Legal Aid FDCPA Presentation

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This was a presentation given to Legal Aid attorneys on working with the act. See more at www.schleckpa.com

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Legal Aid FDCPA Presentation

  1. 1. FDCPA Presentation Daniel S. Schleck Mansfield, Tanick & Cohen PA
  2. 2. Overview <ul><li>Law </li></ul><ul><li>Practice Pointers </li></ul>
  3. 3. The Law <ul><li>Federal Consumer Protection Law which took effect on March 20, 1978 15 U.S.C. §§ 1692-1692p </li></ul><ul><li>Levels the playing field for consumers with debt collectors </li></ul><ul><li>Prohibits debt collectors from using harassing, oppressing, abusive, invasive and deceptive collection practices in collecting consumer debts </li></ul>
  4. 4. In Plain English <ul><li>The FDCPA is a consumer protection statute which protects consumers from harassing, oppressive or abusive debt collection tactics by a debt collectors in the course of collecting a consumer debt. Debtors have a right to be treated with truth, fairness, dignity, and respect in all your dealings with a debt collectors. If not, they may have a right to sue them. </li></ul>
  5. 5. Basis for Law <ul><li>Loss of Jobs </li></ul><ul><li>Marital Instability </li></ul><ul><li>Increase in Bankruptcy Filings </li></ul><ul><li>Invasions of Privacy </li></ul>
  6. 6. Requirements for FDCPA Claim <ul><li>Consumer (or a person affected by a violation) </li></ul><ul><li>Consumer Debt (Personal/Family/Household) </li></ul><ul><li>Debt Collector </li></ul><ul><li>Violation of the FDCPA </li></ul>
  7. 7. Victim Must be a Consumer <ul><li>Can’t be a business or Corp. </li></ul><ul><li>Primarily Debtor, but can be 3 rd Party. </li></ul><ul><ul><li>Third-Party Persons have standing to bring claims under the FDCPA if they were damaged by a violation. For example, family members yelled at, neighbors or coworkers harassed. </li></ul></ul>
  8. 8. Consumer Debt <ul><li>No contact with anyone but Consumer to collect a debt (includes spouse, consumer’s lawyer, creditor, creditor’s lawyer, and parent of minor) </li></ul><ul><li>Consumer = Debtor, Debtor spouse, Debtor lawyer, collection personnel, original creditor, express permission </li></ul><ul><li>Third Party = anyone other than the Consumer </li></ul><ul><li>It is NEVER permissible to contact a Third Party to collect a debt </li></ul>
  9. 9. Third Party Contact <ul><li>The only permissible purpose for contacting third parties is to obtain location information. </li></ul><ul><li>Location information is defined as home address, home telephone, and place of employment </li></ul><ul><li>That means, if you already have the consumer’s location information you have no permissible purpose to contact a third party. </li></ul><ul><li>Impermissible third party contacts are violations of the FDCPA. </li></ul>
  10. 10. Debt Collector <ul><li>Debts must be in default at the time the collector takes them over for collection, otherwise they are simply a servicer and are exempt. </li></ul><ul><li>Process servers are exempt. </li></ul><ul><li>Repo agents are exempt unless they breach the peace. </li></ul>
  11. 11. FDCPA Violations Generally <ul><li>Unfair </li></ul><ul><li>Untrue </li></ul><ul><li>Undignified </li></ul><ul><li>Disrespectful </li></ul>
  12. 12. Important Specifics <ul><li>Third-Party Persons have standing to bring claims under the FDCPA if they were affected by a violation. For example, family members yelled at, neighbors or coworkers harassed. </li></ul><ul><li>Debts must be in default at the time the collector takes them over for collection, otherwise they are simply a servicer and are exempt. </li></ul><ul><li>Process servers are exempt. </li></ul><ul><li>Repo agents are exempt unless they breach the peace. </li></ul>
  13. 13. Debt Collector Tactics
  14. 14. Common Techniques <ul><li>Collectors want a payment or a promise to pay </li></ul><ul><li>Payment = Mission Accomplished </li></ul><ul><li>Promise = Overcomes obstacle of denial, not my debt, not me, etc. Most people keep promises </li></ul><ul><li>If you break promise, they now have moral club to use for future collection </li></ul>
  15. 15. Timing of Debt Collection <ul><li>90 --120 Days – Creditor </li></ul><ul><li>90 – 120 Days – Secondary Collector </li></ul><ul><li>120 Days + Third Party Debt Buyer or </li></ul><ul><li>Outside Law Firm for Collection </li></ul>
  16. 16. How Debt Collection Works <ul><li>Compensation Drives Conduct </li></ul><ul><li>Payments & Promises </li></ul><ul><li>The FUD Principal: Un-Fairness, Uncertainty and Doubt </li></ul>
  17. 17. Case Selection <ul><li>What are bad cases </li></ul><ul><ul><li>Check Four Elements – are any thin? </li></ul></ul><ul><ul><li>Meet client </li></ul></ul><ul><ul><li>Problems </li></ul></ul><ul><li>What are good cases </li></ul><ul><ul><li>Check Four Elements </li></ul></ul><ul><ul><li>Elements of Claim </li></ul></ul><ul><ul><li>Other Factors </li></ul></ul>
  18. 18. General Case Analysis <ul><li>Don’t Rush into a Case & Be Objective – </li></ul><ul><ul><li>Don’t rush into the cases. Clearly review them. Don’t stretch the law to fit the facts. If you cannot make a claim, don’t make it. </li></ul></ul><ul><li>Actual Damages & Dispute Facts - Bring actual damages cases and argue facts not law. </li></ul><ul><li>Preparation is Key - Always prepare cases as though you were going to try it to a jury. </li></ul>
  19. 19. What makes a Good Client <ul><li>Is client reasonably presentable to a judge, jury, defense counsel, collector, etc. </li></ul><ul><li>Is client truthful? Does her/his story make sense and is validated by documents or recordings </li></ul><ul><li>Is client invested in case? Punctuality and Interest </li></ul>
  20. 20. Red Flags for Bad Clients <ul><li>Know the Law better than you. </li></ul><ul><li>Argue unreasonably about Damages. </li></ul><ul><li>Argue or Negotiate Fees after the Case. </li></ul><ul><li>Object To Payment of Costs </li></ul><ul><li>Miss Or Are Late For Any Appointments. </li></ul><ul><li>Lack of Cooperation on Paperwork and Questionnaires. </li></ul>
  21. 21. Retainer Agreement <ul><li>Compensation Agreement – Actual Damages vs. Statutory Damages? </li></ul><ul><li>What is Scope of Representation – Multiple Collectors or other work? </li></ul><ul><li>What about Costs – Filing Fees, depositions, transcripts? </li></ul><ul><li>Settlement Authority – Limits and Modification? </li></ul><ul><li>Terminations – Who and when? FED COURT! </li></ul>
  22. 22. Evidence Collection <ul><li>Intake Questionnaire </li></ul><ul><li>Client Chronology </li></ul><ul><li>Call Logs </li></ul><ul><li>Recordings </li></ul><ul><ul><li>OK to Record in Minnesota if One Party Consents </li></ul></ul><ul><ul><li>See Minn. Stat. 626A </li></ul></ul>
  23. 23. Starting Case <ul><ul><li>Challenges </li></ul></ul><ul><ul><ul><li>Recordings with Letters the Best </li></ul></ul></ul><ul><ul><ul><li>Be Careful of Letters Alone, tough to find violations </li></ul></ul></ul><ul><ul><ul><li>Exception Post-Bankruptcy Collection </li></ul></ul></ul><ul><ul><ul><li>Mini-Miranda Claims – Tough to win on </li></ul></ul></ul><ul><ul><ul><li>Failure to Validate Claims – Can lead to other claims </li></ul></ul></ul><ul><ul><ul><li>Local Collection Firm Claims </li></ul></ul></ul><ul><ul><ul><li>Bona Fide Error Defense </li></ul></ul></ul>
  24. 24. Ineffective Strategies <ul><li>Cease and Desist Letters – Why give them warning? </li></ul><ul><li>Phone Calls to Debt Collectors – Can potentially make Attorney a witness. </li></ul><ul><li>Demand Letters – Do not routinely result in settlement, just less evidence. </li></ul>
  25. 25. Bankruptcy Issues <ul><li>Pre-Petition Claims/Violations are the Property of the Bankruptcy Estate </li></ul><ul><li>Post-Petition Claims in Chapter 7 are valuable </li></ul><ul><li>Post-Petition Claims in Chapter 13 are arguably the property of the estate and you must negotiate with Trustee. </li></ul>
  26. 26. What Makes Better Cases
  27. 27. Finding Info on Debt Collectors
  28. 28. Drafting Complaint <ul><li>Use Checklist Provided </li></ul><ul><li>Focus on Facts, not legal arguments if possible </li></ul><ul><li>Look at model complaint provided </li></ul><ul><li>Bringing Cases in State Court </li></ul>
  29. 29. Actual Damages v. Statutory Damages <ul><li>Statutory Damages limited to $1000 </li></ul><ul><li>Actual Damages – Similar to Emotional Distress </li></ul><ul><ul><li>Medical records – Get Releases </li></ul></ul><ul><ul><li>Mental Health Experts </li></ul></ul><ul><ul><li>Third Party Witnesses (Establish a Baseline) </li></ul></ul><ul><ul><li>Contemporaneous records </li></ul></ul><ul><ul><li>Physical manifestations of distress </li></ul></ul>
  30. 30. Discovery <ul><li>Get records of collection – Collector Notes </li></ul><ul><li>Get recordings of calls – Always available </li></ul><ul><li>Get names of actual collector, supervisor, et. al. </li></ul><ul><li>Get phone records of calls </li></ul><ul><li>May need motion to compel </li></ul>
  31. 31. Many Cases Settle at this Point <ul><li>Statutory Damages Only $3,000-$5,000 </li></ul><ul><li>Abuse Found $15,000 - $100,000 </li></ul><ul><li>Taped Abuse $25,000 - $xxx,xxxx </li></ul>
  32. 32. Settlement Pointers <ul><li>Put in writing or make them put offer in writing. </li></ul><ul><li>Don’t agree to confidentiality for free. </li></ul><ul><li>Initial Demand is the max you will get if settled. </li></ul><ul><li>Don’t make wildly inflated demands in statutory damages cases. </li></ul>
  33. 33. Bona Fide Error Defense <ul><li>Made by inexperienced defense counsel </li></ul><ul><li>Based on premises that violation occurred despite reasonable procedures designed to prevent error. </li></ul><ul><li>Factual Issue for Trier of Fact – i.e. No Summary Judgment </li></ul><ul><li>Requires collector to admit that it violated FDCPA </li></ul><ul><li>Jerman Case: US Supreme Court holds mistake of law is not a valid defense. See attachment </li></ul>
  34. 34. Conclusion <ul><li>Be aware of industry practices </li></ul><ul><li>Review claims carefully for factual disputes </li></ul><ul><li>Pick good clients and cases </li></ul><ul><li>Don’t use letters, serve complaints </li></ul><ul><li>Be reasonable in settlement </li></ul>
  35. 35. Call with Questions <ul><li>Daniel S. Schleck </li></ul><ul><li>Mansfield Tanick & Cohen, P.A. </li></ul><ul><li>220 South Sixth Street, #1700 </li></ul><ul><li>Minneapolis, Minnesota 55401 </li></ul><ul><li>612-339-4295 </li></ul><ul><li>[email_address] </li></ul>

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