debt collection lawsuit

Midland Funding Robo-Signing Class Action Settlement Struck Down

Under the terms of the settlement reached in several class actions against Midland Funding for its (apparently past) practice of employing robo-signers to execute affidavits for debt buyer lawsuits, each class member would receive under $20 — and that’s it. The Sixth Circuit rightly decided this was unfair (pdf).

Unfortunately, the Sixth Circuit seemed to think the settlement was unfair primarily because the named plaintiffs (i.e., those whose names actually appeared on the complaints) would receive $8,000 plus the elimination of their debts. The class members who opted into the settlement just got $17.38 each, and still owed their debts:

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How to Defend a Debt Collection Lawsuit

Following up his excellent 2011 article on robo-signing in small-claims court, Peter Holland just wrote a quick-and-dirty guide to defending a debt collection lawsuit. In it, he summarizes the factual, procedural, and evidentiary problems debt collectors face in court, which we have been writing about here for years.

The article is meant as a guide for lawyers, because putting Holland’s strategies to work in court requires some decent legal research skills along with the ability to assemble a coherent legal argument and defend it in court. (I wrote a similar article for the William Mitchell Law Review back in 2009, complete with citations, but it only works for Minnesota cases.) But ambitious pro se defendants will find a lot of useful information in Holland’s article, too.

For more on defending debt collection lawsuits, see our Debt Collection Help resource page.

Courts Should Require Extra Proof From Debt Buyers

In order to administer any kind of justice, our court system requires two parties participating in a lawsuit. When that doesn’t happen, plaintiffs generally prevail, even if they haven’t produced any proof of their claims. Ordinarily, a default is a bad thing for a plaintiff, because there is little or no chance of getting paid.

Defaults are just what debt buyers want, though, because they have thousands of lawsuits to file and little or no proof in any of them. And debt buyers are willing and able to pursue collections on a massive scale—garnishing salaries and bank accounts to satisfy all those default judgments. Essentially, the debt buyer industry has found a loophole in the court system—a way to exploit the default rules.

That’s why courts need to raise the bar for debt buyers. When the usual result of a debt buyer lawsuit is a deprivation of property, courts should endeavor to make sure it doesn’t happen unless the debt buyer has shown some right to that property.

The Maryland Court of Appeals recently decided just that. Since last week, debt buyers must show actual proof that the defendant owes the debt and that the debt buyer has actually purchased the debt. The court also made it clear that it does not trust the robo-signed affidavits that debt buyers routinely attach to their lawsuits.

It’s a step in the right direction, and I hope more states will follow suit.

Caveat Emptor Lawyer Network, October 13, 2011

Minnesota consumer lawyer Randall Ryder got a $22,000+ Midland Funding debt collection lawsuit dismissed for a client who had been disputing the debt for years, but couldn’t make it go away. Says Ryder “Bringing the proverbial bazooka to a gunfight, we produced a 5 page affidavit with 70 pages of exhibits to prove the client was not liable.”

North Carolina bankruptcy lawyers Duncan Law says that, in some cases, consumers in foreclosure may be able to stay in their home for a year or more while the process plods along. This can be a good thing, especially if it allows families to save for an emergency fund or security deposit.

Don’t Post Information About Legal Problems on Public Websites

I frequently get comments from people looking for help with a legal problem. Inevitably, these comments contain information about the facts of the case from the commenter’s point of view. Usually the commenter admits owing the debt in passing (such comments are usually about debt), but explains a theory of why there he or she ought to win, anyway.

This is a BAD IDEA.

Debt collectors read this website. Lawyers for debt collectors read this website. This website has been cited in at least one Fair Debt Collection Practices Act lawsuit (by the debt collector). Debt collectors use Facebook and other social media to find out about you. If you post information about your legal problems on this website—or any public website—chances are good that the other side will learn about it. That’s why I generally delete any comments that contain information about legal problems.

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How to Negotiate

Most civil lawsuits are the result of a breakdown in negotiations. But 99.9% of civil lawsuits settle, because negotiation is almost always the best way to resolve a dispute, in the end. If you negotiate well, you may just get what you want—and avoid litigation. But even if you don’t, you can set yourself up to take your dispute to the next level.

Successful negotiation takes strategy, patience, and a cool head. Here’s how to maximize your chance of success, whether you are negotiating with a debt collector, a landlord, or anyone else.

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Minnesota Consumer Attorney Randall Ryder Joins the Caveat Emptor Directory

Randall Ryder is a consumer rights attorney in Minnesota. I am especially pleased to welcome Randall to the Caveat Emptor directory because I have worked with him extensively, and I know him to be an excellent lawyer and consumer advocate.

Randall is an even-tempered but aggressive consumer advocate who gets great results for his clients. He sues debt collectors and defenses people who are sued by debt collectors in Minnesota. He takes cases on contingency and uses innovative unbundled services arrangements to get clients the help they need without breaking the budget.

If you are dealing with debt collection abuse or a debt collection lawsuit in Minnesota, contact consumer rights lawyer Randall Ryder.

Pennsylvania Puts a Stop to Debt Buyer Robo-Signing

The secondary debt market—credit cards and mortgages included—has relied on made-up legal terms and suspect justifications for years in order to turn the usually slow-moving court system into a speedy tool of business. It worked, probably because few consumers put up a fight. But more people are fighting back now, which means debt buyers are scrambling for legal footing.

It isn’t working, at least not in Pennsylvania, where the state court of appeals recently said “we reject [the] ‘This is how the industry does it’ mantra.”

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Debt Buyers Fake Affidavits, Too

Last week, GMAC basically stopped evicting homeowners and foreclosing homes in 23 states when it got caught filing affidavits without any personal knowledge. That’s good news, but here’s what rubs me the wrong way: debt buyers do the same thing, and nobody seems to care.

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Minnesota State Fair Attendees Sound Off on Debt Collection Lawsuits

Every year, at the Senate Fair Booth at the Minnesota State Fair, Minnesotans can vote on the issues of the day. This year, one of the questions was:

Do you think debt collectors should be required to verify they have the correct debtor and the correct amount of the debt before filing a lawsuit against an alleged debtor?

A loaded question, to be sure, but here were the results:

A. Yes. 95.8% (5644)
B. No. 1.8% (108)
C. Undecided/No opinion. 2.4% (142)

Not much room for spin, there.