Defending Yourself Against Creditor Lawsuits

In these harsh economic times, debtors having difficulty paying their credit card bills are suffering the collection calls and lawsuit nightmares. In an article entitled ‘How To Deal With Debt Collectors’ I discuss that debtors who want to stop harassing calls should write a letter to the creditors asking that all communication cease or a lawsuit will be filed for violating the federal and state laws on collection practices. This is a follow-up article to discuss how sending out the letter and keeping great records can lead to success in defending a creditor lawsuit. The letter should be sent via certified mail return receipt requested. Once the letter is sent, take great care to document any future calls made to you by the creditor. If the account is turned over to collections, send the letter out to the collection agency as well, and document any future calls to you.

I have represented clients with success with this strategy as for example, the client wrote to the creditor the cease communication letter and the creditor kept calling nonetheless. The creditor would call and discuss the debt with the clients’ family and would call the client at work despite my client having told them that they were disrupting his work environment. The creditor ultimately filed a lawsuit against my client. We filed an answer disputing the debt. We also prepared a complaint to be filed in federal court citing each telephone call as a separate count with statutory damages according to the Fair Debt Collection Practices Act (FDCPA), 15 USC §§1692-1692p, MCL §§ 339.901 et seq., MCL §§ 445.251 et seq. We sent the complaint to the plaintiff attorney indicating that we were enclosing the unsigned complaint which my client intended to have filed. We explained that my client alleged sixteen counts of separate violations of federal and Michigan debt collection practices laws and that each count provided a basis for statutory damages of up to $1000 for federal and $150 for Michigan, as well as attorney fees. We then suggested that in the interest of saving personal and judicial resources, we would abstain from filing the complaint in order to settle the matter of the lawsuit against my client. We offered a 15% lump sum payment and noted that if we were forced to file the complaint, the creditor’s lawsuit would be removed to federal court to be joined with the federal case and that we would seek the maximum statutory damages.

In order to succeed in this strategy documentation is crucial. This documentation is your proof and sword on paper and in court. The time, date, name of the caller, and content of the call should be noted. Any voicemails or other recorded messages should be saved. If the creditor continues to contact you after you have sent the letter out, and they likely will based upon my experience, you have grounds for a lawsuit with both state and federal against the creditor, turning the tables on them and giving you negotiating leverage to settle your debt for pennies on the dollar.

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