .

Demand payment for the violation.
Before you sue, send the collector a
notice of intent to sue, a one-page letter detailing the violation and stating that unless the collector sends you $1000 statutory damages by a certain date, you will file suit. Expect this letter to be ignored. Be prepared to follow through on your threat of suit . . .

settling the suit
Settle before suing, if you can, but don't be the one to make the offer. Set up conditions to induce the collector to make an offer.
A collector may file suit against you only to discover later that he's dealing with a competent debtsman, that he won't be able to get a cheap default judgment, and that he may even end up paying his lawyer many times what he claims is your debt . . . 

nondisclosure agreement
As part of the settlement, the collector will probably want a
non-disclosure agreement in which you agree to keep the matter secret, in the interests of not inciting debtsmanship in the public at large. Author Steve says his silence is expenxive and demands additional funds, starting at $10,000 and negotiating down from there.

In the non-disclosure agreement, the collector agrees not to disclose any information about this matter to any credit-reporting agency. . .

Where to Sue

You may bring suit in any court of competent jurisdiction, federal or state. When you sue under the federal acts, "any federal district court" has jurisdiction. You can sue in a state court if state laws apply, such as in a statute-of-limitations case. Be certain that the state court does have jurisdiction. Jurisdiction can be a complicated and convoluted area of law with many pitfalls should the opposition decide to contest venue.

Generally you must sue in your resident state or where the transaction took place . . .

What to Sue For

Sue for impermissible pull.
That's pulling your credit file when not permitted by you or by the law.
The Fair Credit Reporting Act allows access to your credit file by only a few entities, in specific situations, and only for certain purposes. (See the Act at www.ftc.gov.) If you prevail, you are entitled to a $1000 statutory damages award . . .

Sue for a deceptive threat.
The legal standard for what is deceptive asks: would
the least sophisticated consumer believe the threat? If the village idiot would believe it, then it is a violation. . . 

Sue for statute-of-limitations violations like re-aging.
FDCPA places a 7.5-year statute of limitations on a debt, beginning at delinquency. Re-aging the
status date is a violation. So sue the bastards . . .

Sue for failure to validate the debt.
FDCPA supports your right to demand a validation of debt, your “put up or shut up” right. The Act requires that you be warned of your right in the initial communication. If this validation warning is not included, the collector has five days to mail it to you. Failure to do so is a violation. So sue him . . .

Sue for unlawful communication with your employer.
An agent can communicate with your employer to determine your collectability, but, if he characterizes you as a “deadbeat” or even as a “debtor,” it is defamatory, so sue him. Employer contact is a shame tactic, and so is any communication with friends, relatives or neighbors, defamatory or not. FDCPA permits such communication solely for obtaining “location information.” If the collector already knows where you live, then he has no need for location information. So sue him . . .


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