FDCPA question

We had a charge-off revolving credit debt through a major bank turned over to a local (Idaho) lawyer for collections. The amount demanded in the initial letter did not coincide with our records (it was about twice what our records showed... there's no legal interest rate THAT high), so we asked for validation of the entire amount listed.

Today is the 31st day after they received the letter asking for validation (I have the USPS return receipt to prove it) and we have not received anything from this lawyer except a note saying he received it (he also attempted to collect the debt in the same letter stating he received the request for validation... I thought that was funny). But since no validation was received, does this mean that--legally, at least; morally is a different story--the entire debt is now un-collectible by the bank? Can the banking institution send it to another collection agency for action (I know they can, and probably will)? Is the debt wiped and now uncollectible in full, since the lawyer or the banking institution could not be bothered to send the validation in the time-frame required by law?

Thanks for any clarification you can give. Happy Independence Day to all!

RMStrong:

The amount demanded in the initial letter did not coincide with our records (it was about twice what our records showed... there's no legal interest rate THAT high),

That's typical. They are already incurring lawyer fees of 200 to 300 per hour and that mounts up fast in addition to whatever default rate of interest is accruing (20% to 30%).

RMStrong:

But since no validation was received, does this mean that--legally, at least; morally is a different story--the entire debt is now un-collectible by the bank?

No. You still owe it.

If you actually read the FDCPA - Section 809, you'll see how it works.

http://www.ftc.gov/bcp...

RMStrong:

Can the banking institution send it to another collection agency for action (I know they can, and probably will)?

Of course.

RMStrong:

Is the debt wiped and now uncollectible in full, since the lawyer or the banking institution could not be bothered to send the validation in the time-frame required by law?

No. See Section 809.

adjuster jack:

That's typical. They are already incurring lawyer fees of 200 to 300 per hour and that mounts up fast in addition to whatever default rate of interest is accruing (20% to 30%).

The interest acruing is, according to the demand letter, $0.85 per day (a total of $292.07 in interest).

[quote user="adjuster jack"]If you actually read the FDCPA - Section 809, you'll see how it works.

Yeah, read that... many times in the last 30 days. I didn't see anything in there that states what happens when a collector does not fulfil his end of the bargain. Section 809, as I read it, only deals with what information is required to be in the initial demand letter, the fact that I can dispute, and what consituttes--and does not constitute--"validation". I have received none of the validation either spelled out in Section 809 OR in the initial demand letter (which also gives a timeframe of 30 days).

Where, in Section 809, does the law spell out what happens to a debt when it is not validated within the legal timeframe?

RMStrong:

Where, in Section 809, does the law spell out what happens to a debt when it is not validated within the legal timeframe?

See Section 813 - Civil Liability

You can sue the collector for monetary damages as outlined in that section.

But you'll first have to find out if your state has any similar regulations of collectors. See Section 817 - Exemption for State Regulation.

Adjuster Jack, first, thank you so much for all your help, and happy Independence Day!

What would you suggest we do? If the lawyer is still waiting on validation of the debt from the bank, and if the bank lost the paperwork supporting their claim, do we simply keep asking each new collection agency for validation until the statute of limitations runs out (in 3 years)?

Do you recommend I contact the Idaho State Bar and ask about this particular lawyer? If there is a class-action being filed (or one that should be filed), they would have that information, wouldn't they? I can't help but wonder, if he "attempt[ed] to collect a debt" in the same letter stating he received our request for validation (isn't that a blatant disregard of FDCPA 809?) with us, does he do it with everyone? Wouldn't that constitute a class action?

Should we contact the lawyer to let him know we did not receive the paperwork in the allotted time, or should we simply, at this point, let sleeping dogs lie? Should we (keeping every scrap of paperwork, of course) simply wait until we receive word from him again and perhaps negotiate a markdown in a satisfactory settlement offer (at this point, reading only the letter of the law, he owes us (up to) $2,000) rather than waste everyone's time clogging up the court system?

RMStrong:

What would you suggest we do? If the lawyer is still waiting on validation of the debt from the bank, and if the bank lost the paperwork supporting their claim, do we simply keep asking each new collection agency for validation until the statute of limitations runs out (in 3 years)?

That's not a bad idea. Stalling till the SOL runs out. But the SOL in Idaho is 5 years (Idaho Code § 5-201 et seq.). Or do you mean that you defaulted 2 years ago and you have 3 years left?

RMStrong:

Do you recommend I contact the Idaho State Bar and ask about this particular lawyer?

Won't do you any good. As long as he is licensed to practice, nothing else matters.

RMStrong:

If there is a class-action being filed (or one that should be filed), they would have that information, wouldn't they?

Maybe, maybe not. But, again, as long as he is licensed that doesn't do you any good either.

RMStrong:

I can't help but wonder, if he "attempt[ed] to collect a debt" in the same letter stating he received our request for validation (isn't that a blatant disregard of FDCPA 809?) with us

You say "blatant", he says "unintentional". Judge says "you're wasting my time."

RMStrong:

does he do it with everyone? Wouldn't that constitute a class action?

Maybe if he does it to thousands, maybe not. I doubt if anything like this will ever rise to the level of a class action. I'm not sure you even know what class actions are really about. Most people think it's an easy way to get free legal help - it isn't.

RMStrong:

Should we contact the lawyer to let him know we did not receive the paperwork in the allotted time, or should we simply, at this point, let sleeping dogs lie?

I can't tell you what to do. But, if it was me, I'd leave it alone.

RMStrong:

Should we (keeping every scrap of paperwork, of course) simply wait until we receive word from him again and perhaps negotiate a markdown in a satisfactory settlement offer

That's a good idea.

RMStrong:

reading only the letter of the law, he owes us (up to) $2,000)

Maybe, but you'd have a long way to go before a judge would ever award you the money.

Let me inject a note of reality here. Somebody provided you with goods or services that you didn't pay for. When a judge sees two people in the courtroom, one trying to get out of paying a debt and the other trying to collect, guess who gets the judge's support. The creditor, of course.

RMStrong:

rather than waste everyone's time clogging up the court system?

Wish I had a buck for every time I've seen that. That never stops anybody from suing.

Please note that your rights under the FDCPA have nothing to do with whether you can be sued in an Idaho court for an unpaid debt.

FDCPA is Federal law.  The SOL for debts in your state per Adjuster Jack is five years.  Even if you believe that you can prevail on an FDCPA complaint, that does not prevent the collector from suing you in state court.

In state court, you can, as part of the Discovery process, ask for proof of the debt.  However, the proof has to be enough to satisfy the judge, not your personal opinion about what constitutes acceptible proof.

Most responses to debt validation requests under the FDCPA amount to little more than the debt is valid and owed.  I would be willing to be money that some time this week you will receive this type of "canned" response in the mail.