Mitchell & Culp » Creditor Work

Fast-Track Arbitration Helps Debtors & Creditors

Richard Mitchell — Fri, 13 Aug 2010 01:14:11 +0000

My long experience in determining claims of creditors for distribution in liquidation cases has led to a new experience. I’ve been appointed by the Superior Court of Cabarrus County as the arbitrator to determine the distribution of approximately $500,000 to between more than 150 potential claimants.

The process has been carefully crafted to avoid long, drawn-out, and expensive litigation. It will resolve entitlement to the funds in slightly over three months.

To the best of my knowledge, this is the first time that an arbitration of this nature has occurred in the region. This “fast-track” arbitration offers both debtors and their creditors a quicker and more cost-effective resolution to the claims process than may otherwise be available through a receivership or bankruptcy.

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Texting to Collect?

Heather Culp — Fri, 21 May 2010 11:38:19 +0000

We work with both debtors and creditors, which makes the issue of texting to collect on past-due debts very interesting. A South African study showed that using cellphone SMS messaging in debt collection has driven response rates as much as 200% higher than what was achieved by letters and even summonses.

From the debtor’s perspective, a text reminds without feeling confrontational. Text messaging is immediate and personaly directed and debtors can respond via text. As one industry observer said, “They can say what they want, without problems that occasionally result from actual telephone dialog… People have been conditioned to respond negatively when they receive collections telephone calls. Debtors don’t suffer embarassment or feel cornered by ‘The Call’.”

From the creditor’s perspective, text messaging works because cell phones have become almost “an extension of the person” and as such are always turned on and in close proximity to their owners. Using texting services gets around the strict guidelines for collections dialog and gets around the cultural and language misunderstandings of person-to-person contact.

Use caution when collecting

Just because technology exists to allow creditors to harass debtors by text doesn’t make it legal. Collection texts are governed by the Fair Debt Collection Practices Act and their state counterparts, using the same framework applicable to calls, in person visits, writings, and other collection efforts. In a 2009 case, Hartung v. J.D. Byrider, Inc. a collections agent violated several sections of the Fair Debt Collection Practices Act and a total of $33,312.00 was awarded to the debtor (Hartung).

J.D. Byrider and CNAC allegedly assigned her debt to Defendant John Anderson for collection; Anderson allegedly contacted T-Mobile, misrepresented that he was Ms. Hartung’s father, and requested that he be added to a user on her T-Mobile account. According to Hartung’s complaint, Anderson then used the information gained from T-Mobile to begin “unlawful and harassing collection attempts by frequently calling and text messaging Plaintiff.” Hartung alleged that over the course of five days, Anderson contacted her seventeen times, by either text or call, by her cell phone. These seventeen messages allegedly included a false statement that he was an attorney hired by CNAC, and a false statement that he would have Hartung arrested if she did not give him the car. Even after Hartung contacted her local sheriff’s office and Anderson was ordered by the sheriff’s office to stop contacting Hartung, the contact continued, by text and voice mail. The court specifically noted that Anderson had called Hartung’s employer, called her names, told her he had taken pictures of her, and made inappropriate sexual comments about her.

Whether you are in debt or need to collect, if you are unsure of your legal rights, contact a qualified legal counselor.

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If The Paperwork Is Wrong, It’s Not Enforceable

Heather Culp — Thu, 06 May 2010 11:57:11 +0000

In this recession, it is no surprise that the Federal Trade Commission — which has primary enforcement responsibility as to the Fair Debt Collection Practices Act — reports an absolute increase in the number of complaints by consumers about third-party debt collectors’ practices. An April 21, 2010 slip opinion by the United States Supreme Court in the matter of Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA holds that attorneys cannot rely on the “bona fide error” exception of the Act to shield them from liability for damages for mistaken interpretations of the law.

The Supreme Court weighs in

A recent Supreme Court ruling tells what can happen when your lawyer slips up. In a 7-2 opinion by Justice Sonia Sotomayor, the Supreme Court ruled against an Ohio law firm, Carlisle, McNellie, Rini, Kramer & Ulrich, accused of making a mistake when bringing foreclosure proceedings on behalf of Countrywide Home Loans Inc. The firm filed a foreclosure suit against a mortgage borrower, and included with the complaint to the borrower a written notice that the mortgage debt would be assumed valid unless the borrower disputed the debt in writing. The borrower did dispute the validity of the debt in writing, and when Countrywide agreed that the debt had been paid and thus was not valid, the law firm withdrew or dismissed the foreclosure suit. The borrower then filed this lawsuit against the law firm, arguing that it violated the FDCPA. Justice Sotomayor said the “bona fide error defense” doesn’t protect debt collectors who make mistakes when interpreting the legal requirements of the federal Fair Debt Collection Practices Act. “We have long recognized the ‘common maxim, familiar to all minds, that ignorance of the law will not excuse any person, either civilly or criminally,’ ” she wrote, quoting from an 1833 opinion.

This makes common sense. If ordinary consumers aren’t allowed to use ignorance as an excuse, then legal professionals, (whose job and education entails knowing these things), should be held to the same standard.

Turning the tables

It’s easy to believe whatever documents the sheriff might serve to you are in good order, but we always recommend to people that they take documents to a trained legal advisor for examination and review before taking action. The courts are not obliged to rule against you if the debt is not valid, or the paperwork is improperly drafted.

Likewise, creditors should seek legal advice from attorneys experienced and well-informed in the various debt collection laws, including the FDCPA.

Our firm works with both debtors and creditors, hence our tagline, “Whether You’re In Debt Or Need To Collect.”

The Importance of Paperwork This story from New York brings a lesson to both...

The Importance of Paperwork

Heather Culp — Wed, 09 Sep 2009 20:31:10 +0000

The American Bankruptcy Institute covered this story from New York concerning foreclosures:

While the nation’s largest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages, New York State Supreme Court Justice Arthur M. Schack rejects nearly half of the banks’ motions because the foreclosure papers contain errors, the New York Times reported yesterday. Justice Schack has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. His duels with the banks started in 2007 as foreclosures spiked sharply, particularly affecting working-class black precincts in Brooklyn. “Banks had given out loans structured to fail,” he said. As banks and mortgage brokers repackaged mortgage loans for sale to investors, creating a confusing array of paperwork, Justice Schack maintains the view that if a bank cannot prove ownership, it cannot foreclose. “Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions,” Schack wrote in a 2007 ruling.

Debtor lesson: never assume a creditor has properly prepared its legal case against you.

Creditor lesson: don’t let legal/administrative details stand between you and a successful collections effort.

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Texting for Collections

Heather Culp — Mon, 24 Aug 2009 16:29:49 +0000

The law lags often behind technological advances; one example is the area of debt collection. While financial service providers send 12 million text messages per day, most of them are service-related (such as account balance alerts) and permitted by the account holder.

However, if you are a creditor thinking of using text messaging as part of your collections efforts, you might think twice (and get a legal opinion). The Fair Debt Collection Practices Act (FDCPA) and state laws are too antiquated to fairly govern the use of text messaging as a means for contacting debtors.

In an article by PaymentSource David D. Cherner, legal counsel and legislative director of state government affairs at ACA International, a trade group for collectors, says,”The biggest concern is that the [FDCPA] and state laws really don’t address how to use these new methods of communications.”

If you if you have doubts about lawful means of communicating with creditors in North Carolina, call our offices before taking any steps.

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In Financial Distress?

Heather Culp — Thu, 25 Jun 2009 17:15:10 +0000

We help clients facing these financial difficulties:

Foreclosures, wage garnishments, creditor harassment and repossessions
Creditor negotiation (including credit card companies) to lower debt and avoid bankruptcy
Restructuring, liquidating and winding down troubled operations
Negotiate unpaid taxes with local, state and federal agencies
Asset planning and protection after a harmful turn of business affairs
We regularly advise clients on legal matters that affect their personal and business finances, working to minimize our clients’ risks and legal exposure.

Don’t believe everything you see on TV or read online

Call Mitchell & Culp today for an appointment. Bring to the appointment a simple list of creditors (not a stack of bills, not a credit report) itemizing each debt, the approximate amount owed, to whom it’s owed. Indicate on the list who’s responsible for each debt (Husband, Wife, or Joint).

If you hire us, you’ll pay for that initial appointment. If you don’t hire us, you pay nothing. You have nothing to lose so give us a call today and get the facts for your situation.

What you read on the Internet, hear from friends and family, see in advertisements from “tax repair” services, “credit repair” services, “debt consolidation” services and the like is often (at best) misleading or misinformed, and (at worst) downright criminal.

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