I am an attorney who defends credit card lawsuits, helps people with bankruptcy, and sues collection agencies. AMA!

My husband and I are separated (soon to be divorced), he lives in Oklahoma while I live in California. He apparently has some student loans that he isn't paying off (around $1700) and I guess he's not answering the collectors calls because I get 1-2 phone calls per day about it. I've answered multiples times and have tried to explain that I can't make him answer their calls and I can't do anything about the debt. At first it's a sweet lady and then some angry guy will jump in and take over the conversation and threaten me telling me that this is my problem too and it will affect my credit and that if I fail to comply and set up a repayment schedule then he will put me down as refusing to pay it. I've told them that I definitely won't do that because it's not my money to do that with behind his back. The guy hung up on me. I've been very nice and asked them to stop calling multiple times. Is there anything I can do to make them stop?

That kind of behavior is completely unacceptable. Threats = bad. False representations = bad. Refusing to stop contacting you when you ask to = bad. These cases make me happy, because they're satisfying, and result in a great outcome for my client.

Log everything. Every call, phone number, date, time, name, and what they say.

Then call a NACA member. Based on what you're telling me here, the violations of FDCPA and Rosenthal are stacking up left and right. This is the kind of case I jump all over, because: *They will stop calling you *You may be entitled to up to $1,000 for FDCPA and up to $1,000 for Rosenthal violations *Your attorney's fees and costs will be paid for by the Creditor *It may be possible to get your liability for the $1700 cleared as well.

No guarantees, of course, on any of this, but you're describing my favorite case.

I'm in debt, with everything in collections. I'm on top of my car, car insurance, and cell phone bill. I need all of those to work. I went from a decently paying job where I was able to make all of my payments on time, to a terribly paying job, and we just can't make ends meet, let alone make all these payments. This year was a tremendous financial struggle, we lost half our income, our furnace broke, hot water heater died, just utter mayhem.

Is there anyway I can resolve my debt, or do I just have to wait for my financial situation to turn around, and continue to make payments? It keeps me up at night and I feel like a terrible person. I went from responsible adult with good prospects to poor, creditor dodger overnight.

I am so sorry to hear about your situation. This is so normal and so typical of the people I talk to every day. Good people just have stuff happen sometimes.

You absolutely cannot beat yourself up, or place stress on yourself, over extrinsic events which cause situations like these. Life happens, and as long as you can keep some perspective, keep your family intact, and realize that your finances are just a business transaction, you'll be fine.

Your finances are not your self-worth, please don't buy into that lie.

I would very seriously consider a chapter 7 bankruptcy. If you qualify, it's a short and simple process that provides immediate relief. The instant we file a bankruptcy petition, all creditors must stop all collection efforts - calls, letters, litigation - everything stops instantly. Anyone who pursues collections has violated an order of a federal court, and is subject to sanctions for contempt.

In a chapter 7, something like 98% of the time, the debtors can keep all of their property and possessions, the case is over in about 110 days, and you get a 'do-over,' courtesy of the US Congress, who managed to get one thing right.

I cannot tell you how often my bankruptcy clients tell me about the profound relief they feel once their debt is discharged. It's a palpable, physical relief that permits you to be a better parent, spouse, and employee, because a giant monkey is lifted from your back.

I hope this helps.

Just reading "your finances are not your self worth" made me tear up.

I need a plaque with that engraved on it... But I can't afford it :)

I should have certificates printed for my clients. Thank you for the very kind feedback.

I give a version of this talk to every client. People need to separate their self worth from their finances. Shit happens. It doesn't make you a bad person. Get on with your life.

It's my understanding that filing a bankruptcy has the potential to make life even more difficult in the long term. Every bill will go up. Car insurance, rent, etc.

Not in the long run. People forget that their credit is already shot. The BK puts a stake in the ground and begins a fresh start, immediately. You are suffering from a common (but mistaken) misconception that bankruptcy is the death knell for future credit.

Simply not true.

What do you think of the student loan crisis, and what do you think the best way to fix it is?

Not an individual level, but on a national level. What policies do we need to enact?

That's a GREAT question. I think it's the next explosion waiting to happen in the US. It's also keeping an entire generation away from purchasing homes or otherwise increasing their standard of living, because of the choke-chain of student loan debt.

I counsel a lot of student loan debtors, and the stories I hear are terrifying: $300-400k in loans. There's no way anyone is going to pay that back in their lifetime, and their income is certainly not going to increase proportionally to that expense.

I think the solution has to be to make student loans, under some conditions, dischargeable in bankruptcy - BUT - make the schools responsible for some of the debt that's forgiven, since the schools are complicit in encouraging students to rack up this debt, and the schools are increasing their fees, in part simply because of the availability of "free" student loan money.

A friend of mine defaulted on her student loans 20 years ago. She doesn't live in the US anymore so there's nothing the debt collectors can do at the moment, but she's thinking about moving back. They recently got in contact with her again and tried to negotiate rehabilitating her loan for $5 a month. The company that bought her loan was more than a little dishonest, telling her father than they wanted to "talk about an investment with her" (yeah right). My instinct is to not trust someone that starts out with a lie.

So my first question is, what's the angle here of this company? Are there downsides of this rehabilitation? If she comes back to the US, can her wages be garnished?

The other thing I've heard is that a lot of these companies that buy debt don't have the paperwork to prove that the borrower owes it. There was a recent story on This American Life about a guy who was able to walk away from a large CC debt he didn't remember incurring simply because he showed up in court and asked for the paperwork to prove what the original amount was, what the interest rate was, etc. The company that bought the debt didn't have it, so the case was dropped. Is the same true for college loan debt?

More or less. The student loan collectors are also subject to statute of limitations, FDCPA, and RFDCPA (in California). They have trouble with their paperwork (one of them in particular), and they screw up. What you're telling me is a classic FDCPA violation, and subject to litigation.

Why are these people getting so much in loans? I know the cost varies, but according to the College Board, the average cost of tuition and fees for the 2013–2014 school year was $30,094 at private colleges, $8,893 for state residents at public colleges, and $22,203 for out-of-state residents attending public universities. My university (public) costs between $15,000-$20,000 per year depending on the courses, books, and additional fees for in-state students. If these people are racking up $300-$400k in loans, then something else is going on aside from ease of availability and school encouragement. We're talking about more than four times the needed amount for the average out-of-state resident.

They go to USC...

Do we need more education on finance and our rights to do with our money?

That's an unqualified "hell yes."

High schools and colleges provide ZERO education on personal finance, personal economics and the practical knowledge we all need to function in this complicated world.

I have been thinking about this recently; my kids are all in late high school or college, and I was struck that they received no formal personal finance education at all. Clearly, we've browbeaten them with this stuff, as the sons of a lawyer who is neck-deep in it all day long, but their cohort is essentially financially illiterate. And I mean a cohort of VERY bright people - they've simply never learned about how money works, and notably about their rights when bad people try to take advantage of them.

I'm a social science teacher and when I taught Economics I centered it mostly on personal finance and educating my seniors on what is an expectable/livable income, or lack there of, based off their choices.

Now we only need about 10,000 more of you.

Do you take credit cards?

Funny.

Heck yes, I take credit cards. But not for bankruptcy. Attorneys who take credit cards for bankruptcy lose their licenses pretty quickly.

Good call. Learned in class the (slightly) humorous story of how a bankruptcy lawyer who doesn't get paid upfront may easily become an unsecured creditor. Probably won't get much if that happens!

Our district has a rule: Attorneys fees paid before filing, or they're discharged with everyone else.

But not for bankruptcy.

Funnier. I tip my hat to you, sir or ma'am.

sir or ma'am.

Really? REALLY? My picture is that bad? And the moustache and goatee didn't tip you off? <g>

What do most people not know when it comes to debt collectors and being under "collection?"

When I was younger, I was placed under collections for a bill I didn't receive. The bill was insignificant (less than $100) but it ruined my credit until I had it removed from my credit history. I found out when my Credit Card companies jacked up my interest rate, despite never having late payments with them. Were they allowed to do that? What sort of recourse did I have, and what could I have done differently? (I did nothing, btw).

Thanks for the AMA!

Those are the kind of situations where the giant credit/collections machine can make your financial life FUBAR for years.

Most people don't know that you have rights and don't need to tolerate mistreatment, mistakes, harassment, guilt, endless phone calls, or any other creditor mischief.

Also, most people don't know that you SHOULD NOT USE A DEBT NEGOTIATION COMPANY. My opinion only, YMMV, but I have sued and dealt with a number of "negotiation" or "settlement" companies.

They take a metric crapton of your money for themselves, put very little into your "trust account" to be used for settlements, and won't help you when you're sued by your creditors. By the time these charlatans settle a debt for 50%, their fees and costs mean that the true net reduction ends up being in the 80% range, not the 20-50% range.

A debt attorney can do more, for a LOT less money. And if bankruptcy is the correct option for a debtor, a Chapter 7 BK will wipe out your unsecured debt, with no tax consequence (usually), and decisively.

What about a non-profit debt management program?

I don't trust 99% of them. Lots of pirates, rogues and scoundrels hide behind non-profit status.

If you do want to get an unbiased look at your picture, without hiring an attorney, I do, however, recommend a guy named Damon Day. He charges a very nominal flat fee to look at your debt and make a recommendation. And Damon claims to know of a few legitimate, ethical debt management companies. I can't speak to that. I know Damon and I believe he's a 100% straight shooter. But debt management companies make me queasy. I've sued them, threatened them, and seen the damage they cause to desperate people looking for a solution.

I checked my credit score recently and found I have an account in collection. Long story short, I passed out at the Kentucky Derby and woke up in an ambulance. Being a poor college student I just walked out of the ambulance while they were carting in the other guy. I figured I was fine as I hadn't been checked in and still had my wallet and phone one me. It looks like the account in collection is for that ambulance ride. I have never received a bill in the mail from the hospital or the collection agency. I assume I just gave them my name and social while blacked out but they never got my address. What should I do?

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Fear is why the collection industry is so profitable. Never operate from fear. You have rights. Debt defense attorneys know those rights.

No fear.

The account is only for ~$700 and it was 2.5 years ago, not sure what to do.

I don't even know who to contact in order to pay it off.

Pull your credit report at annualcreditreport.com (free). The address will be on the report.

What do you think is the most corrupt thing about collection agencies?

Btw thanks for doing this AMA

You're welcome. Most people truly don't have any idea that these things can be defended, or of their other rights under the web of consumer protection statutes.

Believe it or not, most agencies aren't corrupt, just overworked.

That's not to say that there aren't a lot of bottom-feeding scum; there are plenty of those. But the majority just operate on a business model of filing lawsuits, and expecting 98% (really) of those suits to result in a default judgment for the agency. Then they garnish wages and levy bank accounts to collect.

The issues arise when process servers dump the paperwork in a gutter and then file proof with the Court that the suit was served properly. We call those "sewer serves." Or the wrong person, but with a similar name, is served.

Most large agencies try to color inside the lines, more or less. The agents are trained to be VERY aggressive and unresponsive. Since I always deal with their attorneys, and we both know the score, I am able to have a different conversation with them when something goes wrong, or when discussing violations which occurred while they were trying to collect from my client.

I actually believe that collection agencies need to exist, to keep the minority of abusive debtors on the straight and narrow. Just like debt defense attorneys, such as me, need to exist, in order to keep the collection lawyers and agencies on the straight and narrow. Without either of us, the system would be out of balance.

So, most of the 'abuses' that occur with large agencies, are the result of them having too many files open, and the inevitable mistakes that happen with that much volume.

As to the smaller agencies, or creditors who try to collect for themselves, abuses happen regularly. This is mostly because of a lack of training, or because they think they can get away with being abusive, lying to my client, or using techniques to collect which are prohibited by law.

I rambled. Did this answer your question?

How would you go around defending against a collection agency who's client was paid off directly, but the collection agency never got the memo? (Actually going through this with a dr. )

Thanks for doing this AMA!

I would immediately threaten to, or actually, sue the original creditor and the collection agency. Period. I'd have that letter in the mail so fast that I'd look like Wile E. Coyote.

Why? Because the collection agency and original creditor are going to pay my bill for defending you and making the harassment stop. I like that system.

I have a question for you. I'm an attorney in Kentucky and I had a guy come in asking a similar question to the one above. Essentially he went to the ER several years ago, got fixed up and never paid the bill until it was sent to collections. He has proof from bank statements that he paid it, but lo and behold the debt was sold on to two separate collections agencies in different states who continue to report the amount on his credit report. What is the proper way to confront this? Should I send proof of payment with a demand to remove the debt as being owed and then sue, or just go ahead and sue beforehand? What other damages might we be able to get? What about attorneys fees?

Call me, Seth. 805-244-5291. It's easier to discuss on the phone.

Why is it so difficult to get debts removed that are well over 15 years old? I have some issues where my ex wife opened cards before we divorced and I didn't know it. The debts keep being resold and I can't get them removed. Is the seven year limit just bs?

Not at all. This is an issue under both the Fair Credit Reporting Act and the FDCPA. If, however, the debt has gone to judgment, then the reporting is accurate and fair, and you'll need to work on settling with whoever owns the debt now.

However, if the debt is truly over 7 years old, it should be removed from your credit reporting. You can dispute the reporting directly with the credit reporting agencies. Please, DO NOT use the online form. When you do so, you subject yourself to mandatory arbitration, and can waive your right to sue. Instead, dispute, in writing, CMRRR (Certified Mail, Return Receipt Requested).

And by this you mean the ORIGINAL debt? Or the debt that is sold off? I've had trouble where the original debt is 5-7 years old, gets sold off to some new company and now claiming that it is new debt.....when in fact it's not, it's the same original debt from many many years ago.

That's a bogus re-aging of the debt, which could subject the collector to liability under FDCPA and other statutes. SOL doesn't restart when the debt is sold.

But they try. Man oh man do they try.

I'm a law student, currently taking part in a clinic that has placed me with a public interest group that does pretty much precisely what you're doing right now, for low income residents of NYC. So my question is, if you had been doing what you're doing right now but while you were still in law school, what would the biggest take aways from the experience be?

That really good people can get into really bad trouble through no fault of their own.

That the system works, more or less. We (the consumer bar) are here to help keep it in balance, and to address the times when it doesn't work.

That the collection industry isn't a group of vicious demons. It's people who get up and go to work just like you and I do. I don't demonize them, I treat them very respectfully, particularly when I'm consistently beating them. In turn, they treat me respectfully, and cut my clients plenty of slack. They're not the enemy, they're simply an adversary. Big difference.

I'll think of more and edit this.

What do you think about debt collectors that call relatives (or anyone they presume is a relative) and bother/harass them over debt?

This happened to me over my Dad's debt and they were making me feel guilty, like I needed to give them the info they were looking for (my Dad's whereabouts, etc) or I was being shady.

Honestly I had no idea how to handle the situation other than telling them I didn't want to give them that information.

Just thinking about it... Ugh!

This is one of those cases where abuse is likely, and, depending on the facts, I would examine calls like that for violations of the law, to see if a suit against the collector is warranted.

The FDCPA (Federal Fair Debt Collection Practices Act) and California's Rosenthal Fair Debt Collection Practices Act (I practice in CA) limit contacts to third parties to only a single call for purposes of locating the debtor. Any other content to that call is a violation. That means no trying to guilt you into helping them, no "could you please go across the street and ask them to call me," none of that BS.

If anyone contacts you over a third party, my advice is to reach out to a debt defense attorney asap to evaluate the conversation and see if it's actionable. You'll need a record of the call, date, time, number who called you, name of the individual, and notes as to what they said.

By the way, a GREAT resource to find consumer attorneys is the National Association of Consumer Advocates. They have listings in every state of attorneys who take on just these types of consumer protection issues.

Excellent, thanks for answering. Good to know if this happens again.

This individual called multiple times from different numbers and I always felt dirty afterwards.

Once is it. After the one time, get a lawyer in and sue 'em.

Related question: how do you suggest one records a phone conversation? Is there a mobile app you could recommend?

Be vewwy, vewwy careful about recording phone conversations. In some states it's considered a wiretap violation. In California, unless both parties to the conversation know and consent to it being recorded, it's a wiretap AND a civil rights violation.

On the other hand, the little recording they play you says "this conversation may be recorded for quality purposes?" I know some people who consider that to be a permissive "may."

THAT WAS NOT LEGAL ADVICE AND IF YOU GET IN TROUBLE FOR RECORDING A CONVERSATION, YOU MAY NOT BLAME ME.

Do you like the work you are doing? Was it your focus in law school? What drove you to pick debtor/creditor law? What other areas are you interested in? I ask as a fresh attorney who knows way too little about any area to do an ama, yet.

Welcome to the bar, and congratulations on passing!

I LOVE this as a practice. Absolutely LOVE it.

I'm not wired for criminal law, and this lets me help good people, and be able to sleep well at night. I also practice in Elder Financial Abuse, consumer protection, fraud, bankruptcy, and defamation. My clients are grateful, I feel good about what I do, and my stress level stays relatively low.

First I'd like to say thanks for doing this AMA, you appear to be quite busy for the good of public knowledge and the internet appreciates that. My girlfriend just received a message this morning from a man claiming to be from a law office called Westhill Exchange, apparently they specialize in debt collection. The message they left her was very vague and contained no personal info. My Girlfriend also doesn't have any known debt as she worked full time to pay for college so she was really caught off guard. The message just said a claim was being filed against her and to call him back. She returned the call and spoke to the man who left the message who asked for her info, which she would not provide in fear of this being a scam. She said that you just called me and should be able to provide my info. He then got angry and threatened her and eventually hung up on her. I checked them out and they have a website and a BBB rating of an F. Are they legitimate or is this a scam that was phishing for info?

This hits every note in the scam song to me. I'd tell them to pound sand unless and until they provide their name, address, and the name of the creditor, as mandated by FDCPA

What are the first things that I should do if someone claims that I owe a non-existing, previously paid-off, or otherwise bogus debt?

Excellent question.

Within 30 days of receiving notice of the alleged debt, dispute it, in writing, certified mail, return receipt requested, or call a debt defense attorney. Most of us will go over your situation on the phone or email at no charge. That way, we can evaluate whether a law has been violated or not.

How are collection agents able to berate, harass, and threaten people? Does it actually work? Are they able to do what they threaten to do? How do they know charges are legitimate, or does that matter?

They do it because it works. It's illegal, but the number of times people like me bust their chops, is more than covered by the number of times they get away with it.

There is NO JAIL for debt in the USA. No one will come to your door and take your stuff. The threats are meaningless, and anyone who makes a threat or is disrespectful, has broken the law. If that happens, a consumer attorney needs to know about it, yesterday. Because we can make it stop and get you compensated, if it's a true violation.

Maybe not the type of question you expected to or prefer to answer, but I'm interested in your thoughts on debtors. I've collected cc debt from $500 to $40,000 and my experience is that there are about 5 useless people who blame everything on the planet for every 1 debt collector who will lie, harass, or bully in an attempt to collect. What are your thoughts on standing up for people who recklessly or knowingly put themselves in debt then come to you for help with the bill comes?

Maybe I'm cold hearten, I didn't enjoy collecting (first job out of school) but I definitely had no patience for people whining about how me calling them made them feel 'guilty' or 'annoyed'. There are exceptions for anything, but largely (in my experience from all the people I spoke with over 2 years) people spent more than they had and then got to the point that they couldn't keep up any more and elected themselves the 'victim' of 'deceiving' business practices. (meaning when you spend money, you actually have to pay it back, and interest is a thing.)

This is a great question, and I not only don't mind, I'm glad you asked.

To be honest, I don't see a lot of abuse on either side of the table. I don't accept cases from people who I think are gaming the system, and I don't turn down very many. Almost 100% of my clients are simply good people who had a job loss, divorce or medical issue. They lived on their cards, things got out of hand, and now they are in a position that they can never recover from.

As I said elsewhere in this thread, if the consumer bar didn't exist, the collection industry would run amok with abuse. If the collection industry didn't exist, consumers would run amok. Each side keeps the other in line, and without that dynamic tension, the entire system would collapse. Neither of us would exist without the other. Criminal law is similar to what I do in this respect: my job is to negotiate to keep the collectors in line, and to make the plaintiff prove their case. Much of the time - MOST of the time - the collector is unable to prove their case to an evidentiary standard. If they aren't prepared to do so, they should lose the case.

Thanks for participating, this has been a very informative ama. Unpaid debt is the biggest source of anxiety in my life. When I was 20 years old I started making my first purchases and maxed out a few credit cards. I am now 30 years old and I have ignored the unpaid debt for the better part of a decade. I don't even have an idea how much I owe. In my estimation, it is likely upwards of $10,000. I ignore all phone calls, throw away all letters without opening them, and generally go about my life trying to pretend the problem doesn't exist. The only person I blame for the problem is myself. I've been trying to work up the courage to face the problem head on, but I have no idea where to start. What would be the logical starting point in rectifying a situation such as mine?

Pull your credit report from Annualcreditreport.com.

Do NOT go to the place you see advertised all the time.

That will give you a baseline. You may need to consider filing bankruptcy, or reaching out to each creditor and negotiating the debt.

But - don't delay. It won't go away, and it won't get better. Call a lawyer. We don't judge. We just want to get results.

In 2005, I had an auto accident and some financial difficulties. Since then, my debt has been getting resold from one bag of dicks to another. Is there any way that I can reduce or eliminate what I owe with little or no payments?

Depends on which back of dicks currently owns it. Much of what any attorney can do is help reduce or eliminate your debt by looking for violations and failures in the paperwork and in their collection efforts. To answer your question, "yes." There are a lot of ways to reduce or eliminate your debt under these circumstances.

Edit: Also, depending on your state and the specific facts, this debt may be out of the Statute of Limitations. You should get advice from a local attorney to see if it is.

Thanks for all the info you are providing. I have 3 accounts in collections. I would like to pay them off but some of the balances seem way more than what it originally was. Is there a way I could settle with them and still get these accounts paid?

You should be able to settle with ALL of them. If they've been charged off by the original creditor and bought by a third-party debt collector, the collector likely paid $.03 on the dollar for your account. They continue to increase the balance by the "contract rate," which is whatever your credit card co was charging.

You can reach out to them and make your case - offer 15-20%, along with a compelling (true) story as to why they or their client (if they're an attorney office) should accept the smaller amount. If you can offer a lump payment, you'll do better. If you are simply not in a position to offer a lump, offer payments. Start at a number less than you want to arrive at, because they will NEVER accept your first offer, but will counteroffer.

If the accounts are sizeable, consider bringing in a debt attorney to negotiate for you. If you've already been sued, you MUST answer the complaint within 30 days (in California), or risk a default judgment being entered, and losing your bank account, or being garnished. If you've been sued, please don't try to defend it yourself. We (the defense bar) are relatively inexpensive, often flat-rate, we know what we're doing, and we know how to defend this debt. In 50-60% of the cases I defend, we can get the case dismissed before trial.

I have an old unpaid balance of about $2,200 that was turned over to collection a couple of years ago. It's now around $15,000 (not sure how it went up so high as I have not used any credit cards since I stopped payment) and I just got a pretty threatening phone call saying that I'll be getting something in the mail that I'll have to sign for. The caller had no I.D. number and didn't even state who was calling. Does this sound like a situation where I would need a credit attorney? I'm in California. Also, the reason I stopped paying was they raised my interest rate to 40% for no apparent reason. I couldn't keep up with it.

I bet this was a payday lender. I will also bet that the "collector" who called you was scamming you, and would have required you to make payment via western union or cash card.

This is a common and virulent scam. If they won't give you their address and tell you who the creditor was, tell them to sit on a sharp stick.

They're untraceable, calling on VOIP lines from Boca Raton or Bangladesh. Tell em to kiss your ass and hang up.

No legit collector will EVER, EVER, EVER tell you that you have to sign for something, or that "someone is on the way to your house. EVER EVER EVER.

Just by reading through this AMA, it sounds like it wouldn't hurt to call and go over this with a credit attorney.

I get that feeling, too. Thank you.

Both of you, please do. It's free and can give you peace of mind.

Hi there,

I have almost ten years of experience in bankruptcy law but I'm currently unemployed (last firm I worked for let me go due to having no clients/work for me). I'm in California and have experience in the Central District.

My question for you is, do you need any help by any chance?

Ps I know this is tacky and do not expect an answer but I had to give it a shot...

PM me. I'll even forgive the Sox reference...

Before you even suggested it, I decided to get my credit report from annualcreditreport.com (I read about it on forbes.com). I have some of my collection letters beside me (e.g., a circuit city card debt, a cabelas visa card debt) and they aren't even showing up on my credit report. Do agencies often continue to attempt to collect debt after it is no longer on your report? If so, should I pay it, ignore it, or call them and tell them to get lost?

In fact, many of the debts I had on there the last time I saw my report years ago are not on there. Is this a good thing? Or is this a false positive?

It could be that they aged off after seven years. I wouldn't spend my money until I was certain that the debt was valid and collectible. Even if uncollectible, agencies can and will continue to try to collect. But they can't sue you.

It's probably a good thing, but I would keep a careful eye on it.

What is your favorite color?

Green. Settlement Money Green, when we collect from a collection agency or law firm, instead of them collecting from my client.

How do you handle fees? Is much of your work on contingency when you smell a lot of statutory damages?

Bankruptcies are paid up-front. Debt defense is mostly on contingency, with a small retainer, and something for costs, because I like my clients to have skin in the game. I find they're much more involved in the outcome than when I'm working for 100% contingency.

Statutory damages to the consumer are capped at $1,000 FDCPA and $1,000 Rosenthal (and $1,500 per call for TCPA), plus attorney fees and costs. These are fee-shifting statutes, which put the burden of attorney fees onto the defendant.

What would be the actual repercussions if something like Fight Club happens when some guy blows up a bunch of credit card/bank towers?

I'm embarrassed to admit that I never saw Fight Club. My wife likes happy movies, so even Pitt wasn't enough to get her to the theater.

Go watch Marley & Me, then! It's about a dog.

Yeah, that's my movie life. Happy movies with happy endings. No random s**t blowing up.

I hope you're still answering questions! My mom made a huge mistake and co-signed a student loan for my uncle. Now they've stopped making payments and she's getting letters from the school demanding money. Is there anything she can do? Right now really and advice would be useful.

Depends on whether it's a private or federal student loan. She can check out Joshua Cohen the Student Loan Guy. Josh knows more about student loans than anyone else. I learned all I know about student loans from him.

How often do you tell your clients that they're judgment proof?

Good question. For those who don't know, judgment proof means that the debtor has no assets that are collectible. No house, no money, or a low income, no assets, and a car that's under the exemption limit.

For the most part, even many judgment proof individuals still want to get a resolution, because they don't like the uncertainty that comes with an open judgment (and judgments accrue interest in CA at 10% annually), so even though I will make certain that anyone in that situation knows they cannot be levied or garnished, probably half of those clients still end up defending or resolving the suit.

How do you pay for a bankruptcy if you literally don't have any cash? I just started a business, have no assets or income yet and can't get these guys off my back...my next thought was chapter 7 but not sure how to pay for it.

Is chapter 7 something I could do on my own due to income restrictions?

Federal law requires me to tell you that you can file on your own.

Common sense requires me to tell you that it's tougher than it looks.

It varies district to district, but in our district (California Central), the court requires that the entire attorney fee be paid up-front, along with the filing fee.

At this point, since you have no assets, you may be able to consider yourself judgment-proof, and simply wait out your creditors for a year or so until your cash flow improves. There's nothing for them to seize, so you have little to lose by waiting.

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Opalinear,

That's a crappy situation. Unfortunately, I have literally no idea what the credit laws are in Canada. Can you locate an attorney near you who can go over your options?

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You're welcome. Good luck!

I have a debt from a doctor that billed my insurance for a pre-existing condition when I was only scheduled to have a physical. My insurance didn't pay them, and after I attempted to get the situation fixed without luck, I also refused to pay them. My bill has since been sent to collections. Do I have any options?

Your options depend on whether the collection agency is collecting for the Doc, or whether the debt was sold to a third party. Realistically, this is the kind of thing that often goes away once a lawyer sends out the initial letter. For some reason, people are scared of my letterhead...

Ever yelled "OBJECTION!" like Phoenix Wright while in court?

I'd be sanctioned so fast...

Court is the most boring place in the world. Makes the dentist chair look positively exciting.

Serious question- Just divorced. I was awarded the house. Paying her child support. My income is down dramatically. I have 3 large credit cards that are in default. 2 of which are going to be charged off very soon.
Due to a prolonged separation and finalization of divorce, have not filed income taxes for 2012 or 2013 as of yet.

Please tell me that BK Chapter 7 will be an option for me....?

RJIZZ800, I'm sorry to hear about the problems and frustrations.

Qualifying a BK7 requires a little more info. It depends on how much equity is in your house, your household size (# of kids), your income, expenses, other assets, and some other factors. You must also pass a means test, which is specific to your geographic area.

This is one of those things that a BK attorney could answer for you in a 15-minute phone call, and most BK practitioners will give a free consultation. If you call someone and they want to charge you before answering these questions, MOVE ON. Keep calling until you find someone who will.

If you qualify for the 7, it's a great solution for a lot of people. Your 2012/2013 taxes won't be dischargeable, but earlier tax debt may, again, depending on circumstances.

So what more can i do other than use secure passwords (2 step included), monitor my credit reports, and shred all documents? Are we ever going to be safe from identity theft?

I doubt it. You listed the big bullet points, but even those aren't enough. I do all that, and more, and still someone created a bogus paypal account in my name. You can lock your credit reporting accounts (or pay someone like Lifelock every month to do it for you), but at some point the inconvenience of true security begins to outweigh the benefits.

I use a password service (lastpass) to make sure that all my online passwords are different, random, and long. But that presumes I trust the operator, and all of my eggs are in that particular basket.

For now, I think 2-step verification and password managers are good steps. And pulling a credit report once or twice per year.

You can get genuinely free credit reports at the government-sponsored website once each year from each credit reporting agency. (not the one with the cute singing dude).

Don't trust the "credit scores" at Credit Karma or the other free credit sites. The only true way to get your ACTUAL FICO score is at myfico.com, and it costs a fair amount to keep an account open there.

Throwaway due to the nature of the question. I am in severe need of rebuilding my credit. Its into the very low 500s I have had 3 delinquencies in my name. These were all from when I was younger but, now I am trying to fix this. I tried getting a secured card but was declined. I make about 30k a year. I have no idea where to start. Any tips for somebody struggling to fix past mistakes? The delinquencies are about 3-5 Years old.

The best resource I know of for rebuilding credit is here.

Although that site sells an expensive credit rebuilding course, there is so much free info available that you could read between the lines and learn much of what you need to know from the freebies and the discussion boards.

It is not credit repair. DO NOT GIVE MONEY TO CREDIT REPAIR COMPANIES. It's credit rebuilding, the ethical, honest and sustainable way.

Disclosure: I pay that site to be able to give the program to my bankruptcy and debt clients to help their rebuilding process. I do not receive any money or other compensation from them under any circumstances.

I know someone who was served because of default, then it was dismissed by a judge, and now has been served again a year later, for the same exact debt and each time they serve it in the wrong county of residence.

A. WHY would the attorney's office do that?
B. WHY would the attorney's office serve the summons AGAIN after a judge had dismissed it a year earlier? And finally....

C. Are there benefits to fighting it in a federal court, since they are obviously disregarding a judge's orders?

A. They're overworked and don't have time to pay attention to the file. I chatted with a creditor's attorney last week who told me he has around 6,000 files open in a slow week.

B. Because they can. The judge probably dismissed without prejudice, meaning the case can be refiled.

C. That's called 'removal,' and can only be done under strict circumstances. They should hire an attorney if they're contemplating removing to Federal. Federal judges don't fuck around.

This may have been answered before, but I will ask.

Have you ever had a client that you had absolutely zero sympathy for?

Yes, but rarely. A staggering majority of my clients (more than 99%) are really superb, decent, hard-working people who just can't catch a break. They feel so terrible about getting into unresolveable debt, and they are so grateful when we can come up with a solution.

I would feel a little guilty about discharging debt and beating collection agencies up, if they all weren't so absolutely impossible for the average consumer to deal with, without professional help. More often than not, I can hear the stress in my client's voices - they sincerely feel guilty about not being able to meet their obligations, or they've tried to work things out with a credit card company, but the company wouldn't budge. Literally, if the CC companies would offer some flexibility, I'd be out of a job. BUt they don't, and then they sell the debt to third-party debt collectors who play hardball with the consumer until the consumer stops responding, out of exhaustion and fear.

So the ones who I dislike or am unsympathetic to are rare. Occasionally someone will come in for their third or fourth bankruptcy, or a student will have no idea how many student loans they signed for, but are stunned to find out that they owe $400k and are going to need to find two grand a month after graduating, just to meet their loan debt. I will still work very hard for these people, but I blame a lack of basic financial education more than the consumer. The blame to them is for being incurious and not watching their own flank or not educating themselves. The blame to the system is for failing to educate them in fundamental economics, and then dangling easy money in front of people who are simply ill-equipped to handle it responsibly.

Even those people, though, deserve competent counsel and representation.

Hello. I may be late here, but my question is this. I have about 5k in credit card debt along with 5k in car debt that I CANNOT pay off. I have been considering bankruptcy, but am afraid that the amount is to little and in general just don't understand it very much. Is it advisable to declare bankruptcy in this situation?

$10k is around my minimum threshold for debt in a chapter 7. Anything less, and the cost of the proceeding is not going to outweigh the benefits. I've filed chapter 7's for people with debt as low as $7,500 or so, when it was just choking them to death.

The rest of the chapter 7 equation is whether your income/assets/expenses would qualify you under the means test. That's more than I can address here, but a bankruptcy attorney can do it in a quick consultation in less than 15 minutes.

Once you are served for wage garnishment are you pretty much liable to make that payment?

No. In California, you can file a claim of exemption, which sets up a hearing to show that you need the money for support. I also frequently negotiate with creditors once they serve a garnishment or levy against my clients. Everything is always open to negotiation. With a wage garnishment, the creditor may not see money for months, because the Sheriff is so slow. So we can often negotiate a favorable settlement in return for releasing the garnishment.

But, don't delay. Get on it asap. The exemption forms must be filed within a VERY short time frame.

My boyfriend and I have been house hunting in the last couple of months and in doing so have filled out applications that include credit checks. Shockingly, I'm finding all kinds of debts on my credit report that I do not recognize, the most alarming being a $1400 Chase credit card debt (I've never had a regular credit card in my life, just a JCPenney card that I paid off years ago). I expected my score to be less than sparkling, considering I had a car repossessed 5 or so years ago (it's paid off, I settled on it) but it is much worse than I thought and I believe it is mostly because of this Chase debt and lots of other small $12-100 debts that I cannot identify. How do I go about disputing these debts or digging deeper to find out where the other debts are from, if they are in fact valid? My credit score is sort of keeping me from getting a new place, or at least requiring a cosigner.

There's also the question/issue of a couple medical bills that I've been hassled for a few years about. There's a law firm out of Topeka, KS that's been dragging me into "court" (a gathering of debtors in a community building) over these bills every few months over the last couple of years. I missed a date once because of work (Topeka is a few hours from here) and a warrant was issued for my arrest. I had to go to Topeka and post bond or bail or whatever on myself so I wouldn't get randomly arrested and jailed. They've also cleaned out my bank account a couple of times, right after a paycheck was deposited, leaving me with $0 and bills to pay. The last time they emptied my account, they over drafted $100+, leaving my account negative when I'd just been paid. I closed my account with that negative balance, so I'm sure that will come back on me too. I haven't had a bank account since then because I'm afraid they'll take my money again. I've used only prepaid Visas and cash for probably 3-4 years. The last "court date" I had was in June and at that point they notified me there's an active garnishment on my account meaning that payment plans are not an option anymore. However, they're not taking anything out of my checks, and they know where I work because I told them where I work. They still call me daily trying to collect, but I don't even know if the debt is valid. I got a rep to tell me what hospital it's from one time and I remember the hospital but don't remember going there in many years. I truly don't think they're valid. The law firm gives me a different total every time I talk to them but last time I asked they said I owe around $700 total, but it's always a range from $600-900. I don't know enough about this stuff and have so much going on that since they haven't given me another court date, I'm just ignoring all contact to focus on moving, work, life etc. but I realize that doesn't fix the problem and I'd like to resolve it. I want to fight back but don't know how. They've already taken plenty from me and I've volunteered more outside of that, how can I possibly keep owing them more and they can't tell me where or why? Help! D:

I would bet good money that you're being viciously scammed. "Court" is ALWAYS at a courthouse, in the presence of a judge. There is no jail, ever for debt. Anyone who's threatening to jail you over a debt is playing a cruel game.

Go to the NACA website, right now. Get a referral to a NACA attorney near you, and get their opinion.

How do you feel about Credit Karma? How accurate is the info and how reputable is the company in the industry?

CK is fine, but you can't rely on their credit score. It's not a "real" FICO score, it's only an approximation. The only place to get a real FICO (the one credit grantors see) is directly from myfico.com (disclosure: I have no connection at all to myfico and do not receive any financial benefit from them).

Thank you for the response. Do you have any thoughts about whether it is a trustworthy company? I know the credit reports they provide are subsidized by selling your info to specific creditors for credit offers.

I have no issue with them, and have never run into anyone who has. Just be aware of the limitations.

I got myself into some trouble about 10 years ago. I nearly did a ch7 but glad I didn't. I'm now back in the high 700's for each CRA (just bordering excellent). Just recently reviewed credit to start positioning for a mortgate next year or so and found I don't have enough lines of credit so got a card w/rewards. The card is managed by FIA and their customer support is horrible, the website is hardly sufficient, I have my first payment due in early Oct and I'm not entirely confident the auto payment is going to work (I can't even see the settings I made for it. All I see is "auto pay on").

Anyway, as you can see I have this irrational fear (suspicion) of credit cards (and credit in general). So my question is: if a card doesn't work out, is there a way for me to get this removed from CRAs simply for customer dissatisfaction?

I feel like I'm in this strange place of needing to work credit (although I don't want to) to increase scores but yet feeling really uncomfortable with this (and probably future) card's customer services.

tl;dr: This new CC doesn't seem trustworthy. If I decide to cancel it how can I get this line of credit removed from my credit reports?

The problem is, if you cancel, it will affect the average age of your accounts. Depending on how long the account has been open, your average age may increase, or decrease.

However, there's no way to remove it once closed, except for it to age off for seven years. Sorry.

Do you ever feel guilty for financially destroying the hardworking people who are simply (and rightfully) trying to collect money that is owed to their clients from debtors who "can't" (won't) pay their dues?

Can you show me a single hardworking person who I "destroyed?"

Didn't think so.

I defend credit card debt, for goodness sake. Credit card companies are about as universally reviled as... As attorneys. Or Congresscritters.

No, I don't feel a bit guilty. Read earlier in this thread. Similar to a criminal attorney, my job is to make the plaintiff prove their case. Not to engage in legal gymnastics and wave my magic wand just to screw the poor hardworking people over at Bank of America.

I know they're working overtime to pay that $12 billion consent decree with the FTC over screwing poor, hardworking consumers, faking mortgage documents, and committing perjury about a zillion times, but I still feel sorry for them, y'know?

A few weeks ago my credit card was used to purchase $850 worth of McDonald's gift cards from 2 locations in cities around mine. I never lost possession of my credit card for them to use it.

Is there anything passed filing police reports in the two cities that I should do?

That's a LOT of mac sauce.

File a complaint with the FTC here.

This report, along with the police reports, should be enough to validate your theft claim.

Keep all of the information on file and where you can find it, for years.

Check your credit report every month or two to make sure this is an isolated event.

Finally, send a letter to your credit card company outlining the problem. If they are unresponsive, send copies of the police reports and the FTC report. If the credit card company still won't help (it happens), get a NACA lawyer to help you.

If you haven't, contact the credit card company immediately. Anytime we've had false charges they've been removed right away and we were issued new cards (ours were not lost, but obviously the number was compromised).

That's true most of the time. I had a client who had bogus charges while she was in Thailand - 5,000 miles from where she was provably staying - and the card company refused to return the money. We had to sue, but they changed their mind the day we served the complaint to them.

If a collections group contacts a person on a bogus debt and doesn't provide info on disputing the debt (like the FCRA requires) and that person doesn't try to dispute it until after the 30 days (because of lack of info), what can someone do about that? My former roommate apparently got contacted about our old apartment and I'm trying to do damage control since I found out two months after the fact.

That's actually a complicated question. It depends on who's trying to collect, and what state you're in. Not to shirk, but you should get a consult from an attorney in your state, close to you, because the answer will vary widely depending on where you are.

What is your favorite kind of bird?

Owl. They watch everything. It's my spirit animal, if you're into that stuff.

Can you educate people to accept the lawsuits and quit trying to run from them? As a process server there is nothing more frustrating when people think they can avoid a lawsuit by not being served. Please tell people that when it gets to the point of a lawsuit and a process server knocks on your door, running away from it is now over. Accept it and defend yourself in court.

Beer4me, I agree 100%. And I tell my clients exactly that. I'll even accept service on their behalf. I don't care if they're served. Credit defense takes place after service, not by avoiding service.

But - it scares people. They don't understand the system, or the papers you're bringing. Many people literally cannot comprehend all the jargon on the Summons & complaint, & cover sheet, & ADR form, & Assignment memo, &.....

Do you think the legal market has rebounded for those graduating from lawschool this year and next?

Honestly, I don't know. For Biglaw, probably not. In my practice areas, there was never a slowdown. I'm busier than ever.

How much do you charge for your services?

Here's the universal lawyer answer: "It Depends."

Debt defense, flat rate plus expenses, and I look VERY hard for collection violations to help get you some money.

Bankruptcy Ch 7 - flat rate

Other matters (defamation, general legal issues) - hourly.

I'm not supposed to discuss actual numbers publicly; there is an antitrust issue for lawyers doing so.

Do u accept credit cards??

For everything but bankruptcy. Accept credit card for bankruptcy, lose my license.

Since you take consumer cases, how woukd you feel about taking on a class action against all the FTC no call list and Can-Spam Act violators?

All of them? That's about a billion pages of paper, just for the cover sheet on the complaint. Class actions are great, but we've got to be practical.

Must. Have Defendant. With. Deep. Pockets.

That means that the shitty little offshore boiler rooms get a pass, because it's not worth the trouble to chase them down and kill them.

What's the best course of action to take when you've agreed to (and paid) a settlement on debt, which the collectors just applied to the principal, and then kept trying to collect the rest of the debt?

Did you pay in full? Do you have a written agreement to that effect? If you do, get an opinion from a debt defense attorney. We see bad faith examples of this all the time, as well as honest mistakes. Either way, it may be actionable.

Do you ever feel bad that you are defending deadbeats?

That's actually a great question. Criminal lawyers end up with the same question: Do you feel bad about defending criminals? That's a fair and reasonable question.

The answer is "no," for a couple of reasons.

First - the system still demands proof that the collector is collecting the debt in the proper amount, from the proper person, and that the collector owns the right to collect on that debt. Many collectors are too lazy to want to prove up their case, and they just want to be able to collect without being subject to any burden of proof. As I said earlier in this AMA, without someone on our end putting them to the test, the collection process would become abusive.

Second - most of my clients aren't deadbeats. The vast majority are decent people who had medical issues, a divorce, job loss, or other catastrophe happen, and they simply were unable to keep up with the credit cards. It's life - sometimes you've got to triage your bills, and feeding the kids comes before paying Wells Fargo.

This is also true for my bankruptcy clients. The most common precipitating factors for bankruptcy are divorce, job loss, and medical issues. Congress realizes, in a rare fit of clear thinking, that sometimes good people need a 'do over.' The bankruptcy court is there to provide it.

My parents went bankrupt because they're sadly very gullible people who fall for basically every scam that comes their way. The final push was a predatory mortgage. When this happened my mother encouraged me to get a credit card (I had just turned 18) and kept asking me to use it for groceries, car payments, whatever. The problem was, I didn't have the income to pay it off, and neither did they.

Years later I finally had a job that paid enough to let me pay off the whole balance at once, and then I cancelled the card/account because I never wanted to see it again. Then I learned that doing that apparently ruins your credit. :\

So I've basically had bad credit from the moment I turned 18. Collections people call me all the time for things I have no clue about (I just never answer the phone) and I've never even tried to apply for another credit card. I'm sort of in a "ignore it until it goes away" habit, which I know is bad, but I don't have any real clue what else to do.

I'm not sure what the original point of this comment was but I'm going to hit save anyway.

Don't worry. You can rebuild your credit, and it's not too difficult, but it takes time.

First - you should answer the phone and find out what each of the calls is for. You have the right, under federal law, to tell creditors to stop calling you, and to tell them that you refuse to pay. They MUST stop contacting you, and the only contact from then on must be if they decide to litigate.

Do NOT pay any money to credit repair services.

Do NOT pay any money to credit repair services.

Finally, Do NOT pay any money to credit repair services.