OR -- settling a zombie debt case
To what criteria or rules should an alleged debtor adhere when settling a zombie debt case?
A zombie debt is a legally dead or extinguished debt upon which an alleged debtor is sued by a third party debt collector brought without necessary evidence to prove its case. Often the settlement discussion arise the second or third or fourth time after the debtor has previously shown the debt is uncollectible for sound legal reason. Strangely, the third party debt collector doesn't want to see another counter-claim or suit based upon the identical FBPA or FDCPA allegations. Here lies the irony and the Alice in Wonderland experience consumer lawyers enjoy when negotiating a settlement.
My criteria:
1. Absolutely no confidentiality clause UNLESS the debt collector agrees to pay your client, the alleged debtor, annual compensation for his or her public relations services for the debt collector. The income stream and clause ends after 5 years or earlier if the client and alleged debtor breaches the confidentiality clause; no other consequence to the alleged debtor. But, if the zombie debt reappears, its reappearance is ipso facto evidence that the debt collector violated the confidentiality clause and authorizes a claim for at least $5K in liquidated damages against the third party debt collector. --- I have tried, but I have never obtained such a confidentiality clause. I did once get a mutual confidentiality clause with a mutually applicable liquidated damage provision for $5K. But I've never won public relations compensation for my client. I keep trying.
2. Educate your client, the alleged debtor, about how remunerative zombie debt cases can be: do not insist that the third party debt collector will "kill" the debt. Both you and your client have heard this promise many times before. Its never worth the paper its written on. By the time the client has collected twice or three times, s/he wants to see another dunning letter and another settlement payment.
3. Insist on the third party debt collector cleaning up the client's credit report: this will produce another claim under the FCRA if the promise is broken. Include the request for the investigation and removal of the offending allegations from the consumer report in the counterclaim . . . the same way debt collectors include their demand for attorneys fees in their complaint. It will more likely be ignored.
4. Settlement amount: as much as possible for the client and for the lawyer. Law firms should use their most senior and experienced attorney's name on all pleadings to justify the maximum possible reasonable attorneys fees.
$1,000 under Fair Debt Collection Practices . . . trebled under Fair Business Practices for intent = $4--$5K minimum to settle + reasonable attorneys fees. I just settled one for $7,500 from the plaintiff because the victim was 60 years or older and under Georgia FBPA you double the recovery if the victim is elderly (60yrs or older). In this case I'm still looking to recover from the debt collector as well, having added it to the counterclaim as third party defendant.
I'm sure Cliff can give us consumer lawyers some better ideas!
To what criteria or rules should an alleged debtor adhere when settling a zombie debt case?
A zombie debt is a legally dead or extinguished debt upon which an alleged debtor is sued by a third party debt collector brought without necessary evidence to prove its case. Often the settlement discussion arise the second or third or fourth time after the debtor has previously shown the debt is uncollectible for sound legal reason. Strangely, the third party debt collector doesn't want to see another counter-claim or suit based upon the identical FBPA or FDCPA allegations. Here lies the irony and the Alice in Wonderland experience consumer lawyers enjoy when negotiating a settlement.
My criteria:
1. Absolutely no confidentiality clause UNLESS the debt collector agrees to pay your client, the alleged debtor, annual compensation for his or her public relations services for the debt collector. The income stream and clause ends after 5 years or earlier if the client and alleged debtor breaches the confidentiality clause; no other consequence to the alleged debtor. But, if the zombie debt reappears, its reappearance is ipso facto evidence that the debt collector violated the confidentiality clause and authorizes a claim for at least $5K in liquidated damages against the third party debt collector. --- I have tried, but I have never obtained such a confidentiality clause. I did once get a mutual confidentiality clause with a mutually applicable liquidated damage provision for $5K. But I've never won public relations compensation for my client. I keep trying.
2. Educate your client, the alleged debtor, about how remunerative zombie debt cases can be: do not insist that the third party debt collector will "kill" the debt. Both you and your client have heard this promise many times before. Its never worth the paper its written on. By the time the client has collected twice or three times, s/he wants to see another dunning letter and another settlement payment.
3. Insist on the third party debt collector cleaning up the client's credit report: this will produce another claim under the FCRA if the promise is broken. Include the request for the investigation and removal of the offending allegations from the consumer report in the counterclaim . . . the same way debt collectors include their demand for attorneys fees in their complaint. It will more likely be ignored.
4. Settlement amount: as much as possible for the client and for the lawyer. Law firms should use their most senior and experienced attorney's name on all pleadings to justify the maximum possible reasonable attorneys fees.
$1,000 under Fair Debt Collection Practices . . . trebled under Fair Business Practices for intent = $4--$5K minimum to settle + reasonable attorneys fees. I just settled one for $7,500 from the plaintiff because the victim was 60 years or older and under Georgia FBPA you double the recovery if the victim is elderly (60yrs or older). In this case I'm still looking to recover from the debt collector as well, having added it to the counterclaim as third party defendant.
I'm sure Cliff can give us consumer lawyers some better ideas!
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Re: Irony / Alice in Wonderland
Sat, January 12, 2008 - 2:35 PMAs to you interest in having the collector clean up the credit score: Many collectors are not "reporters."
My little LLC for example does not report to any of the credit bureaus ERGO: it is not possible for me to tell them that you owe money or that you paid a debt or that it's been paid or even that you never owed it.
It is my experience that the credit bureaus are almost entirely worthless and worse when you are a reporting agency you adopt a whole slew of liabilities and obligations. The exposure and effort is without any meaningful return. I find that the best practice is to simply send a letter wait 30 days and take it to court. That judgment is more profound than any credit report.
You also leave yourself open to malpractice by having some one else do it because if they screw up you will have been the one to make the recommendation that someone outside your sphere of control is the one to do it.
I foun'd that the honest people - the ones who paid their debts or are simply not the right person never blow off my letter. I get a call almost right away. They are all over it like white on rice. They come off sincere and honest and open and often a tad edgy because they really don't owe the money. It's really not hard to suss 'em out from the deadbeats. Ya just gotta take a little time and effort. -
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Re: Irony / Alice in Wonderland
Sat, January 12, 2008 - 3:37 PMyes, I know many collectors are not reporters and cannot report -- I don't ask them to remove what they didn't put there on the report . . . this is about the zombie debt phenomenon where publicly traded companies knowingly buy uncollectible debts and hire collectors to report, dun and sue on them: collectors beware of 3rd party debt. I'm doing my best against these bottom feeders: one of them has for a motto "Giving collections a good name!" As for the legitimate debtors, they get from the following advice from me: "You have three (3) choices: (1) pay (2) compromise and settle or (3) file for bankruptcy protection. I will go to court and hold your hand if you want when the judge gives the creditor his well deserved judgment. After that you can expect garnishments of bank accounts and wages, levies on personal and real property, etc. What would you like me to do for you?"
I just had the marvelous Alice in Wonderland experience negotiating a settlement with a zombie debt collector and actually put the question to him: You're in the business of suing on legally uncollectible debt. Why do you care about a settlement agreement? Why not just proceed on my promise as one lawyer to another that I will dismiss the suit with prejudice? (Here there was reporting, dunning, and suit on an alleged debt procured through fraud against the consumer; the plaintiff dismissed without prejudice upon receipt of the counterclaims before settlement negotiations started, putting defendant in the plaintiff's position on the caption.) -
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Re: Irony / Alice in Wonderland
Sun, January 13, 2008 - 5:52 AM"his is about the zombie debt phenomenon where publicly traded companies knowingly buy uncollectible debts and hire collectors to report, dun and sue on them:"
The word "knowingly" ~ ~ ~ ~ ~ If this is (A) true and (B) the debt was out of statute, or not owed, or discharged in BK or paid: then you may have met all the requirements to pierce the corporate veil and go after the ownership seeking trebles and special damages.
Certain kinds of debt are not collectible because the law says so. When the company violates a law perpetrating wrongful act giving rise to a foreseeable harm as to the intended victim of that harm you can forget about trying to prove the other "piercing" issues cause you'll have all the best one right there: Breaking the law (doesn't have to be criminal); Alter ego; Specific harm as to intended victim.
I can tell you that there are people who knowingly buy out of statute debt. I get calls frequently from brokers trying to sell the stuff. They use hushed tones like it was some kind of secret.
However there isn't anything to prevent a broker from acquiring debt and reselling ti in a large portfolio that is otherwise noncollectable - even for reasons in statute. The portfolios can be HUGE~!! I buy little ones with a net value of a half a million or less but, some people buy 'em with 4 - 5 million or more and the accounts in 'em will have sums owed ranging from $1000 - $7000. The average fee paid is between $0.06 and $1.11 on the dollar. That ends up being a lot of claims.
The companies I know who buy big portfolios like that really do try to scrub ;em for BKs and other issues but there are always some that slip by. The collector guy on the phone ( employee) is paid commission and because of the sheer volume of people he contacts daily he gets jaded and cynical. Keep in mind that most all of these claims are valid. The debtor really is a skating lying steeling thieving defrauding asswipe who doesn't damn well please to pay back that which he borrowed. When I say most all I mean most all.
With people like that on the other end of the phone all day it's rather easy for the Collector guy to miss the integrity in the voice of Sweet Polly Purebred when she stumblingly asserts that the debt is either not hers or was discharged -or- worse claims ignorance of it. etc.
Then when it goes to the lawyers for suit they are taking their clients are face value ( what you and I would do) and off to the races.
I got a guy who is the registered owner and is domiciled at a building in NJ, ( I have the country recorder of deeds documents - 'cause I get that granular) never answered his dunning letter, never responded to the complaint and never responded to the notice of judgment.
Then when he got my post discovery demand that said in huge blazing letters that failure to reply might get him arrested he called me threatening me obliquely that I didn't want to mess with him he didn't owe the money and that he was "doing me a favor."
More lately he as tried to raise the claim that the debt is his sons who lives in Georgia. ( My background records check i on this guy turned up no Junior by his name. Has interfered with the Sheriff's ability to serve turn over of funds notices to the tenants by shuffling 'em so I can never get their names.
How far out of my way do you think I should I go to protect this fukturd's interest?
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Re: Irony / Alice in Wonderland
Sun, January 13, 2008 - 9:52 AMtake him to the mat! I see it all the time. Just had a call on friday about a collection case where the client wanted representation the following monday for a hearing. When were you served, lady?! -
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Re: Irony / Alice in Wonderland
Sun, January 13, 2008 - 11:51 AMI have recently discovered that he is MS13
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