consumer equal justice clinic - flabizlaw.org
TRANSCRIPT
Consumer Equal Justice ClinicLegal Services of Greater Miami Inc.
4343 West Flagler StreetMiami, FL 33134
Matt Bayard Esq.(305) 438-2413
GOALS• Educate debtors and consumers about their
rights when facing debt collection activity• Provide guidance to the debtor on how they
can resolve their problem• Provide resources to debtors• Limited assistance in preparing forms and/or
pleadings• Referrals
TOPICS• Consumer Debt Collection
Basics• Collector Harassment• Identity Theft Fraud• Credit Reporting Errors• Student Loans
Common Types of Consumer Debts• Credit Card debts• Charge Card debts (e.g. Macy’s, Home Depot,
Rooms to Go, Etc.)• Service Providers (e.g. DirecTV, Verizon)• Medical Debt• Auto Loan Deficiencies • Student Loans
Threshold Question: Litigation• Is the client being sued?
– Miami Dade Clerk of Courts: http://www.miami-dadeclerk.com/
– Broward Clerk of Courts: https://www.browardclerk.org/Web2/
• Venue– Small Claims Court: less than $5,000.00– County Court: less than $15,000.00– Circuit Court: more than $15,000.00
Litigation-continued• Small Claims Court
– Designed for people without attorneys– Must attend a pre-trial conference (and usually
mediation)– Limited discovery if one side is unrepresented– If no settlement then the case goes to trial
• County/Circuit Court cases– Defendant must file an Answer within 20 days of
service – Normal Rules of Civil Procedure apply
Common Defenses• Lack of Standing (if debt buyer)• Statute of Limitations• Unlicensed Debt Collection (if debt buyer or
collector)• “Not my debt”/ Identity Theft• “Cannot Pay” is not a legal defense (although
it can still be plead)
Consequences of Judgment• * If a Judgment has been entered please talk to
one of us*• Judgments last for 20 years• Judgments are a lien on property• Will appear on credit report• Plaintiff can engage in discovery in aid of
execution• Plaintiff can execute on judgment by:
– Wage garnishment– Levy on personal property (including bank accounts)
Is the client “judgment proof”?• Social Security, SSI, and most public and retirement benefits are
exempt from garnishment.– Be careful not to comingle funds
• Head of Household wages are exempt from garnishment– Must provide more than 50 percent of the financial support to a
dependent• Debtors can assert their personal property exemptions to levy
– $1,000.00 can be applied to any personal property– $1,000.00 for an automobile– Additional $4,000.00 “Wildcard” available if homestead exemption is
not claimed • There are no “debtors prisons” and people cannot go to jail for not
paying their consumer debts– Possible exception: writing bad checks
Why not just file for bankruptcy?• Consumer has non-exempt assets
– This includes potential lawsuit recoveries, tax refunds, and co-owned property
• Adverse effect on one’s credit– Bankruptcy will appear on a credit report for ten
years
• Timing issues: A person can file a Chapter 7 case once every eight years
Consumer Debt Collection• Original Creditors
– The entity that initially loaned the client money, extended credit, or provided services
• Debt Collectors – Companies that collect debts on behalf of original
creditors– Includes attorneys who regularly collect debts
• Debt Buyers– Companies which buy debts whose “principal purpose” is
the collection of debts– Purchase debts for pennies on the dollar from original
creditors (e.g. Midland, Asset Acceptance, Portfolio Recovery, CACH, LVNV Funding)
Debt Collectors• Must provide consumers with written notice
of the right to dispute the debt (FDCPA)• Must be registered as a consumer collection
agency with the State of Florida – Florida Office of Financial Regulation
(www.flofr.com)• Cannot engage in abusive collection practices
as defined by the FDCPA or FCCPA• Must cease its collection communications
upon written request from the consumer.
Original Creditors• Not subject to the FDCPA but…• Must comply with the FCCPA and should not
engage in practices prohibited by the FCCPA• If the debt being collected is for a credit card,
the consumer has a right to dispute a bill within 60 days of receiving it (Fair Credit Billing Act)
Back to Debt Collectors• Within five days of first contacting a
consumer, debt collectors must send the consumer written notice stating:– The amount allegedly owed– The name of the creditor to whom the debt is
owed– The consumer’s right to dispute the debt in
writing and obtain verification of the debt.• This first letter from the debt collector is
known as a “dunning letter”
Dispute/Request for Verification• Within 30 days of receipt of the dunning letter, the
consumer can mail a dispute of the debt (or request for verification of the debt) to the debt collector– When disputing older debts, be careful about
acknowledging the validity of the debt, as the SOL re-triggered
• Debt collector must cease all efforts to collect the debt until it has verified the debt and responded.
• Verification of the debt should include some documentary evidence of the debt (e.g. an account summary or history, copy of judgment, etc.)
HARRASMENT/ABUSIVE PRACTICEDebt Collectors (FDCPA)• Refuse to identify themselves• Pretend to be an atty.,
government agency, or law enforcement
• Make repeated or continued phone calls intended to harass, annoy, or abuse
• Call btw. the hours of 9 PM and 8 AM
• Call the consumer at work if the employer prohibits such calls
• Communicate with most 3rd
parties about the debt– Spouses are excepted
Everyone (FCCPA)• Fla. Stat. 559.72• Applies to “persons”• Significant overlap in
prohibited practices with the FDCPA
• “Claim, attempt, or threaten to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knowsthat the right does not exist.”
Stopping Harassment• Consumer should send a letter to debt collector demanding
that the collector cease communications or that the consumer refuses to pay the debt
• Only applies to debt collectors, not original creditors• Upon receipt the creditor must stop all communications
except:– To notify the consumer that communications are being
terminated– Notify the consumer of “special remedies”, namely notify that
the collector intends to sue• Sending the cease and desist letter will not prevent a
lawsuit or reporting the debt to credit bureaus • Signing up for the FTC’s Do-Not-Call List will not stop
collection calls, only sales calls
IDENTITY THEFT/FRAUD• Client receives notice that an unauthorized
account (usually a credit card) has been opened in their name– Usually find out when they receive a bill, or check
their credit report
• Unauthorized charges are made to an existing account of the client’s
• Fraudulent tax return is filed in the client’s name• Often caused by a family member of the client or
someone else the client knows
Identity Theft-Next Steps• File a complaint with the FTC• www.identitytheft.gov• Will generate a report which the client should
keep for their records• File a police report and keep a copy of the
report• Can be done at any police department in the
state although some times clients will get the runaround
Identity Theft- Next Steps (2)• Send copies of the FTC report and the police
report to the creditor or debt collector with a letter requesting that they stop collecting the debt
• FTC has several sample cover letters: https://www.identitytheft.gov/Sample-Letters
• Letter should be sent by certified mail and by fax (if possible).
• Keep copies of the letter, certified mail receipt, and fax confirmation
Identity Theft-Next Steps (3)• If the client has not already done so they should pull
copies of their credit report– www.annualcreditreport.com
• Dispute the debt with the credit bureaus – Preferred method of dispute is by letter (see
https://www.identitytheft.gov/Sample-Letters), but can also be done online
• Place a fraud alert on your credit report– Placing it with one bureau should place it with all three
• Consider placing a “credit freeze” with the bureaus– Effectively stops new accounts being opened in client’s
name, but client would have to unfreeze account to obtain credit
CREDIT REPORTING DISPUTES• Free credit reports can be obtained at:
www.annualcreditreport.com• Three main credit reporting agencies:
– Experian– Transunion– Equifax
• Each bureau will provide on free report per year
Credit Reports• Each report contains information available in the public
records (judgments, bankruptcies, etc.)• Each report will contain a list of accounts, also known as
“tradelines”. These tradelines will state:– The name of the creditor– The type of account (e.g. mortgage, credit card, auto loan, etc.)– The date the account was opened– The account balance– Whether the account is open or closed– Any purported delinquencies on the account and, if so, the
date(s) of the delinquency and amount– Whether the account has been charged off, in collections, or
included in the bankruptcy– If being reported by a debt collector, the name of the original
creditors
Common Credit Report Disputes• Public information inaccuracies (e.g. a judgment
that has been vacated)• “Debt is not mine”
– Could be related to identity theft or – Could be the result of a “mixed” consumer file
• Inaccurate balance or delinquency information• Not reporting the debt as being discharged in
bankruptcy.– Prevents debtor from getting a “fresh start”
Disputing Credit Reports• Send dispute letters to both the furnisher
(creditor) and the credit reporting bureau(s)• Consumer should avoid using the bureaus’ form
or online dispute function• Letter should be precise and descriptive of the
error. It should also specify the relief sought.– Documentary evidence should be attached– Letter should be sent by certified mail– Letter should contain information to allow the bureau
to identify the consumer (full name, address, phone #, DOB, SS #)
Credit Reporting ComplaintsConsumer can file a complaint with either:• Consumer Financial Protection Bureau (CFPB)• www.consumerfinance.gov/complaint/
– Consumer should dispute the debt with the bureau and/or furnisher first
– CFPB will submit the complaint to the company and provide the company’s response
– Maintains an online database of complaints• Federal Trade Commission
– www.ftc.gov/complaints
STUDENT LOANS• Private vs. Federal?
– Look at the billing statements– Federal Loans will often have the name of the
program (e.g. FFEL, Direct Stafford, PLUS, etc.) on them
• National Student Loan Data System (NSLDS)– www.nslds.ed.gov (requires user name, password, e-
mail account)– Will show information for federal student loans only
• Private loans can be indicated by high (over 10%) interest rate, having a co-signor, etc.
Federal Student Loans• Guaranteed by the federal government• No statute of limitations for collection• Can be collected through extraordinary means:
– Administrative Wage Garnishment (AWG)– Tax Refund offsets– Public Benefit offsets
-However-• Can be paid off through a variety of payment
plans, all of which are income-driven• Can, in certain circumstances, be discharged
entirely
Private Student Loans• Are akin to standard contractual debts except
that, in general, they cannot be discharged in bankruptcy.
• Lender or servicer must file a lawsuit to enforce the debt
• Borrower can raise contractual defenses to the lawsuit– Lack of Standing – Statute of Limitations– Fraud
• Repayment options are at the discretion of the lender
Federal Loans: Default• Default generally occurs after nine months of
missed payments (Perkins loans are different)• A defaulted borrower is subject to all of the
collections actions described above• Borrower must get out of default before they
can enter into repayment options• *If the client is subject to wage garnishment,
tax offset or public benefit offset, please see one of us*
Getting Out of DefaultRehabilitation • Make 9 voluntary payments
over 10 months• Payments must be
“reasonable and affordable”• Payments are based on
income, household size, and poverty guidelines; can be as low as $5.00 per month
• After 5 payments garnishment stops
Consolidation• Taking out a new Direct
Loan which pays off one or more old loans
• Can only be done once for existing loans
• Cannot be done if wages are being garnished (but can be done if Social Security is being offset)
• Not advisable to consolidate federal loans in private loans
Repayment OptionsTRADITIONAL
• Extended Repayment Plan: Can be up to 25 years; must have >$30,000.00 in debt for each loan
• Graduated Repayment: Payments start low and increase every 2 years
• StudentAid.gov/repay
INCOME DRIVEN• Pay As You Earn:
– 10% of discretionary income; cap on amount; loans forgiven after 20 years
• Revised Pay As You Earn: – 10% of discretion income;
available for more loans than PAYE but no cap
• Income-Based Repayment– Payments are 15% of the
difference between income and 150% of poverty guidelines; forgiveness after 25 years
• Income-Contingent Repayment – Only Income-Driven plan
available for Parent-Plus Loans
Discharge of Fed LoansTotal and Permanent Disability Discharge
• A physician certifies that borrower is unable to earn money due to disability and the condition will continue indefinitely -or-
• Disabled Borrower obtains a Benefits Planning Query form (“BPQY”) from Social Security (or VA equivalent) showing a 5-7 year review period
• Subject to a 3-year monitoring period• www.disabilitydischarge.com has the forms
Discharge of Fed Loans (Cont.)• Closed School Discharge:
– School closed while you were attending or 120 days after leaving
• False Certification Discharge– Borrower did not have H.S. Diploma or GED and did not pass
equivalency exam– State law disqualified borrower from field of study– Forged Signature on loan documents
• Borrower Defense Discharge – School committed fraud based on state law regarding loans
• Unpaid Refund Discharge• Death of Student Borrower (Parent Plus Loans)• Student Loan Ombudsman may be able to help:
studentaid.ed.gov/sa/repay-loans/disputes/prepare
REFERRALS• National Association of Consumer Advocates
– A non-profit association of attorneys whose primary focus is consumer protection
• www.consumeradvocates.org• NACA maintains a list of consumer advocates
by locality, including South Florida
