The Warybuyer Speaks! Thoughts on Credit Card Defense, Debt Collection, Credit Reporting and Auto Fraud

The LA Times has more…

According to the WSJ (no link ’cause I’m too cheap to subscribe) as noted by Andrew Leonard in Salon, Bank of America is offering credit cards to people without social security numbers. Welcome to the Slave Ship! Just kidding. As bad as I think our credit card industry is, this is a major improvement for folks who have been plagued by our underground credit system of payday lenders, pawn shops, and neighborhood loan sharks.

I’ve recently been contacted by a few clients who believe that a debt collector has failed to properly respond to a letter either disputing a debt or requesting verification of the debt. They’ve told me about how much they’ve learned on the internet about their rights under the Fair Debt Collection Practices Act. When I talk to them, they do have a surprising amount of knowledge, certainly more than most non-specialist attorneys, about what the statute requires. Unfortunately, for all their research, the letters that they’ve sent me are so over the top that there is little prospect of them prevailing in a lawsuit against the debt collector.

The letters read like a giant game of gotcha; as if the letter-writer is trying to send the debt collector on an impossible scavenger hunt for every last piece of paper relating to the debt, hoping that the debt collector will fail or give up. My advise to these folks has been uniform: “Stop doing that.”

By attempting to game the system this way, these letter-writers have done the near impossible. They have set up a trial dynamic in which the debt collector will be more sympathetic than the debtor. Typically, there has been no harassment or anything close to wrong-doing by the debt collector. He has usually done nothing more than mail a form letter notifying the debtor that he will be collecting the debt, providing basic information about the debt that was provided to him by his client or predecessor, and giving the statutorily required notices. In response, he receives an accusatory missive, threatening him with a lawsuit for violating the law if he doesn’t fulfill a set of byzantine verification requests to the letter. I have even seen debtors who have sent the debt collector a form, informing him that his claim “will not be considered” unless the form is filled out in full.

When you are disputing a debt, you have to remember that you are not just writing to the debt collector. You are writing to a jury.

This jury will largely be made up of people who take the responsibilities seriously, otherwise, they wouldn’t have shown up for jury duty. For the most part, they will have worked hard in their lives to pay their debts, sometimes making personal sacrifices in order to make sure they keep their commitments. They are not going to be moved to help someone they perceive is twisting the law to slip free of a legitimate request to pay a debt. In fact, jury bias against people who haven’t paid their debts is a real problem in cases where the debt collector has really done something wrong.

The same is true of judges, who are the gate-keepers to the jury. While a disciplined judge will follow the law even when his personal feelings weigh against the party for whom he is ruling, that’s still an uphill sell, and not all judges are disciplined in their application of the law. There are plenty of judges out there who decide who should win and then figure out a legal way to justify that result.

What does this mean for verification letter writers? It means you have to write from the point of view of someone who has a legitimate concern and who wants information to satisfy that concern. Your letter should present your concern and suggest the easiest, most direct way of dealing with it. Here is an example of what I consider to be a good, initial verification request for a debt that you don’t have any reason to dispute:

Dear Mr. Debt Collector:

I received your notice that you will be collecting this credit card account from me. I need some information from you:

I need to know that you are really the person I should be dealing with on this debt. I don’t want to make a payment to you and then find out that I should have paid someone else. Please provide me with documentation that you either own this debt or have authority to collect it, so that I will know that if I make a payment to you, the payment will be going to the proper person.

I also need to know how you calculated the balance you say is due. When I last heard from someone about this debt, the balance was substantially lower. If you have added interest or fees to the debt, please provide me with an itemized breadown of what you’ve added and documentation showing that you are following the terms of my contract. I don’t want to have to pay more than I really owe.

Thank you for your help with this matter.

Sincerely,

David Debtor

This letter accomplishes the basic goals of a verification request. If the debt collector responds, you will have additional useful information about the debt that may come in handy in negotiating the amount of the debt or disputing it if it is incorrect. If the debt collector doesn’t respond but continues to attempt to collect the debt, he will have violated the FDCPA and you will have a sympathetic case to make to the jury that the debt collector was illegally refusing to comply with a request so reasonable that anyone would understand it.

This letter is not a one-size fits all letter. If the debt is not correct, the dispute letter needs to specifically point that out. There is an example of how to do that in my guide to disputing a debt. Depending on the circumstances, there may be other types of information that are reasonable to request, for example, if the debt is old and the debt collector has threatened to refer you for legal action, it would be reasonable to request documentation showing how long it has been since you defaulted on the debt, so you can determine whether the debt is beyond the statute of limitations.

Whatever the situation, and whatever kind of letter you write to a debt collector, or to a creditor or credit bureau for that matter, remember that you are also writing to a jury. If it helps, imagine that you are writing to your mother. Your letter should make her want to help you, not toss you out on your ear.