Consumer Debt Collection Practices (ANPRM)

Recently, courts have held that debt collectors can escape 1692i's venue provisions entirely by pursuing debt collection through arbitration instead. As the NAF studies reflect, arbitration has not proven a satisfactory alternative. I urge the CFPB to include in a rule language interpreting 1692i as requiring debt collectors to proceed in court, not through largely-unregulated arbitral forums.

Depending on the nature of the suit the closest court location to the debtor's home address.

I am curious to know if the consumer is ever properly notified of the suit? Statistics show that something like 90% of the consumers don’t show up to court. I don’t think the real issue is where the case is held, but more to do with does the consumer even know they are being sued.

I have 13 lines of he same debt on the credit bureaus. The first one was bought and passed down

One business in particular needs to be investigated...Legal Recovery Law Offices. We sent them a letter asking for a copy of a signed credit card agreement bearing my signature to prove that I owned the credit card accout,
which they failed to do for a credit card they claimed we owed. Instead of following the FDCPA, they filed suit and their complaint included NO DOCUMENTED PROOF that I even own the account. Before any company is allowed to file suit, one document that should be in the complaint before a judge even will accept the filed complaint is a copy of the original credit card agreement bearing the defendants signature. All legal recovery attached with the complaint was pleadings with written accusations and no documented proof of the debt .

If the account was opened 20 years ago, the bank is going to hold on to this agreement for the 20 years?? That makes no sense. Either you have a dispute meaning you did not charge on the account and you need to file fraud charges or you owe the money and should have been sued for stalling. Sounds like they did the right thing.

I have often wondered why many times a Plaintiff/attorney may handle the hearings telephonically but the same is not available to the Defendant/debtor. This does not appear just. I suggest that most Defendant's choose not to appear because of the loss of wages or choose not to show at at all because they are intimidated by counsel. If given the opportunity to appear telephonically I believe that more cases will be heard.

A debt collector did not litigate a credit card debt, but summarily garnished our joint checking account. It was two weeks later that notification was received from the debt collector. This occurred September-October 2012. Debt Collectors must provide advance notice of their intent to garnish a checking account. It took several weeks including an Order from the Judge to release the funds, only after the Debt Collector took all of a tax refund.

I am not a lawyer, but I have noticed that credit card agreements often contain statements advising consumers that if suit is brought, it will occur in a specified jurisdiction or "as provided for by law." At the point where collectors start suing consumers is where many consumers say enough and hire a bankruptcy attorney. That does everyone a lot of good, right? The only winner in that situation is the bankruptcy attorney.

As a Director for Collections now for Kennedy Space Center Federal Credit Union, which is over 500 Million in asset size I try as I have for prior union to file suit closest to the Consumers current address. One method is to assign over to an attorney within the current residence-venue of the Consumer. In legal terms we attempt to get service when filing a suit out of state, its method is called obtaining if possible a Alien Juddgement outside from the County and or State the contract/note was originally signed. There are states in the Union that do note accept foreighn judgments. So recording a judgement obtained for example in Floirda and rerecorded in another State may not be possible.

The current rules seem adequate, with the possible exception that debt collectors must be required to follow the rule, or risk a loss of the suit due to jurisdictional issues.

The state in which I practice does not allow jurisdiction based solely on where the contract was signed. As such, we limit our filings to the venues where we reasonably believe the consumer resides. The states typically define what is the proper court thereafter, whether its based on amount, location, etc. so even if there is a large judicial districts we do not have the choice to file elsewhere by local rules.

I recommend that the option to bring a suit in the jurisdiction where the consumer signed the contract should be removed. In many situations, consumers may not actually sign a contract (e.g. credit cards), they may sign an agreement in a distant location (for medical payment at a hospital on vacation), or they may have moved in the years since opening the account. I believe the most consumer-friendly option is to file suit where the consumer resides at time of commencement (unless it concerns real property and then it should be where the property is located). With respect to geographic size concerns, it is important to note that many states are facing budget crises that affect the civil divisions of state courts. In one of our largest districts, our options for filing suit was reduced from 32 courts down to 2. If there is a concern for protecting consumers in this particular area, I recommend a section of the rule that prohibits collections from choosing a court venue with the intention of interfering with the consumer's ability to participate in the action. To prove a violation, the consumer (or regulatory agency) would need to demonstrate that the collector had no reason to file suit in that court other than burdening the consumer (thus demonstrating intent).

I know this is not the proper venue, but I felt you should know that the email address listed on your contact page is not working; I have tried to send you material three times and it keeps getting bounced back to me with an invalid address message. The error message I get says that the mail cannot be sent to ga.regulationroom@cornellprod.onmicrosoft.com; I only used the address provided. Please reply via email with a valid email address. Thanks!

I believe lawsuits should be initiated in the jurisdiction in which the consumer resides, and that the case should be subject to the laws of that jurisdiction, especially concerning the statute of limitations. (Yes, I realize that a SOL defense is an affirmative one).

Filing suit in the state that the consumer lives in is the most practical. If a state has a large district there is nothing that can be done unless judges want to allow tele-conferencing,, or phone conferencing. However, if that is allowed it should be allowed for both sides provided the evidence of the debt is supplied to the court in advance.

The documentation sent to the defendant should include a link or instructions on how to proceed according to the rules of the course if the venue is incorrect.

This question is most interesting with respect to student loans. Unlike most other debts, student loans have the potential to be greater than $75k, which means a consumer can be sued in Federal Court under supplemental jurisdiction provisions. Additionally, should the current creditor be able to achieve complete diversity, the consumer can be sued in an entirely different state.

I've heard multiple stories of summons being dropped off or served to the wrong individual and summons being mailed to old addresses when the new address was clearly available. I don't believe that a summons should ever be served by mail. If the debt collector wants to sue, they should be required to serve the person directly in the city and state in which they currently reside. It's an especially dirty tactic to serve someone by mail. It's unreliable and puts the debtor at a disadvantage.

This is the problem. What account would stay open for 20 years after being delinquent. It seems to me this is just a way to prolong as long as possible the ability to harass people for very old debt. There needs to be time limits. This type of thing, re-filing debt, selling the same debt to someone else, and then adding it back AGAIN to the credit report is just an excuse to harass the heck out of people and do it legally. These are not good business practices. This is harassment. Once a debt is placed on a credit report -- or even sooner -- once the debt letter is sent, time should start running and this agency needs to set time limits that are reasonable. Creditors have a right to try to collect true, accurate debt. But what happens is the debt is wildly inflated, then it runs the gamut of various collection agencies until nobody even remembers its genesis. This is all to harass.

State and local court rules sometimes make default judgments much more likely. For example, when a person who allegedly owes a debt is told to come to court on a work day, they may be forced to choose between a default judgment and their job. I urge the CFPB to find practices that involve scheduling hearings at inconvenient times unfair, deceptive, and abusive, or inconsistent with 1692i.

When alleged debtors are served with state court summonses, they are not always comprehensible to laypersons. I suggest that the CFPB encourage or mandate the use of a standard-form, plain English letter advising defendants in collection lawsuits of the following:
- Any requirements to file papers to avoid default judgment
- The date of any scheduled hearing and procedures for changing the date
- Local and online sources of information for pro se defendants, and possibly local non-profit advice organizations.
- That the debtor may wish to consider bankruptcy if they cannot pay their debts.

There is currently a split between the Ninth and First Circuits as to whether 1692i and other FDCPA provisions apply in garnishment proceedings. In many states, the nominal defendant is the judgment debtor's employer, but the judgment debtor is the real party in interest. To allow consumers to better assert the defenses to and exemptions from garnishment available under state law, the CFPB should issue a rule applying 1692i to garnishment proceedings.

When an attorney is a 'Debt Collector' (as per their own documents) and not legally considered a 'Collection Agency' the attorney is not held accountable for consumer protection law violations (both local and federal) within civil court.
This loop hole needs to be addressed.
The attorneys/debt collectors are not monitored by the state bar because it is a collection practice (the attorneys buy old debt and then collect upon that debt in civil court) and the state and federal civil courts are not monitoring the attorneys because it is an attorneys office and not considered a collection agency - even though the attorneys buy old debt then take alleged debtors to civil court.
I personally know of a very large attorney agency in Washington State that even gives classes thru the Washington state bar to other attorneys because it is a easy caseload to win.

I do NOT owe any debt but have a COMMON FIRST and LAST NAME. My Constitutional rights are violated every time a lawyer fails to perform due diligence, per rule 137, BEFORE SIGNING and FILING COURT PAPER against me. The clerks are helpless, the judges & attorney disciplinary do nothing favoring “lawyer zealousness.” I then have to spend time & money, going to court to prove I am NOT the person who owes the debt. I urge the CFPB to create mechanisms for clerks & citizens that make it 1) easier to fix these messes &, 2) to bring sanctions against lawyers & judges for MISUSE OF LEGAL PROCEDURE, ABUSE OF PROCESS, WRONGFUL CIVIL PROCEEDINGS, & MALICIOUS PROSECUTION.

Allow the States and/or local courts administer lawsuits. Regardless of any added rules, documents, etc. none will help increase debtors attending hearings. Since 1964 I have seen no significant increase of consumers attending hearings. I have, however, seen the major reason being attributed to not understanding due process by consumers.

CA has already made great strides as to debt buyers. This should be the rule for all collectors: that when they file, they must produce properly authenticated backing for the debt sued upon.

Current validation guidelines do nothing to prevent wrong people from being dragged into court (common first and last name etc.). Debt validation ought to be a continual process, enacted: 1) any time the debt is sold, transferred, reassigned etc. 2) any time the creditor or its agents "lose track of" the debtor 3) any time new information is found and ASSUMED to be the debtors such as a new address, 4) any time a person presents legitimate ID to the clerk that proves they are not the right person (wrong middle initial, wrong birthdate, wrong race, wrong gender, etc.), 5) at each phase of the court process particularly after time lapse, transfer, reassignment 6) any time the debt records or court files concerning the debt records are destroyed (fire, flood etc.), 7) any time a clerk loses or accidently destroys all the court records, 8) any time a discrepancy is known or should have been known, 9) any time an ambiguity exists or (when viewed by a reasonable person would have been found to have existed) in the identity (i.e. common first and last name without middle initial etc.)

Debt collectors are very experienced at what they do. Consumers and defendants often have little or no experience with fighting a debt collector. They have no idea what their rights and defenses are. I strongly recommend the CFPB to require all debt collectors to provide consumers with their basic rights. The rights could be state-specific or federal. For example, New York collectors should be required to advise that there is a statute of limitations that may be based on where the defendant is located or where the original creditor is located, whichever one is less. They should also be required to advise what the statute of limitations means. Plaintiffs or their counsel should be required to inform the defendant that he or she has the right to deny the allegations in the complaint and then require the plaintiff to prove its case. Defendant's should also be advised that he or she may demand documents from the plaintiff and require the plaintiff to answer questions about the account (i.e. is it owned by the original creditor or debt buyer? How much interest was charged? When was the last payment? Etc.) Other important rights and defenses could be related to FDCPA rights or, in the subject state, how they may have the right to vacate a default judgment if they have a reasonable excuse and meritorious defense. Other requirements that the CFPB should consider: Require collectors and collection law firms to provide copies of pleadings, judgments and affidavits of service within seven days of a demand by an individual or an attorney when a judgment creditor attempts to enforce a default judgment. Require lawsuits to include the original contract and documents showing a valid chain of title. At the very least, help consumers understand the law, their rights and their defenses. Thank you for your hard work.

Why is it that debt collection agencies feel like litigation is needed? I have helped over 4.5 million people settle their accounts without ever using litigation. What the debt buying and collection industry needs to realize, is that most people want to pay their debts – and will if given an opportunity. When a customer is threatened with litigation they begin to panic, often times leading to bankruptcy. Once a bankruptcy occurs the customer ends up in FICO hell and all of the customer’s other creditors suffer the consequence caused by one litigation happy debt buyer.
The empirical data now conclusively proves the non-litigation collection model is more profitable than the litigation collection model. It is also safer and more profitable for the banks who sell loans. It is safer because it creates no bank exposure or risk for improper litigation by the purchaser of their debt and it is more profitable because non-litigation debt buyers can afford to pay the bank a higher price for the same distressed loans.
What is the true way to help someone who is deep in debt? It isn’t to sue them into oblivion but rather to offer them a way out of their predicament. This way out can be accomplished by helping them resolve their other obligations; helping them find new/better employment or providing them needed social services. Sometimes it is simple as just listening to their plight and offering them patient understanding.
The entire robo-suing; inadequate documentation, sewer service, mistaken identity problem involving 10 million lawsuits a year could be avoided simply and easily. If debt selling banks were persuaded not to sell loans to debt buyers who utilized a litigation collection model, these ills would be stopped overnight. This simple solution would end the living nightmare now suffered by more than 30 million American families.

Default judgements should not be allowed. In Arapahoe county (littleton, CO) it is well known that a landlord can get a judgement and evict a tenant even if their is no justification. Republican judges always side with the property owners at the tenants expense.

I think it would be better to focus on avoiding the law suits rather than avoiding defaults. The validation of debt process is unfair to the consumer. A debt collector should not be able to file a law suit prior to validating the debt. A proper validation should include the following:
A) A signed statement from the original creditor, on their letter head, establishing who is the assignee and what specific acts they have been authorized to perform on behalf of the creditor.******* Debtors are required to provide Letters of Representation or Specific POA to the creditor/debt collector. Why should the Creditor not have to perform in the same manner.
B) This validation letter should state the amount of the alleged debt, at the time it was assigned to the law office (collection office) or the amount of debt at the time it was "charged off" by the original creditor.
C) It should give a deadline to cure the alleged debt.
D) It should include several options to settle prior to the deadline.
E) It should include a “sample” debt validation notice for the debtor to mail in.

As a creditor collecting my own debt, I assert that by the time I move to litgation, I've exhausted all other forms of collection. I've talked to, emailed, and snail mailed the debtor. I've tried to negotiate a payment plan or settlement offer all to no avail. Litigation is our last attempt. Once we are litigation, we present our best case and let the debtor present their defense. My experience is that debtors don't participate in their defense out of either fear or lack of knowledge about the legal process. But the burden of educating the debtor shouldn't be put on the creditor's shoulders. If debtor's prefer to ignore the issue, then a default judgment is justified. There should be consequences to the inaction of the debtor.

I do not believe that it is "just" to allow a third party to buy a past due debt and sue for the entire balance, plus attorney fees, court costs, and other fees associated with "mediators or arbitrators". I believe that a third party debt buyer should be limited as to how much they can sue for above their initial investment. Too many times the original creditor is a publically traded company and the loss has already been taken by the share holders. Then some debt buyer buys a portfolio of un-performing debt and pays a dime on a dollar for it. Sends all of it to a "law office" to collect 100% or more of the original alleged obligation. The debt buyer should not be able to sue for 900% of their investment. They should be limited to a percentage of true damage. I know of no other civil process where this would be considered ethical.

I believe that many default judgments are because the Defendant/debtor does not know what to do. They cannot afford to retain an attorney and they do not know how to answer a complaint. I believe that if every "debt collection law firm" is required by the CFPB to provide a answer form with check boxes. Example to include check box 1 if you admit to the allegations in paragraph 1 of Plaintiff’s complaint. Check box 2 if you deny the allegations in paragraph 1 of Plaintiff’s complaint. Check box 3 if after reasonable investigation the defendant does not have sufficient information to form a belief as to the allegations in paragraph 1 of plaintiff’s complaint. Something so that the least sophisticated consumer has a chance at avoiding a default. It should also delineate of any filing fees necessary to be paid (varies by state) in order for the Defendant’s Answer to be accepted by the court.

In most states all that a debt collection law office needs to provide is a complaint. The average consumer has no idea what the difference is between a balance and a sum. they do not know how to calculate the interest and certainly do not know what is "legal" pursuant to state or Federal Credit Card Act limitations. The name of the Plaintiff may not even be recognizable to them. They just know that they owed some money and fell behind on bills. More times than not, they do not respond at all.

There should be a monetary "floor" required before debt collectors can pursue uncollected debts in court. The idea that corporations that already charge puninshing interest rates and fees can clog the court systems trying to collect a few hundred bucks from someone who is unemployed, ill, or otherwise unable to pay is counter-productive. There should be a minimum amount of consumer debt owed before creditors can sue debtors. Another issue with using state and local courts to settle debt collection suits is that it burdens jurisdictions already heavily burdened with cases and strapped for cash.

I have personally witnessed how judges perceive credit card debt cases, and I believe they have strayed too far towards the debt collectors. Judges simply decide whether a default has occurred, and once a judge declares a debtor in default, the adjudicated debtor has no pleading rights.
Alleged credit card and student loan defaulters should have the right to declare their default an Involuntary Default and be allowed to pay back the debt with no more penalties, fees or interest rate charges, called Debt Neutrality. Debt Neutrality is making of a debt neutral so that it does not continue to indenture a defaulter in a never ending cycle of ongoing interest rate charges, penalties and fees. Involuntary defaults should allow the debtor to have the debt reset to where it was at the time of the default minus any payments made. As it stands now, Strategic Defaulters are given much better treatment than Involuntary Defaulters, in large part due to Involuntary Defaulters not being able to plead their default as being Involuntary.

Debt Collection companies get a very unfair debt negotiation advantage against an alleged defaulter when they hire an unscrupulous service company that has lied about giving a proper service or subservice to the alleged debtor's residence. Judges do not seem to understand that if a service company will fraudulently state in court documents that they served a defaulter or subserved someone at the residence when in fact they did not, that the debt collector can become very arrogant and cocky as to how they negotiate with the alleged defaulter. In a nutshell, if the debt collector's one sided terms are not met, they will simply hire the service company who will provide service even if it is a false service. Judges rationalize that the mail service is an adequate notification without realizing that what a false service does is embolden the debt collection company to not properly negotiate a debt with an alleged defaulter because they have total control over the service aspect, even if fraudulently obtained. This need to be fixed and false servers need to be fined along with the debt collection companies who hire them and keep hiring them even after they receive complaints of false service.

If I have been falsely served or subserved, (the making up of a person who does not exist to claim a service, or simply stating "Jane Doe" received the service) and the judges don't care, and the debt collection companies don't care, I should have the right to file an errors and omissions insurance claim against the debt collection company for false service that resulted in a verdict against me. I have already tried asking for an errors and omissions insurance policy from the debt collection company so that I could file a claim and the debt collection company simply ignored my request. I find this both egregious and outrageous.

There is a bait and switch approach towards unsecured credit card debt that I find disconcerting. If an unsecured debt can be converted to a secured debt, than was it ever really an unsecured debt? This seems like bait and switch. A consumer signs up for unsecured line of credit, but then the debt becomes secured by the courts. What motivation does a credit card company have to resolve a default situation if the courts will do the enforcement so easily and so one sidedly for them? The courts and the judges are actually using public tax money to give private business (credit card companies) a free ride when it comes to enforcement. Show me in the original adhesion contract where the credit card company states that their unsecured agreement is in fact more important than any life changing event that may occur in the alleged defaulter's life. Omission of obvious warts in the adhesion contract should not be tolerated by the courts. If I had been properly notified at the time I began acquiring debt that providing life affirming CareGiving services to another human being, aka my parents, was no excuse to default, I would have reconsidered how much debt I accrued. What about victims of hurricanes, floods, identity theft, hit and run, medical emergencies, is it fair that credit card companies HIDE THE FACT that they consider their debt more important? How much less business would credit card companies do if they did not conceal their underbelly at the time the agreement is signed. Who decided that the original agreement could be casually made over the phone or via a mail in signature, but enforcement would then happen in a courtroom? If the credit card companies truly believe that their debt is more important than any other aspect of a debtor's life, LET THEM STATE SO IN BOLD, VIVID FONT just above where a person signs the agreement.

Possibly the most egregious action of all regarding credit card debt occurred in 2002, suspiciously close to the 911 aftermath. While insurance companies were paying out tens of millions of dollars to building owners who suffered damage because of 911 (which technically they should not have done since this was an act of war which is NOT covered by most insurance plans), the comptroller of the currency was DENYING insurance companies from competing with credit card companies in the credit card debt suspension insurance arena.

The result was a credit card debt suspension insurance monopoly for the credit card companies with premiums that were overpriced by a factor of 1000% to 2000%

The profit margin was so high for credit card debt suspension insurance that the CFPB actually had to fine the credit card companies OVER 500 MILLION DOLLARS in the summer of 2012 for overly aggressive credit card debt suspension insurance sales and marketing practices.
I had warned about overpriced credit card debt suspension insurance back in 2008 with the creation of www.credit-protector.com but was never compensated for my efforts.

So what did 1000% to 2000% overpriced credit card debt suspension premiums do for the consumer? It meant that MOST credit card defaults in the United States over the last 10 to 15 years were based on a fraudulent foundation of obscenely over priced credit card debt suspension insurance that consumers could not afford to keep purchasing. Consumers were literally paying for 5 years worth of credit card debt suspension insurance but only receiving 3-5 months worth of coverage!

Most of the times that a judge was declaring a credit card default, they were propping up the overpricing of a monopolistic credit card debt suspension insurance policy that did not fairly give consumers the most obvious way to protect themselves from a default that was caused by life changing event

We could literally fix the U.S. economy almost overnight by doing the right thing. First acknowledge credit card debt suspension insurance fraud that the credit card companies have perpetrated on the american people over the past 10 to 15 years and as retribution reduce all consumer credit card debt by approximately 65%. Then raise the monthly minimum payment on the remaining 35% from 2% to 5% so the monthly payment remains roughly the same but consumers feel their debt more easily going forward. The comptroller of the currency tried to get credit card companies to raise their monthly minimum payment requirements from 2% to 4 or 5% back around 2005 but relented when it became obvious too many people would default.

By reducing consumer credit card debt by 65% as a form of reparations for debt suspension insurance fraud consumers suddenly have a lot less debt BUT still have to make a similar monthly payments. However MORE of that monthly payment goes towards paying down the actual debt rather than the cesspool known as ever expanding interest rate charges.

If you would like to learn more about the Debt Neutrality Petition on Change dot org, please click the link below.Debt Neutrality Petition.Debt Neutrality BlogDebt Suspension Rights BlogCredit Protector Warning issued in 2007Credit Card Debt policy changes website also created in 2007
You can also find Debt Suspension Rights and Debt Neutrality Petition on facebook.

The agency needs to be careful of new rules that will, though unintended, be harmful to the free market. However, it is important that litigation is monitored to ensure that the system does not allow reward with no risk. A plaintiff in a lawsuit cannot be placed in a situation where it is rewarding to sue with insufficient cause and minimal risk.

Creditors and those following in the process of recovery do not need additional regulation in this area since their efforts are monitored by the CFPB. The CFPB does not need to set standards for the industry, but make it clear that only those documents provided to the court in the original filing will be considered in a CFPB review. If in the course of a CFPB review, it is found that litigation was filed without a successful verification of the facts, the CFPB could award the amount sought by the filing to the defendant of the case and a fine to the CFPB of no less than $2,000 but no more than the amount sought.

This position would motivate the litigant to ensure their facts were correct before any filing took place. This position would allow CFPB to review cases filed no matter how they were adjudicated by the involved court. This review could be conducted at CFPB offices since it only requires the original filings. This review could be initiated simply based on a complaint to the agency's offices. The penalty could be adjustable based on a variety of agency standards.

I would have to take more time to consider when the plaintiff was not the original creditor or a member of the recovery industry, but, again, there must be a risk associated with the reward to stop nuisance suits.

There needs to be something in place to stop the frivilous law suits that agencies have to spend thousands of dollars to defend even though they have tried to explain to the consumers / attorneys that there was no wrong doing and no case - a lot of these consumers file the suits Pro Se and continue pushing for a settlement or trial - in these cases the agencies spend monies to prove there was no cause for action to begin with and to have a judge agree with the agency. Please look at putting some kind of penalty on consumers or their attorneys when they send settlement demands or file law suits when they have been shown that there is / was no case

First parties should still have the right to sue if they deem it necessary. I have no problem with this rule if it is directed to third party debt buyers.

Is it possible for the CFPB be given proxy, POA, or other authority in individual cases, or groups of cases, to pursue debt collectors for violations of the FDCPA?

The enforcement mechanism of the FDCPA is laughable from the point of view of the debtor.

For example, a debt collector said that since they are out of the country they are not required to adhere to the FDCPA. Luckily, I knew better, but most folk don't.

The CFPB's voluntary reporting combined with proxy enforcement power may curb the industry's activities, and may be cheaper and faster than class action lawsuits.

A neighbor who has since moved away has had her debts turned over to collection agencies. We receive repeated calls trying to get contact information, even though we request to be taken off their list. An unfortunate situation but we don't know the whereabouts of the individual and shouldn't be subjected to this sort of harassment.

I am a clerk at a local city court. I am the civil clerk and I feel that debtors are treated extremely unfairly by debt collection laws. The Court cannot give legal advice so it is saddening to have to try and explain and console upset litigants who have no idea what they are in for. I think there should be more avenues for pro se litigants who cannot afford to retain a private attorney (which is 95 % of the litigants in my city). I can say that most people do not answer summonses because they either were not properly served or they just straight up do not care, or most often, do not understand the legalese. BUT, I do have to say that I get many litigants who call and ask what they do now that they are served. On the occasions that people do file answers, most of them are in letter form, not a "legal" verified answer. Most debt collection attorneys jump right on that and request a summary judgment. Our Court does not turn away letters, and we send a copy to the attorney and set the matter up for a pre trial conference with a judge or court attorney to help try to get both parties together to come to some sort of resolution. The Court does have to adhere to a scheduling policy for these conferences, but we are very flexible if a defendant has a scheduling conflict we try to accommodate them as best we can. When summonses are filed with the court, half of them have tons of information about the debt, others only have the amount due! I find that sometimes it's hard for litigants to obtain further proving documents from attorneys, even with the court telling them they have to. When entering default judgments, I take my time and examine the whole file, like comparing the contents of the summons/complaint and the default judgment submitted, re-checking the affidavit of service of the summons (to make sure the defendant had the legal time to answer the summons), and ensuring that attached to the default judgment is the proper documentation as to purchasing the debt, a non-military affidavit, etc. I also make sure that they are being charged the proper interest rate and court costs. The bottom line is that the debtors still do not have enough and/or sufficient laws to protect them, and the Court's hands are tied based on these laws, even if they wanted to help, they couldn't. I know the Court is to remain impartial, but in a small city, everybody knows everybody and sometimes it's hard to see these practices occurring.

In the end, the entire issue boils down to 1.) Who owes what to whom? 2.) Can that debt be resolved? 3.) Are both parties working in good faith.
To the first question, due diligence is a must. Even if collectors are allowed to continue litigation (which I do not see going away,) there must be a penalty for the collector if false claim is made. If a collector starts litigation and it is found to be against the wrong person, compensation and additional penalty should be paid by the entity initiating the litigation in the form of a reasonable fee to the victim and an additional (and substantial) fee to the governing authority to help cover oversight expenses.
To the second question, I believe an overwhelmingly large portion of consumer debt can be repaid. However, there are always going to be exceptions to this. In cases where debt can not be collected for whatever reason, it should be written off as truly not collectable and no not be allow to be sold again as debt to be collected. Fine tuning and definitions of “Not Collectable” will have to be worked out by the appropriate oversight bureau or agency.
To the third question, both party's must be measured. There are currently established credit reporting agencies to monitor the consumer side of this issue and an additional, numerical evaluation score can be added to the consumer's already established credit report. That would be a starting point that can be expanded on as the system is fine tuned. The collector, on the other hand, would require a new measuring system that would not only score the company as a whole, but the individuals taking part in any debt resolution activities. For successful examples of such a system I would direct you to the Department of Transportation, Federal Motor Carrier Safety Administration and their Compliance-Safety-Accountability system. Admittedly, their system is much more complex and dives much deeper than would be required for the debt industry. However, their point system is valid and flexible for future change. It would also allow for measurement of the initial creditor. Such measurement would give the government and investors a better idea of a given business' risk level.
Add to this mix, the recommendations from Mr. Bartmann and you have a system whereby collectors and financial institutions will better regulate themselves to achieve an ethical and responsible outcome and not hide behind the “what I did was legal” defense. It would be a Win-Win for both sides and bring many consumers out of the debt death spiral.
Lastly, the federal government could implement this system with a minimal impact on state autonomy. It would reduce the number of litigation in state and local courts, thereby motivating the states to take part.

The courts should also mandate that if a debtor has reached out to the creditor in an attempt to negotiate the creditor must continue to try to reach a settlement rather than seeking judgment against the debtor. Also, the collection agency should not be able to add interest on top of debt that seek judgment for if the debtor agrees to pay since they will make a profit over what they paid the original creditor. Basically these so called "attorneys" (just another form of ambulance chaser in my book) are just forcing bankruptcies upon people who would be willing to work a deal and then they and the courts and the government are whining about what the bankruptcies do to the economy and the bottom line. Last time I checked even in a court of law you can't play both sides.

Debt collectors file a large number of default judgments because quite simply consumers do not take action, not because they are unaware of the issue. Usually at the time a lawsuit is filed, a debt collector has attempted to resolve the issue via telephone calls and/or letters. This doesn't even include the efforts the original creditor may have made. A lawsuit is never a first response. It is usually done after numerous and repeated failed efforts to work with a consumer to resolve an outstanding debt. A default judgment is just a further extension of that. Even after we file suit, we may attempt to reach the consumer to resolve the lawsuit prior to judgment being taken. I have seen numerous files where we have spoken to the consumer and told them they can file an answer, and they still don't. In my opinion, default judgments are largely the result of consumer's deliberate uninvolvement with the process, rather than a collector taking deceptive steps. I will state that many states have local rules that if there is no response to a summons and the consumer has defaulted, they do not need to be noticed on a motion for a default judgment. Therefore, the actual entry of the judgment may in fact come as a surprise, despite the summons stating if you don't answer a judgment may be taken. However, an attorney who follows the local rules is not acting deceptively. In order to curb this shock for the consumer who doesn't answer, it wouldn't be bad to require all motions for judgment be served upon the consumer, despite local rules which may require otherwise. I would point out, many default judgment motions are not noticed for motion hour. They may simply be submitted for a ruling without a court hearing. As to the inquiry as to what is required to support a default judgment, this varies court to court and judge to judge. The courts that I have seen require more documentation are largely looking for affidavits of debt, charge off statements and statement showing payments or charges, and the assignment (if the plaintiff is a debt buyer).

I believe most default judgments occur for one reason: the consumers know they owe the debt and see no reason to prolong the situation. Many consumers will
call us and make payment arrangements after being served. We advise them they have the opportunity to be heard in court but most decline. They simply want to resolve the debt.

Please READ this article about global debt. Enforcing the existing debt collection paradigm simply legitimizes and illegitimate system. PLEASE DO MORE than that, Please LEVEL THE DEBT PLAYING FIELD. GLOBAL DEBT ELEPHANT IN THE ROOM.

The CFPB doesn't need to craft rules to encourage non-litigation alternatives or not to sell to those who utilize litigation models. BillBartmann's data is suspect as to 10M lawsuits filed yearly and likely his models comparing litigation and non litigation data has not been published. The facts are consumers need to reach out and communicate to a lender, agency, or debt buyer rather than not communicating at all. Debts not repaid usually result in the debt being charged off so the consumer had a minimum of 180 days to seek alternative repayment options. Lenders, collection agencies and debt buyers have a right to sue a legal debt just like the IRS. Keep in mind that judgments last longer than open credit accounts looking at statute of limitations. To BillBatram's comment that filing bankruptcy creates hell as far as FICO scores, consumers face that issue with non payment of debt and bankruptcy is an alternative for a consumer to have a fresh start. That was the intent of the bankruptcy law and still is. Consumers with little or no hope to repay debts care more about moving forward with their lives instead of worrying about FICO SCORES.

By the time a file reaches litigation, the debtor has already received at least one prior opportunity to resolve the debt with the collector (the initial demand letter, which by law must inform the debtor of his/her right to challenge the veracity of the debt being pursued). By making default judgment more difficult, the CFPB would only be rewarding the debtors who choose to take no action to resolve their complaints. Furthermore, the CFPB arguably has no authority to impose new, more burdensome requirements upon litigants in state court fora. Doing so would constitute an admission that state court rules of civil procedure deny due process in other types of proceedings that are not granted the "benefit" of Federal oversight.

Thank you for that site. Well, I get at least one call per week from a litigant saying "I was served with a summons today, and it says I must appear within 10 (or 30) days to answer this complaint, but there is no court date on the papers for me to appear", and I have to tell them the procedure (and point out to them the blurb about you not physically having to come to court to answer). I'm not sure how much clearer the wording in the summons has to be, I understand them fully, and not just because I'm familiar with the forms, I'm just smarter than the average litigant I have to deal with I guess. The complaints do state that they have the rights to the debt, under verification that is notarized, at first... but they cannot enter the default judgment unless they provide the affidavit signed by both parties who owned and now owns the debt, which is generally attached to their judgments.

The data is difficult to obtain and likely not attainable considering lawsuits can be filed in magistrate, county, state, and federal courts. Also the data could be inaccurate since a case can be postponed and renewed later. I do not know if there is any central data base for either court. Also, lawsuits are filed in bankruptcy proceedings as well so these would need to be considered as well. This is why I am concerned when numbers just get tossed out without and substance verification.

Based on my experiences I would estimate about 1.5% of delinquent accounts were forwarded to filing a lawsuit.

With increased and onerous liability for making calls and sending letters to debtors, creditors and debt buyers have had little option but to file suit rather than repeatedly attempt to contact an uncooperative or uncommunicative debtor. Most complaints provide adequate and identifying information about the debt. In my experience, most debtors don't feel taken advantage of by lawsuits, they simply understand they owe the debt so there is little point in filing an answer or taking time to appear in court. In fact, the vast majority never respond to a Federal Law letter inviting them to dispute the debt. Filing suits and appearing in court is expensive and time consuming for creditors and debt buyer, but there is little alternative, nor should there be as these matters have always been governed appropriately by State law and State judges. As more credit is granted (and the US is a credit ecomony - over 70% of our economy is based on consumer spending which comes mainly from credit extensions and not consumers pay increases), there are simply more defaults, particularly in a Great Recession. Any heavy handed Federal regulation will hamper and restrict credit granting and debt buying, both of which are needed by the economy and the credit industry. While credit grantors should should make their documentation retention systems more accessible and share more documents upon a sale of accounts, a lack of documentation should not hamper State court lawsuits when a debtor offers no dispute so long as the account is adequately identified in a complaint. In Michigan, efforts to "make it more likely that consumers would defend themselves" have fell very flat for the reasons mentioned above. As it has always been, the protections are in place and are used by those debtors that wish to avail themselves of them. Judges are there to listen. However, most debtors (bless them) understand they simply owe the debt.

A contractor who did work unlicensed was able to file bogus claims against both me and my wife amounting to double the original bid price. there was no court action. I managed to get rid of the debt collector but there seems nothing I could do to stop another contractor doing the same thing. There should be a penalty for the people filing the false debt. The amount in question was almost $10,000

While not specifically addressed in this website, the current punishment for violations of the FDCPA are practically teethless. $100 is of little consequence to most companies. The law show be changed to all ow a 7 year statute of limitations (it is currently one year) and a maximum penalty, payable to the plaintiff, of either $10,000 or $100,000 for each violation.

I have one debt in the court. Here is my issue, I never received any paperwork saying there was a court date. I did receive a letter from my bank a month after the court hearing saying they received a garnishment notice. They could've saved the court costs since I already had told them I was unemployed. Secondly, after I received the bank letter, I then received three (that's right three) garnishment hearing notices from three different companies for the same debt. Since I was unemployed I could not afford to get an attorney. It would've been nice if I could have provided the court (telephonically or by pre-trial documents) with documentation to explain why I was unable to pay the debt, but the paperwork said to only respond if you did not owe the debt. I believe court documents and debt companies should have easier and clearer paperwork for the lay person to understand their rights. And yes, debt collectors should have to provide documentation that the debt is owed and they have the right to collect.

In order to get a default judgment through a State Court, a collector's pleadings have to spell out the theory of their case (usually contract) with sufficient specificity that a reasonable person can understand the basis for the claim. Without some form of affidavit from the actual creditor, very few courts will award a default judgment. Also, most state court approved forms are already written for the "least sophisticated debtor."

I don't see any reason to impose a more stringent standard on collection lawsuits than are imposed on any other lawsuit.

Let's remember that most debtors have had the original creditor from 2 to 4 collection agencies and the creditors attorneys office before a suit is ever filed. That process usually takes as much a 2 years or more. So it is difficult to think that the courts should make special accommodations for these individuals. Every person called into court has had many opportunities to have the debt validated or payment arrangements made prior to a default judgment. I do believe basic evidence should be supplied. This would be a statement or bill copy with a matching name of the consumer and proof of address at the time the debt was incurred. This proof of address could be provided by other confirming data available through skip tracing companies. There were significant problems with how debt buyers were allowed to file suit and receive default judgments with virtually no evidence. So improvements and consistency is needed in evidence but it should also not be expected to show every single bill copy.

If this is an area that the CFPB is interested in regulating, I believe it will be necessary to initiate cooperative actions with local State judiciaries. Because the CFPB is a federal agency, it doesn't have authority to tell State governments (including the judicial branch) how to operate or how to interpret its own law. Since some states are already taking steps in this direction ( like New York), it is likely that the CFPB would find positive reception toward this effort. But trying to accomplish change through federal rulemaking is not an option in this particular area.

What about when it's the other way around? The agency I work for is small and follows FDCPA to the letter of the law. And yet we are still sued constantly by attorneys representing debtors. These attorneys count on the fact that it's less costly to settle than to go to court to prove that we have not violated the law. Our retail division is in trouble because we've recently lost our two largest clients -- for this reason. They're now getting slapped with bogus lawsuits as well. People don't even have to pay their bills any more; they just send a "cease and desist" letter, hire an attorney, and wait for a settlement to roll in. All this will lead to are more stringent rules around extending credit, which is not a good thing for the economy. If we keep going down this slope, the only people who will be able to get credit will be those who don't need it.

I also wanted to add that because debt collectors know they can hire robo service companies to false service, they aren't going to negotiate in good faith. Just as appalling for me was the judge agreeing that the one service I challenged was a false service, but allowing the case to go forward anyways. Sure, people can lie and say they were not served when they were served, but the very day I was in court contesting the service, a person who spoke before me made the comment that they found their service document on their door step when they got home. This means the servicers are lying in court documents, and nobody seems to care. So does rule of law only apply to the consumer? I still want redress on these two cases, and I want to be able to file an errors and omissions claim with both debt collectors insurance company for lying on court documents. And if it is not a law, then isn't it time that debt collection companies carry errors and omissions insurance?

Many if not all banks have been involved and lost class action lawsuits for improperly imposing interest rate changes and fees as well as conducting deceptive and abusive practices especially 1999 through 2008....

I have no legal background but what I don't understand is why there is no simple avenue for consumers to prove improperly imposed fees dating back to early 2000's and to establish the true amount owed if money is still owed. In addition there is no recourse for consumers if ironically the bank after imposing these abusive practices owes the consumer a refund of over-payments? Law or no law it is simply the right thing to do.

Why are banks, debt collection agencies and JDB's not forced to recalculate the amount owed after removing the improper and illegal practices? I don't understand why nobody is stopping this horrid abuse. In Michigan alone today, one JDB is getting over 3000 judgments even after a collection license has been revoked. I hope I am wrong but all I see is another unfair mafia-type racket allowed to continue in the good old USA. I wish I knew 10 years ago it would have been this easy to "get rich quick" if I went to law school. There is no hard work involved for these JDB's to buy debt and then file thousands of lawsuits thereby getting rich quickly. What kind of message is our country trying to send? At the minimum this country should force them to recalculate what is actually owed based on some rate derived by reviewing the many lawsuits the banks have lost already on the abusive practices. Law or no law it is just the logical thing to do.

I have spreadsheet that can recalculate daily interest to show how much I should owe after the improper and illegal practices. But because I have no legal background, live in a rural area and don't have an extra $5000 to retain an attorney how am I as a defendant to prove what is truly owed against these "mafia-like" attorney collection agencies? Do judges really have the time to go through 20 years of spreadsheets and recalculations even if the defendant can make them available? Does our country want judges to spend countless hours reviewing statements so the JDB's with little work can get rich quickly and then spend their free time in Aspen at their 20 million dollar chalet?

If you can afford an attorney good luck finding one that will dig deep into the statements to see how much a person should really owe. Most attorneys only want to defend based on "account stated" if you can even find an attorney in a rural area. Many folks like myself have not only paid off all transactions but have over-paid above reasonable interest rate yet I find myself with horrible a credit report and now trying to get law degree in one week to defend against these JDB's trying to squeeze more money out of me. Money they clearly don't deserve. In my case it is a travesty of justice if I end up having to pay more above what I have already paid to the bank.

All I want is my good name back and I deserve it. I never received free money and have paid back every penny to these banks and more.

We need laws to prevent these abusive practices. If a person owes money after the recalculations then force the original bank even after a 6 month "charge-off" (where did the 6 months come from?) to work out a payment plan. Why are these unprofessional JDB's and collection agencies in the middle? It simply is not logical even if it is the law. Change the law.

Thanks for listening...
"A Mad and Frustrated American in Michigan"

I live in Florida where proof of the debt is getting difficult for debt buyers to prove without them falsifying documents. I currently have a case where the Debt bill of sale was whited out in three places, sadly these documents were filed by an attorney at law registered with the Florida Bar Association. Debt buyers have no scruples

I am currently going through a miserable experience with a creditor and debt collector. In 2004 I completed my college education and consolidated all of my student loans through Nelnet. In 2005 (or so) I started to get calls from debt collectors stating that I was delinquent on my loan repayment. I explained the situation, that I had made all of my timely payments through Nelnet and, before I would pay anything else, I would need to see some proof of the debt. I never received any proof of the debt and this conversation reoccurred several times for the next five years.

In 2011 I wanted to buy my (wife’s) dream home. It was a significant purchase and the bankers I talked with indicated I needed to clear up the student loan issue to be approved. I reached out to the original creditor and the debt collector and begged for some proof of the loan. They then provided me with a loan application (nothing to indicate that the application was approved or that any funds were ever dispersed to me). While I was not comfortable with the proof, I knew that fighting it out in court would take longer than I was willing to take. So, I was very purposeful in my conversations with the original creditor and the debt collector to make sure that the issue would be cleared on my credit report if I paid the full value of the (alleged) loan. I also recorded the conversations I had with the original creditor and the debt collector.

I paid the original loan amount and (if you didn’t see this coming) the original creditor refused to update my credit report. And, even after providing the credit reporting agencies with proof that the debt was paid, they also refused to update my credit report.

I was originally applying for a “jumbo” loan for my home purchase and I was told that I did not qualify (based on the student loan entry on my credit report). So, I was forced to cash in my life savings in order to come up with a huge down payment. I bought the home in June of 2012 and the stock options/restricted stock that I was force to sell would be worth twice what I realized on the sale.

The impact is that I missed out on the home I really wanted (it was in foreclosure and sold for pennies on the dollar); it would be worth at least $100k more today than the sales price. And, I was forced to take a huge loss on my stock options/restricted stock due to the inaccurate reporting. In my opinion, my actual damages are around $200k.

Things like this should not happen to anyone. I do not come from money (the family farm went under two years after I left for college). I busted my butt to get ahead, always working 2-3 jobs to get through college and I acquired significant student loan debt. But, after working that hard for so many years (four years of undergrad and seven years of post-secondary (part time)), it is inexcusable that anyone should have to go through this kind of abuse.

Based on my experiences, here are a few changes that need to be made to bring some sort of balance to the power inequity between creditors/debt collectors and debtors:

1. We need greater accountability for creditors and debt collectors. At a minimum, creditors and debt collectors need to be accountable for all actual damages and attorney’s fees. Better yet, creditors and debt collectors should be accountable for punitive damages (or some hefty, minimum penalty as well).
2. When an account is in dispute, there should be some minimally invasive/expensive process that a debtor can use to try and remedy the situation. There should be an easy to use form that a debtor could use to dispute a debt. Once filed correctly, it should be against the law for any creditor/debt collector to attempt to collect on the debt.
3. When an account is in dispute, the creditor should not be allowed to pass it off to debt collector after debt collector for year-after-year harassment.
4. The credit reporting agencies should also be liable for incorrect information reported on a credit report.
5. There should be a national registry of attorneys that are competent to handle credit dispute issues. I’m not sure of the evaluation criteria or who would perform the evaluation, but there should be a way to guide a debtor involved in one of these disputes.

Anything you can do to help would be appreciated. I continue to be turned down for load applications due to this inaccurate reporting.

Thanks,

Jason

After a court verdict in favor of a debt collector, Banks assess a significant fee against a customer when a customer's account is levied by the debt collector , even if there are scant funds in the account on the day the levy is imposed. Explain how assessing a 125 dollar bank levy fee when an account has 50 dollars in it helps resolve the ongoing debt resolution. The Debt collector gets nothing and the customer is hit with a 125 dollar bank levy fee. Is it ethical to levy every last dollar when none of it goes to the debt? Why isn't there a 100 dollar float that is impervious to a bank levy fee and protected from the debt collector's clutches as well? Is it wise to force people to lose their bank accounts based on a credit card default that may have had extenuating reasons beyond the debtor's control? Once again, we get back to the same underpinning, Judges who simply decide on whether a default has occurred without caring why the default occurred are basically rubber stamping minions of a system corrupted by a lack of fairness. People can lose income based on circumstances beyond their control, yet the system doesn't even blanche an eye. A debtor who purposely runs up debt quickly and defaults is treated identically to someone who
had a perfect payment history but had to stop working to become a CareGiver for a family member. A debtor who purposely runs up debt quickly and hires a lawyer can strategically default and possibly get a better resolution than an honest person with an impeccable payment history who has lost income because of an event beyond their control. What kind of educated monsters are you for leaving the playing field so uneven, for so long?

There are a few states that have the barbaric practice of actually arresting people for their debts by using a legal loophole. Some of the most egregious examples are in Minnesota, Illinois, and Missouri. The creditor sues the debtor in court. If the person fails to show, a warrant can be issued for their arrest. The police can actually arrest and jail the debtor until a court hearing, or until they pay the bond (which is usually the amount of the debt). This is a downright abuse of the legal system. These loopholes need to be closed in all states.

In many districts where bad check diversion programs exist, there is anecdotal evidence that the companies administering the programs threaten with prosecution individuals who do not come within the state's bad check law - for example, checks that bounce due to printing errors, checks for which there were funds available when written but not when presented, and individuals who pay the amount due by other means within grace periods permitted by state law. The CFPB should ensure that bad check diversion programs have a realistic means of ensuring that only individuals realistically subject to prosecution are targeted, and should also require that, in order to qualify for the 1692p safe harbor, diversion programs prohibit misleading communications and misstatements of state bad check law.

No federal rules. Allow States continued enforcement of their state laws.

I can't comment on any of this, but it would seem appropriate for Federal law to establish a framework of requirements for states to meet. This would level the playing field for debtors and creditors in all states. and would provide an equal basis for states to proceed with adding or amending their own laws affecting debt collection lawsuits.

Maybe a definition of "bad check". If a consumer sends a post dated check(s) and it bounces then it may not fall under the bad check enforcement. Also, consumers use ACH capability to repay a debt, so if the amount is not available, then this may also not fall under bad check enforcement. My experience is more consumers use ACH rather than personal check distribution. there are numerous reasons why checks bounce so I suggest a look see as to determining the reason or cause why the check bounced.

State rules should apply.

There needs to be some federal protections for the consumer and a clear appeals process. The state run by private company programs seem to see the alleged debtor as already guilty. For example, some consumer groups have suggested that entities may not be including a “clear and conspicuous statement” that the consumer may dispute the validity of the alleged bad check violation.

What kind of financial incentives are there for these companies to meet certain benchmarks that may not be in the consumer's best interest?

It kind of sounds like those arbitration programs for credit card debt where everything was stacked in the favor of the creditor.

I contacted the debt collection company and tried to make arrangements for payment of debt, the reason I could not pay my bills is my husband was laid off work and he had started a new job. I wanted to make payments of $100. a month, debt collectors said NO, so I said the most I could afford was $200 a month the said NO they wanted $1,000. a month. Now we have 4 children, a mortgage and utility payment, debt collection said $500 a month my husband brought home after taxes $1,100 twice a month. My mortgage is $1,300 per month not including utilizes so I told debt company that I couldn't pay. I always thought something was better than nothing and that a debt company would try to work with you. I learned that they won't work with you.

The FDCPA should be above ALL state and local law. Period.

Either State or Federal law should provide some penalty for passing an NSF or "closed account" check that includes a presumption of guilt. The check either bounced or it did not. There's not a lot of grey area here. That said, either State or Federal law should also allow the drafter of the check a "safe harbor" wherein they can pay the face value of the check and some nominal compensation for the hardship suffered by the recipient of that check in order to avoid this penalty. Michigan has such a procedure and it seems relatively equitable.

Oh My. There is just not enough space to comment on these debt diversion programs etc. I've read about good outcomes. I've read about horrifying outcomes in which little was done but fleece the consumer who in all goodwill thought they could work out debt repayment without going into bankruptcy court.
With this, I say 1) clear out the scammers 2) require some uniformity in the rules. If these agencies are honest who could object to a standard set of rules and regulations that make the process transparent (no, not violation privacy) and make it understandable to all. Good luck on this one. You could make a whole other topic just on the debt agencies.