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Edited on Thu Feb-12-04 06:36 PM by happyslug
Over their head in Credit Card Debt, and these debt collectors trying to get blod from a turnip.
Now below is some information I give to my clients who are over their head in debt. I am adding it to this thread so people can better address Debt Collectors. This paper covers the Federal Debt Collection Act (which is a FEDERAL ACT). The paper also goes into Pennsylvania law on Debt Collections so it may NOT apply to your home state (For example Pennsylvania does NOT permit attachment of wages for most types of debts, one of only two states that does so, Texas being the other). On the other hand most states permit you to have more than $300 in assets after an Execution sale of your property to satisfy a Judgment (Most states exempt more, with, I beleive, Washington DC being the only Jurisdiction that permits NO exemption from Execution).
BASIC CONCEPTS IN DEBT COLLECTION AND BANKRUPTCY, By: Paul H. Mentzer, 2/20/2002.
Debt Collection is done either "Pre-Judgment" or "Post-Judgment". A Judgment is a judicial finding that a Debtor owes money to a Creditor. A judgment is only entered by a Judge or District Justice (Called a Justice of the Peace in other states) upon a filing of a lawsuit claiming that a Debtor owes money to a Creditor. Attachment of wages, bank accounts and Sheriff Sales of Property can only be done "Post-Judgment".
PRE-JUDGMENT DEBT COLLECTION
Federal FAIR DEBT COLLECTION PRACTICES ACT (15 U.S.C. § 1692)
Pre-Judgment debt collection is an attempt to collect on a debt without having to go through legal process (i.e. without having to sue you in court). Pre-Judgment debt collection activity is occurs when a debtor fails to pay on a debt. Such a Debtor has three choices:
(1) First the debtor can pay on the debt.
(2) If the debtor can not pay than the debtor can try to make a payment arrangements with these creditors, (Something creditors will do, but most often when it is to the benefit of the CREDITOR not the Debtor).
(3) The third option that can be done is NOT to pay the creditor and tell them you do not want to hear from them except by legal service (i.e. the when the creditor sues you for the money).
Unless a debtor can pay the debt the best option for debtors is not to pay the creditors. If a debtor selects the option of not paying the creditor, the creditor can sue the debtor in a court of law and get a judgment against the debtor. (See the following pages for details).
Now the Federal Fair Debt Collection Practices Act and similar state acts covers HOW debt collectors are to act when trying to collect a debt. Under these acts many collection activity are prohibited and WHAT a debt collector can do are restricted. The most important two restriction are the following:
1. The Debt Collector can only contact a Debtor once a week, and
2. The Debt Collector must stop contacting if the Debtor inform the Debt Collectors, in writing, that the Debtor does not want to hear from them except by legal service (i.e the Creditor is suing the Debtor).
I always advise my clients to keep a log of how often Creditors call my clients and WHAT they say to my clients. Often the Debt Collectors commit violations of the "Fair Debt Collection Practices Act" (FDCPA) (and similar state acts), but the only way to catch them is to keep a log. Please note that the "Fair Debt Collection Practices Act" (FDCPA) permit the Debtor to collect for violations of the act by a Collection Agency. My experience has been that most Collections Agencies resort to the illegal tactics because they have no intention to sue and thus not worried about any counterclaims under the "Fair Debt Collection Practices Act" (FDCPA). Among the prohibited activities are the use of any "harnessing, unfair or deceptive collection practice". Other violations are also possible but that will have to be addressed based on the facts if and when you are sued. Please note the FDCPA only applies to Debt Collectors, not to the person you owe money to.
If you believe you have been treated unfairly by the debt collector you can call the Pennsylvania Attorney General, Bureau of Consumer Affairs at (814) 949-7900 in Ebensburg Pennsylvania;
or the Hotline at 1-800-441-2555, and file a complaint.
Judgment
A Judgment is a judicial finding that a Defendant owes someone (Called a Plaintiff) money. A Judgment can be only entered after a Pleading (called a "Complaint") is filed in either District Justice Courts, Common Pleas Court or Federal District Court. If a person dispute a debt, the best time to dispute the debt is in front of a Judge, Board of Arbitrators or District Justice. Except in District Justice Court a Defendant must respond in writing (Called an "Answer"). If you wish to defend contact an attorney whenever you receive a copy any Complaint.
District Justice Courts
In District Justice Practice a Complaint is filed by a Creditor and a hearing date is set. If the Defendant wants to contest the debt all a Defendant has to do is appear at the set time for the hearing. District Justice court are viewed as not giving "Due Process" for District Justice Courts do not provide an opportunity to supply a written answer (and no jury). For this reason there is an absolute right to appeal any decision of a District Justice. The appeal is to Common Pleas Court and must be filed within 30 days of the decision of the District Justice (10 days if possession of Rental property is in dispute). On how to Appeal please see an Attorney.
Filing In Common Pleas Court and Arbitration
In Common Pleas Court, once a Complaint is filed the Defendant has 20 days to file a written "Answer" to the Complaint. Once the Pleadings are done, the case (if less than $20,000) is assigned to a Board of Arbitrators who set a hearing date and hears both sides. Like District Justice Court, if either side dislikes the decision of the Arbitrators they may appeal for a hearing in front of a Judge and/or Jury.
Common Pleas Court Hearing
If the action is for more than $20,000 (or an appealed is taken from a decision of a Board of Arbitrators) than a trial in front of a Judge and/or Jury is permitted under Pennsylvania Law. This is the final hearing on the merits of a case, any appeal to Superior Court or the Pennsylvania Supreme Court will be on legal technicalities only.
Defenses against Entry Of Judgment.
Now in addition to any defense based on not owning the money, the law permits other types of defenses based on legal technicalities. The following are partial list of such technicalities:
1. Statute of Limitations
If a Creditor waits more than four years from the last time you made any payments before he sues you, the lawsuit may be dismissed under the statute of limitations. In Pennsylvania (and the Uniform Commercial Code in general) the Statute of Limitation is four years from the last time you made any payments.
Federal Fair Debt Collection Practices Act (FDCPA)
Please note your rights under the "Fair Debt Collection Practices Act"(FDCPA)(15 U.S.C.A. §§1692 to 1692o.), mention on page one of this paper are also enforced at this stage of any litigation.
Pennsylvania Consumer Protection Acts (Title 69 & 73)
Pennsylvania has several consumer protection laws, including the following, in any lawsuit you should discuss these with a attorney:
1. Pennsylvanian "Unfair Trade Practices and Consumer Protection Law", (73 P.S. § 201-1 et seq).
2. The "Plain Language Consumer Contract Act" 73 P.S. § 2201 et seq.
3. E-Commerce is governed by the "Electronic Transaction Act", 73 P.S. 2260.101 et seq.
4. The "Motor Vehicle Sales Finance Act" (MVSFA) (69 P.S. 601 et seq.), also has requirements that a creditor must perform before he can collect from a client who automobile has been repossessed. Please note the MVSFA does permit re-possession of an automobile even if you are one day late in payments.
Federal Consumer Protection laws
They are other Federal Consumer Protections laws that you should discuss with an attorney before you leave a Complaint go to Judgment, these include the following:
1. Consumer Leasing Act, 15 U.S.C. § 1667 et seq,
2. Consumer Credit Cost Disclosure, 15 U.S.C. § 1601 et seq.
3. "Unfair and Deceptive Practice Act" (UDAP), 12 U.S.C. § 45 et seq.
4. Regulation "Z" of the Federal Reserve System, 12 C.F.R. § 226 et seq.
Post-Judgment Debt Collection.
Once a Judgment is entered against a person, that Judgment is a lien on that person’s Real and Personal Property. Once a Judgment is entered the Plaintiff can ask for an "Execution Sale" of the Debtor’s Personal Property (We will not discuss the sale of Real Property in this Paper). Furthermore the Plaintiff can ask the Sheriff to "Attach" any bank accounts or other money asset of the debtor.
As a rule Pennsylvania exempts the following from Execution Sale:
1. Personal Clothing.
2. Wages.
3. A Bible
4. $300 in other personal property. ($600 for a couple if BOTH of them owes the debt.)
5. Pension funds.
In addition the following are exempt under Federal Law:
1. Social Security and SSI Benefits
2. Veteran’s Benefits
One of the main advantages of the Federal Exemptions from the state’s Exemptions is that the Federal Exemptions survive conversion of the exempt asset into a bank account. For example if your Social Security has direct deposit (and no other money is deposited into that account) the money is still exempt from attachment by the Sheriff. On the other hand wages are exempt under the State exemption but as soon as the wages are deposited into a bank account, the Sheriff can attach the money.
For the above reason I always warn my clients who have judgments against them, never to deposit wages or any other money into a bank account.
Personal Property Sheriff (Execution) Sale
Pennsylvania also permits the sheriff to sell your personal property, but only if such property exceeds $300 in value. Such sales are called Sheriff Sales (The Official name is "Execution Sale" but I will use the popular name in this letter) Under Pennsylvania Law if you are subject to a Sheriff Sale of personal property the Sheriff can sell ALL of your personal property.
Under Pennsylvania law the only exemption from Sheriff sale are personal clothing, a bible and $300 in other personal property. You get to select the items that make up your $300 exemption but it is still limited to only $300. Please note that trailers, automobiles and pets are "Personal Property" and thus can be sold by the Sheriff in a personal property Sheriff Sale.
The Sheriff can only sell the assets of the Debtor, not the Property of the Spouse of the Debtor.
Once a judgment is entered a creditor can request an execution sale take place and than only to the property of the person who owns the debt. i.e. the Sheriff or Constable can not sell the property of a debtor’s spouse’s for the debt nor sell marital property for a debt of one spouse (they can sell marital property for the debt of BOTH spouses, but not just one spouse). The Sheriff or Constable can not sell property owned by any one else for the debt of the debtor.
Now the law assumes all property is owned in the same nature as the real property is held, i.e. if a debtor rent (or own) a house with the debtor’s spouse, all property on the property is assumed to be marital property.
If debtor rent (or own) a house alone all personal property in the house is assumed to be the debtor’s alone.
If a debtor lives with someone else (i.e with debtor’s parents, or with any other person where debtor is not a tenant) the law assume all personal property on the real property is the same as the real property, i.e. the parents (or the person who has title to the real property).
Now the above is an assumption which can be overcome by evidence (including the testimony of the debtor). If a constable or sheriff deputy does tag property belonging to another person, that person must go to the District Justice that issued the judgment (if a constable is during the execution sale) or to the Sheriff (if a sheriff deputy is doing the sale) and file an objection to the levy on the grounds that the tagged property does not belong to the debtor. If the person filing the objection loses in front of the District Justice or Sheriff, that person can appeal the decision to Common Pleas Court. For this reason I always recommend if someone is subject to an execution sale they should call my office so we can open a file on the actual execution sale.
What I mean by the above is that the Sheriff can not sell the property of a debtor’s spouse nor any marital property. Marital property under Pennsylvania law is viewed as owned by both spouses with both spouses having an "Undividable Half Interest" in the marital property. "Undividable Half Interest" means that any marital property can not be sold for the debt of ONE spouse (It can be sold for the debt of BOTH spouses. If the SPOUSAL residence is in both spouses’s names it is marital property. Any vehicle own in BOTH names is also marital property. An argument can be made that a car in one spouse's name is still marital property if it was purchased during the marriage or in anticipation of the marriage. I always recommend to married couples to add each other’s names to their automobile’s title.
Also under Pennsylvania law there is an presumption that any personal property on real property is held in the same title as the Real Property. (See the next paragraph for details on this presumption.) Please note this is a presumption, like all presumptions can be overcome by evidence (including your testimony that something is your separate property).
The above presumption is that any personal property on real property is held in the same name as the real property, thus if the real estate is in both spouse’s name, the personal property on the real property is presumed by law to be marital property. On the other hand if the real property is only in one person's name the personal property in that real property is presumed by law to be that person's property alone.
SPOUSAL NECESSITIES DOCTRINE
The above as to treatment of spousal debt has one exception, the "Spousal Necessities Doctrine". Under Pennsylvania law a spouse (For ease of understanding hereafter referred to a "Husband" but may be a wife) may be held liable for the debts of a dependent spouse (Hereafter referred to as "Wife" but may be a Husband) only if the husband co-sign for the debt or the debt is a "Necessity". Now if the husband co-sign for the debt he is jointly liable for the debt but if the husband did not sign for the debt he is liable only if
a. the creditor looked to the husband to pay for the debt when the wife incurred the debt and
b. the debt is for a "Necessity".
c. the burden of proof on both elements above is on the CREDITOR.
Now what is a "Necessity"? A "Necessity" is something a husband would be expected to pay for his wife, i.e. Clothing, food, etc., but not something a husband would not be expected to buy for his wife. In most cases if a creditor looked to the wife for payment they can not claim it is a "Necessity".
The "Spousal Necessities Doctrine" is a very old doctrine but still used in Pennsylvania. In my opinion, luxury goods, gifts, etc are not “necessities” but in any particular case it is question of fact up to a District Justice, Judge or Jury to decide. I warn my clients of this doctrine but also tell them I have only had one case in ten years involving the doctrine and that case was never resolved. Very rarely used in litigation but you never know when it will appear.
BANKRUPTCY
The Federal exemption under Federal Bankruptcy Laws are much more generous than the State Exemption from Execution Sale. For Example:
1. You can retain $16,150 equity in your home
2. You can have up to $2575 equity in one automobile
3. $425.00 in any one piece of personal property primarily used for household use. Total not to exceed $8,625
4. $1075.00 In Jewelry
5. $850.00 plus up to $8,075.00 of the amount set aside for real property exemption and not used as part of the real property exemption.
6 $1,625.00 in tools of one’s trade.
7. Im-matured life insurance policies
8 Other items
The down size of Bankruptcy are the following:
1. Cost is $209.00
2. Can only file once every seven years
3. Extensive paperwork involved YOU MUST LIST EVERY DEBT AND ASSET YOU KNOW OF.
Please note the following can NOT be discharged in Bankruptcy:
1. Debts do to any criminal activity
2. Debts do to a Auto Accident involving alcohol or drugs
3. Debts secured by other property, i.e mortgage or Auto Loan, but only to the value of the item securing the loan. These debts are often referred to as "Secured Debts".
4. Municipal utility bill, these are viewed as a lien on the real property being served.
5. Other miscellaneous debts.
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