An attorney has a wide variety of tools available to collect a debt. This arsenal of tools extends well beyond what is available to an original creditor or even a collection agency employed to collect the debt prior to the attorney becoming involved. Additionally, these tools offer a step-by-step increase in the ability to involuntarily wrest money away from the debtor.
The first tool employed by an attorney in collecting a debt is the Attorney Demand Letter. I will normally make a decision on whether or not to send the debtor an Attorney Demand Letter based on the debtor's prior history and the creditor's prior attempts to collect the debt. A creditor may question why an attorney is going to send a letter asking for payment when the creditor has done this on a number of occasions or may have even sent the debt to a collection agency who has not only sent demand letters, but made telephone calls to the debtor's home and place of employment.
There are three primary reasons for utilizing the Attorney Demand Letter. First, it has been my experience that somewhere between fifteen and twenty percent of debtors who have been adamant in their refusal to pay will, upon receipt of an Attorney Demand Letter, pay the full amount owed. There is something intimidating about receiving a letter saying you owe the money on an attorney's letterhead. The Attorney Demand Letter ratchets up the seriousness of the matter substantially.
The second reason for sending out the Attorney Demand Letter is to comply with certain state statutes and to allow for the possibility of recovery of attorney's fees in certain circumstances. For example, in the state of Mississippi when a debtor owes money and that debt is not based upon a contract or agreement which allows for attorney's fees, if the attorney sends an Attorney Demand Letter and gives the debtor a reasonable period of time to satisfy the debt prior to filing suit, the attorney may then recover attorney's fees in that suit. This is true regardless of the nature of the debt or how it was created. Therefore, I always utilize an Attorney Demand Letter in attempting to collect debts in the state of Mississippi. The state of Tennessee does not have a corresponding statute and attorney's fees are available only by agreement of the parties.
The third reason for sending out the Attorney Demand Letter is to establish the creditability of the creditor. Many times or the creditor or a collection agency employed by the creditor has told the debtor, "If you don't pay this debt, I am going to send it to an attorney for suit." Many times the debtor sees this merely as a bluff. When the letter arrives on attorney letterhead giving the debtor an exact number of days before a lawsuit is going to be filed, the debtor now realizes that the creditor has not been bluffing, nor making idle threats. That has the two-fold effect of creating increased credibility with that particular debtor and creating a reputation for the creditor that it does not make idle threats or bluff.
The next tool in the collection process is the actual filing of a lawsuit. Filing a lawsuit consists of the drafting of a legal document called a complaint, the filing of that complaint with the Court, and the service of that complaint upon the debtor. In the state of Tennessee, such a lawsuit may either be filed in the Court of General Sessions for debts up to $25,000.00 or in Circuit Court for debts above $25,000.00. In either case, I utilize a complaint on sworn account. This simply means that I prepare an affidavit to be signed by the creditor and sworn to stating that the debtor owes a specific amount of money. That sworn affidavit is attached to the complaint when the lawsuit is filed. The debtor is then served with a copy of the complaint and sworn affidavit and given a certain period of time to respond. In General Sessions Court, no formal written answer is required from the debtor and the matter is first heard before the Court within 10 to 15 days of the debtor being served. At that time, the debtor must then either admit to the debt and allow a judgment to be entered, or deny the debt and a trial will be scheduled. Trials in General Sessions usually take place within 30 days of the initial court date. Circuit Court is much more formal and the debtor is given 30 days from the date of service in which to file a formal written answer. If the debtor does not file a formal written answer, a default judgment can be taken. Most debtors, upwards of eighty five percent, are simply unequipped to deal with the complexities and requirements of the Court system. Those attempting to represent themselves simply do not stand a chance. Therefore, judgments are taken without dispute in approximately eighty five percent of the suits I file. Of the remaining fifteen percent, approximately ten percent result in judgments following a futile attempt by a pro se (no attorney) debtor to fight the system, and only five percent result in true contests where the outcome is not certain.
So now you have a judgment that is simply a piece of paper that says that the debtor legally owes you the amount of money you have been attempting to collect. That piece of paper changes everything. The judgment is a key that unlocks an entirely new chest of tools you can use to recover money from the debtor.
The first and most commonly utilized post judgment tool is the garnishment. A garnishment can be issued attempting to recover money from two separate sources. First, a garnishment can be issued against a debtor's bank account. In order to do this, you need to know where the debtor banks and generally their account number. Therefore, it is vitally important that you save, photocopy, and archive any check payments you receive from any customer or potential future debtor. These checks are invaluable in the collection process. When the bank receives a garnishment on an account, it will freeze all of the funds in that account and report to the Court the amount of money so frozen. Unless the debtor comes forward and objects and has good reason, that money will then the paid into the registry of the Court and ultimately disbursed to my law office to satisfy the debt.
The second pool of money a garnishment can be used to reach is a debtor's wages. A garnishment can be served upon a debtor's employer and then a certain amount of the debtor's paycheck each month (the amount is based on a statutory calculation based upon how much the debtor makes, how many children the debtor has, and what are the state statutory exemptions) will be paid into the registry of the Court and disbursed to my office to satisfy the debt.
The next post judgment tool a debt collection attorney can utilize if garnishments are unsuccessful is a Writ of Execution. A Writ of Execution is a request filed with the Court, instructing the Sheriff to go out and seize certain property owned by the debtor and sell that property at public auction to satisfy the debt. A Writ of Execution can be issued against any personal property of the debtor that you aware of, can be issued for cash that the debtor may have on hand or that a business may have in its cash register. But, the most effective way to collect a debt from an individual debtor on a Writ of Execution is to have the Sheriff seize the debtor's automobile. Regardless of the value of the automobile, this is an extremely effective tool. Typically, a debtor's automobile will be financed by a bank that will have a priority lien on that vehicle. That simply means that if the Sheriff does sell the car at a public auction, any money raised by that sale will first have to go to pay off the bank that financed the car before any money comes to my client. While this does not sound like an effective debt collection tool for my client, in reality once the debtor realizes that the Sheriff and not a repossession company has seized his only mode of transportation, the debtor will almost invariably contact you directly offering to satisfy the debt by any means possible in exchange for a release of the Writ of Execution and the return of the debtor's vehicle. Once the debt is paid, the Writ of Execution is released and the vehicle is returned without the sale ever taking place.
The most patient tool in the debt collection lawyer's arsenal is the real property lien. When a judgment is taken against the debtor, that judgment is enrolled among the land records as a lien against the debtor's house. That means absolutely nothing to the debtor until the moment comes that they want to sell their house. They then cannot sell their house and give clear title to someone else until that judgment is paid. If a debtor claims to have absolutely no ability to satisfy a judgment, sometimes you simply have to wait until you get that call from a closing lawyer saying the debtor simply did not tell them about this judgment and that is have to be paid before the closing at 3 o'clock that afternoon and wanting to know from you how much the judgment is, with interest, to date. The real property lien is not fast, but it is effective.
The final tool available to the debt collection lawyer is a judgment debtor examination. The creditor, now a judgment creditor, can ask the Court to issue a court subpoena requiring the debtor, now a judgment debtor, to appear at the debt collection lawyer's office and to give testimony under oath in response to questions the debt collection lawyer asks. Essentially, the debtor is put under oath in front of a court reporter and then you may ask any question about any of the debtor's potential assets. If you don't know anything about the assets of your debtor, this may be where you start, or if one the tools discussed above has failed to satisfy the debt, you may follow up with a judgment debtor examination to get the information necessary to use one of the other tools.
As you can see, from the methods discussed above, the debt collection lawyer has ways and means available to him to collect the debt that an original creditor or even a debt collection agency can’t dream of utilizing. It is these exclusive tools which make a debt that may be virtually uncollectible by a creditor or even a collection agency easy money for a skilled and experienced debt collection lawyer.
Wednesday, July 19, 2006
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16 comments:
wow this is crazy. You guys are serious it make sense for the average person to defend themselvves against people like you with knowledge. You ever heard of the law research group. They have a course called the unsecured debt resolution package and it will invalidate anything you have in your post.
What if the sheriff is unwilling to serve the write of execution upon a vehicle. Can you yourself go and reposses their vehicle?
Any advise on how to collect a Judgment, to be collected in Alabama, inwhich the debtor has all assets listed in his wife's name?
You're nothing but a bottom feeder debt collector who went to law school. And in Texas your property lein would never fly. Have fun, fool. Anyone who believes your garbage is a fool too.
I wonder what these guys would say if they become the creditor with their own money on the line. But of course how would that ever happen since they are probably the ones in debt over their heads from stupid decisions?
Dead Wrong about not standing a chance. Not only did I defend a debt claim against me pro se, I came out of court with a $2500 judgment against the collection agency/ debt buyer. This despite the fact that small-claims judges are in the bank's pockets, and are prejudiced toward the creditor.
he is stupid, states have laws against this. also F---K him witha BK7-13 or stop a garnishment with motion for slow pay- or change bank accounts- or, finnaly if you have a VA they cannot touch you house
I appreciate your information. Although I'm on the side of the debtor, this post helps me understand the process better.
J.
You may be correct if you are representing the Original Creditor against the Debtor.
However, oftentime Junk Debt Buyers as 3rd Party Creditors (not the original creditor) purchasing old debt accounts for pennies per dollar then using the Legal System to strongarm, intimidate niave consumers for 100% or more of face value of the account. Knowledgable consumer can be defeat Junk Debt Buyers and Collector Attorney's in court Pro Se. Most often these Junk Debt Buyers do not possess sufficient documentation to sustain judgment.
Consumers in litigation against Junk Debt Buyers should always demand Full Debt Validation under FDCPA laws. Also, contested cases are DISMISSED increaslingly when Defendants' demand to see Chain of Title for the account, Complete Payment History starting with Original Creditor, ALL Interest, Fees, and Penalities, placed on said account. Also, most of the Sworn Accounts (Affidivat) from Junk Debt Buyers are based on Hearsay the Signee often does not possess first hand knowledge of the original account, and cannot make statments and representations herein. Such documents in these circumstances have no legal basis. The Plaintiff Attorney cannot testify in the case. Historically, many Defendants' fail to appear in court when litigated by Junk Debt Buyers thus Default Judgment are Awared. The Junk Debt Buyers realize this and gamble the Defendants will not appear. However, when informed Defendants' Pro Se or Consumer Attorney's exercise said legal rights the rate of Dismissal Increases Dramatically.
Furthermore, some unethical Law Firms have been known to reset a contested case failing to provide certificate of service to the Defendant as means to ascertain a default judgment, which violates the Defendant's right to appear in court to defend against the case. The Defendant can file a Motion To Have Default Judgment Set Aside, requesting a hearing before the Judge. The Plaintiff can response to the motion requesting denial for the motion. If the Defendant wins this motion, the case is reset for trial.
Do not underestimate the undermining tactics Junk Debt Buyers and Junk Debt Buyer Law Firms will apply in some cases. They do not want to face contested cases when they do not possess sufficient evidence to sustain hearsay cases.
Read the Fair Credit Collection Practices Act, Read your State's Rules of Civil Procedure, Demand Full Debt Validation; If you need an Attorney; consider a Consumer Lawyer with expertise in this scope of litigation is best to select. You can refer to the The National Association of Consumer Advocates for referral to qualified Attorney in your state.
The initial post was the reason people hate lawyers.
The "tools of the debt collection lawyer" bit just shows what a tool this guy is. Why post all this crap except to enhance the bluff that he wants you to think isn't happening. They are bluffing, and his post is evidence of that.
The follow up posts were helpful.
People like you are exactly why I am filing a lawsuit against one of the top ten worst collection agencies in the US www.budhibbs.com. 3rd party junk debt buyers like the one I am dealing with, buy a debt for pennies on the dollar, ignore cease and desist letters until they can validate (not verify) the debt, violate many of the laws of the FDCPA and are in general a bunch of bottom fedding a--holes. The agency I am dealing with even had the nerve to make a payment on the account in order to change the SOL. Junk debt, third party debt collectors are a total waste of human flesh
To the pro debters:
So let me get this straight. You borrow somebody's money and I'm sure you are comfortable you can pay it back. When you can't pay it back you expect them to sit back and quietly wait for them to get their money from you? 3rd Party debt collectors are keeping the over head costs down for the original creditors. Even though they are paying a small percentage of the orginal debt they are doing all the footwork that the orginal creditor can't afford to do. If creditor's didn't sell this debt to collector's what are the odds they would be able to afford to give you a credit card in the first place. This goes all the way back to the beginning. Theres no free lunch. If you spent the money and you knew the terms what is your excuse for not paying it back or whining when they go out of their way to get it back. Don't say you didn't know the terms. There's a sob story every day on TV or in the newspaper and they teach it high school. What kind of defense can you give for not paying back. Who is the bottom feeder here? The person who borrowed the money and didn't pay it back or the person who is trying to recover it. 3rd party debt collectors are an essential part to the economic system. Without them financial institutions wouldn't be able to afford to lend money to higher risk citizens.
In my situation I am the collector. I had a client stiff me for more than 5K. I need my money. I intend to use my right to file a writ of execution in order to collect the debt that is owed to me and my family.
On the contrary to all you debtors posting on this blog, whining about creditors using legal tools to collect from you, YOU are the bottom feeders. You borrow money and do not pay it back, forcing creditors to use the legal system and chase you down. Despicable. If it wasn't for you, a debt collection industry wouldn't exist. You probably didn't pay your mortgage, expecting government bailouts too. Well the rest of society can't pay for you. Someday you will have to grow up and own up to your debts.
F&*K YOU PayupPeople..... it is the bottom feeder banks that overextended credit to people. Let's be real... the money came out of thin air. When the signature on the loan or credit card was placed, the credit card issuer took that the to Federal Reserve and got 9 TIMES that amount of money, all printed out of thin air. So don't give me your bullshit. The system is corrupt and the reason it is failing is because of the corrupt money system.
I have a question. My ex husband (married to him at the time) stole my personal info to obtain credit cards. Numerous etters were sent by my lawyer to the credit card companies in 2005 requesting the original application and charge slips with my signature. They didn't respond. (Because there wasn't any such paperwork)
I am now being sued by a collection agency on behalf of US Bank. The debt was created in 2005 and in July of 2008 they wrote me telling me to payup or they would bring legal action. I responded with a letter to them disputing the debt and requesting a letter of validation. I never received it. 8 months later I receive notice that I am being sued. My lawyer (once again) has requested proof of my signature and they have ONLY provided charge slips with HIS signature and still no application or charge slips with MY signature (cause there is NOT any). (Long story) but when all of this first started, I freaked out and sent them ONE payment before contacting my attorney. They are saying that this constitutes my acceptence of the contract and debt. Does anyone know if this is a bluff? A judge actually set this for trial with the only proof being the ONE payment that they received. I feel like I am getting ready to get screwed again - but, this time for our JUSTICE SYSTEM. My credit has been trashed with NO judgements against me, the ex is running around free and now I am incurring lawyer fees. The only bright spot so far is that I just found out through local police that the FBI is looking for the ex on fraud and identity theft charges from another state! Any input?
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