On December 4, 2009 the Federal Trade Commission held a roundtable discussion, actually it was more of a big U) about protecting the consumer in debt collection litigation and arbitration. As they said, “These events examine consumer protection issues in debt collection proceedings against consumers.”
If you are the least bit sleepy I don’t recommend that you try to wade through all the content of the entire conference so I’ll give you the most interesting stuff as I wade through it.
Their discussion on the statute of limitations was interesting if you are into that kind of stuff. Geek. (Like me.) It was humorous to hear how the representatives from the debt collection side of the industry did not feel that people were sued for debts that were beyond the statute of limitations but the consumer lawyers and judges said “Hell Yea.”
This one debt collection guy you’ll hear made the point several times that they do intentionally and actively collect on debts that are knowingly beyond the statue of limitations since the statute only prevents being sued, not collecting.
One judge even mentions how some debt collectors attempt to frighten families to pay on the debts of dead people.
The panelists also talk about a clever trick to fool consumers into thinking they’ve made a payment on a debt outside the statute of limitations so they will then make a “real” payment and revive the statute of limitations on the debt.
The Agenda
- How frequently do debt collectors seek to collect on debt that is beyond the statute of limitations?
- Should there be a federal statute of limitations for consumer debts? If so, how long should it be?
- What restrictions or rules should be imposed with respect to collecting time-barred debt?
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- Prohibition or limitations on collection?
- Disclosure that the consumer is not obligated to pay?
- Prohibition on a payment reviving the entire debt?
- Disclosure that a payment revives the entire debt?
- Disclosure in complaints in collection actions of the date of last payment on a debt and the applicable statute of limitations?
- What actions should lawmakers, the courts, the FTC, the industry, or others take to address statute of limitations issues?
Panelists
James Abrams, Judge, Connecticut Superior Court
Carolyn Coffey, MFY Legal Services, Inc.
Michael Debski, Rubin & Debski, P.A.
Peter Evans, Judge, Fifteenth Judicial Court of Florida, Palm Beach County
Joanne Faulkner, Law Office of Joanne S. Faulkner
Cary Flitter, Lundy, Flitter, Beldecos & Berger, P.C.
Michele Gagnon, Peroutka & Peroutka, P.A.
Mark Groves, Glasser and Glasser, P.L.C.
Diane Lebedeff, Judge, New York City Civil Court
Carlene McNulty, North Carolina Justice Center
Joann Needleman, National Association of Retail Collection Attorneys
Donald Redmond, Portfolio Recovery Associates, Inc.
Yvonne Rosmarin, Law Office of Yvonne W. Rosmarin
Albert Zezulinski, NCO Group, Inc.
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This “panel” was disappointing. A sitting judge doesn’t understand when revolving accounts are charged off (180 days with no payment) nor when the SOL is measured? (from date of last payment) The moderator from the FTC at the end doesn’t seem to think that there’s any value in disclosing to consumers that making a payment of any kind on a time-barred debt waives their statutory rights by re-setting the SOL and is detrimental to them? (btw all codes of ethics prohibit lawyers from engaging in deceptive acts. doesn’t duping folks into re-upping the SOL come under the term “deceptive”?) Ms. Gagnon of the Peroutka”law firm” (I went up against them 5 times and they could not prevail against me) says that nothing is really needed in tems of SOL disclosure because the FDCPA is “out there” and they don’t want to break the law, and besides the SOL is an affirmative defense… Uh huh. What Ms. Gagnon fails to tell the FTC is that her firm files dozens of these cases each week in MD, and that 90% are awarded affidavit judgment because the defendant fails to appear. So how can a defendant use the FDCPA or the SOL defense if they don’t even show? She knows they can’t. And she knows that if they were forced to tell the defendants that a debt was time-barred it would increase the defendant’s odds of winning, put the law firm in jeopardy of FDCPA, and probably more folks would appear… all of which ultimately lowers the firm’s revenue… a lot. Think about it- Her claim, as was the claim of all the collection attorneys there, was that they don’t file suit on debts that are time-barred, aka outside the SOL. So if they don’t file suit on time-barred debts, why would they be opposed to a statutory disclosure requirement telling the borrower that the debt is time-barred? Yet, they all objected to including such a notice. The truth is most folks don’t understand things like SOL, FDCPA, and TILA (in fact all the judges I had did not understand TILA either!), and on top of that they are intimidated by going to trial. My last case was a third-party debt buyer, closely “affiliated” with the Peroutka firm. I pulled all their cases for the third-party plaintiff they were representing that year from the clerk’s office. What I found was about 90% were granted affidavit judgment (the defendant didn’t show). The rest agreed to either settle or enter into a payment plan, some clearly detrimental- For instance, one had a $25/mo payment on a $3000 balance. That won’t even cover the post-judgment interest accruing; it will never get paid off. But what struck me most was that not one single case had one shred of proof that the plaintiff actually owned the debt- No clear chain of title from the original creditor. One case even showed the plaintiff allegedly buying the “bad debt” several months before it became delinquent. At best it’s absurd; at worst (in my unprofessional opinion), it looked like a fraud upon the court. That the portfolio sale was before the account was delinquent means either they never bought the account- no one sells a current credit card account to a junk-debt buyer – or they could not prove they owned it. The point is, this is a highly questionable industry in terms of the veracity of their claims in court, and from what I heard from this “panel” we can expect little help from the govt. If all defendants would just take the time to learn the rules of their court, understand the laws like the SOL, FDCPA, and TILA, and SHOW UP for court, these debt-collection law firms that are “affidavit judgment mills” would grind to a halt. In my cases I found numerous TILA violations on past statements (I kept all my statements) and filed counterclaims based on those TILA violations. Those violations totaled more than the plaintiff’s suit, so they gave up and dismissed, with prejudice. In the third-party case, they had no proof they actually owned my specific account, so I demanded they provide proof of their capacity to sue. They couldn’t, and the judge ruled in my favor.