Sewer service happens when the process server — the person charged with telling the defendant they have been sued — lies about serving it. The Minnesota Attorney General just sued TJ Process Service for exactly that. The owner of the company leaves little room for doubt. Here is his sworn testimony:
Q: [Y]ou believe 100 percent he [Umland] engaged in sewer service?
A: Yes. What percentage and how many times that was, I don’t know.
The foreclosure mess got messier over a month ago, when GMAC, Bank of America, and others were caught faking (essentially) affidavits supporting their foreclosure lawsuits. The irony of banks acting irresponsibly with their finances was not lost on the media. Of course, robo-signing, as it was soon termed, was already commonplace in another kind of business: debt buyers.
About a year and a half ago, I wrote about Judge Frank’s decision that Minnesotans may sue when a debt collector garnishes funds in a joint bank account. After a lot more litigation, pieces of that question were certified to the Minnesota Supreme Court. The Minnesota Supreme Court decided that, under Minnesota law,
What that means, in English, is that a creditor may take funds that belong to a non-debtor without notice or an opportunity to respond. This would seem to directly conflict with the due process requirements of the U.S. Constitution (and the Minnesota Constitution, for that matter), but the Minnesota Supreme Court ignored that conflict in reaching its conclusion.
The lawsuit is not over, but the law has shifted back in favor of creditors and debt collectors. For now, it looks like keeping money in a joint account is probably a bad idea if the other account holder owes anyone money.
Savig v. FNB Omaha and Messerli & Kramer, P.A. | Minnesota Supreme Court
Some debt buyers take more extreme measures. Thomas Labeaux, owner of Debt Equities, apparently trapped a consumer in her driveway, pretending he was a sheriff and threatening to take her newborn into protective custody if she did not pay a debt.
Some were responsible for more of those lawsuits than others. Minnesota debt collection law firm Messerli & Kramer, for example, filed nearly 35% of the default judgments in Hennepin County for Dakota Bluff Financial, LLC; Livingston Financial, LLC; Midland Funding, LLC; Pipestone Financial, LLC; Red Rock Lake Financial, LLC; and Capital One
The worst part is that many of these cases are brought by debt buyers who cannot prove their case. But the odds are on their side. As far as I can tell, very few consumers ever answer the complaint or defense themselves.
If you get sued over a debt, contact a consumer rights lawyer as soon as possible to find out whether you can win your case.
Default surge: Misery by numbers | Star-Tribune
Back in November, I won an important decision for Minnesota consumers against Messerli & Kramer, a law firm that seems to handle the bulk of debt collection lawsuits filed in Minnesota. Messerli & Kramer served a levy on my clients’ bank for funds in their’ joint bank account, even though Messerli & Kramer only had a judgment against one of them. The other had no connection to the debt.
This happens all the time, and not just to husband-and-wife joint accounts.
The debt collection industry is booming. Unifund, one of the big U.S. debt buyers, files nearly 5,500 lawsuits a year in California. In Minnesota, where pocket filing makes the cost of obtaining a default judgment negligible, I would expect to see similar, if not greater, per capita figures. And, of course, it is not just Unifund filing lawsuits.
Because of pocket filing, coupled with Minnesota’s permissive pre-judgment garnishment rules, most of these lawsuits are never filed. Law firms like Messerli & Kramer; Gurstel, Staloch & Chargo; Wolpoff & Abramson; and others serve dozens, if not hundreds, of lawsuits every month for Unifund and other clients, counting on default judgments.
Want to know just how many lawsuits are filed by the debt collection industry? Well, in a document I just received, Unifund admitted to filing 14,172 collection lawsuits in California between January 1, 2004 and July 31, 2006! That is over 450 lawsuits per month and nearly 5,500 per year!
Of the total, Unifund obtained almost 9,000 default judgments. In other words, Unifund won the case because the defendant never filed a response to the complaint.
Defendants filed a response in only 771 cases, and Unifund ultimately dismissed more than a third of those cases. The document I have does not make clear how many of those defendants were represented by an attorney, but I would venture to guess that nearly all of those who obtained a dismissal were represented by an attorney. Debt collectors know some pretty good tricks to win cases.
The same thing happens in Minnesota, except that because of our “pocket filing” laws, the courts don’t feel the effects. But debt collection law firms like Messerli & Kramer and Wolpoff & Abramson file dozens or hundreds of collection lawsuits every month for debt collectors like Unifund, Palisades, Client Services, and others.
Due to a change in Minnesota’s garnishment statute, the following no longer applies. Now, the burden is on the debt collector to request a hearing if it objects to the debtor’s exemption claim.
Today I discovered yet another way debt collectors use the court system to their advantage. Even though some funds—like child support payments—are exempt from garnishment, a debt collector can make it difficult for the debtor-defendant to get an exemption. In a matter I saw today, Messerli & Kramer served a complaint on the debtor, who failed to answer because she did not realize that she (effectively) had no rights unless she showed up in court to assert them. She also didn’t talk to an attorney at the outset like she should have.
So the debt collector got a default judgment and started with garnishment. But because the funds in the debtor’s account were child support payments, and therefore exempt, she filled out the exemption form and sent it back. Seeing the writing on the wall, the debt collector objected to the garnishment, assuming (probably correctly) that the debtor would not bring the necessary motion in district court. Minnesota law favors creditors and debt collectors so much that all a debt collector needs to do is object. The debtor must then file a motion in district court to grant the exemption, placing the burden on the debtor, not on the debt collector.
The debt collector in this case would surely argue that it was only asserting its right to be sure the claimed exemption was legitimate. And that is certainly the reason the law gives the debt collector a right to object to exemption claims. However, by placing the burden on the debtor to bring a motion to determine the exemption, while all the debt collector has to do is object, and get paid, the law basically rubber stamps debt collectors’ objections to exemption claims.
Instead, the burden should be on the debt collector, given the realities of debt collection. But debtors obviously don’t have the lobby that the debt collectors do, so the law favors the debt collectors.
I was in court this morning, and showed up early, as usual. The hearing before mine was for attorney fees incurred in collecting a debt. The debt collection law firm was Messerli & Kramer, famous for its “unlawful and bad faith tactics.” The debtor represented himself, and actually did a fair job, although he kept wandering off the point. The judge actually grilled the Messerli & Kramer attorney on the fees generated, which was nice to see. Apparently, they only billed about .3 hours of attorney time. The other three hours or so were all billed by paralegals, including one hour for drafting the complaint. Now, there are complaints and then there are complaints. Messerli & Kramer’s debt collection complaint is a form that requires only the debtor’s name, the amount of the debt, and an account number to complete. The judge was–properly, I think–surprised at the billing time.
I was happy to see Messerli & Kramer getting grilled on their time. Debt collection law firms usually throw attorney fees into their complaints, but that doesn’t mean they are entitled to the full amount.