With 1 in 7 people in this country currently in collections (twice as many as year 2000), there is a lot of money on the table to be collected. Conducting ourselves like decent, empathetic human beings will yield far more results. Most people do want to pay their debts; they just have run into some trouble and don’t know what to do about it. By utilizing a strategy of compassion, people are far more likely to pay their outstanding debts.

In addition, using ‘nice guy’ strategies removes the possibility of violating the Fair Debt Collection Practices Act. This law prevents debt collectors from using harsh language such as cursing or profaning at debtors – definitely a vinegar tactic. In the heat of the moment, a collector using a boiler room mentality of ‘take no prisoners’ may inadvertently say something that can later be used against him in a lawsuit. By employing a different, more ‘honeyed’ approach of support and consideration for the debtor, the collector stays within the law.

So take a moment to consider the old folk wisdom and listen to what your parents told you about how to interact with difficult people and situations. We can all agree that how you say something is usually more important than what you say, so a ‘honey’ approach can produce far more success. And remember, a debtor that knows you to be tolerant and willing to work with them will usually take your calls and pay their debts. Now that is sweet…

If you have questions about credit or collection issues, contact Attorney Gary Nitzkin or call toll free (888) 293-2882 for a free consultation. For more information about our firm, visit www.creditor-law.com. For more information about debt collection, follow our blog at www.michigancollectionlawblog.com.

In the past few years, L & I has attached a Motion for Summary Disposition to their complaints.  My best guess for this practice is two fold:  One, to immediately put the debtor on notice that L & I is serious about collecting the debt.  By attaching their Motion for Summary Disposition to their complaint, they were implying to the debtor that if he defaulted, that L & I would file the attached motion and obtain a judgment against him.

In Grden v Leikin, Ingber and Winters, Mr. Grden , 643 F.3d 169 (6^th cir 20110) received such a complaint with a motion from L & I.  He called L & I for the balance due on his account and was told that it was around $1,000 when in fact, he owed about $500.  Grden file a Fair Debt Collection Practices lawsuit against L & I claiming that it had violated his rights under the FDCPA in 2 regards.  First, attaching a Motion for Summary Disposition to the complaint communicated to Grden that he had already somehow defaulted on the action.  Grden also believed that when he called L & I and was told that he owed $1,000 that this communication was clearly wrong and violated his FDCPA rights as well.

Judge Roberts from United States District Court for the Eastern District of Michigan agreed with L & I and dismissed the case.

The Sixth Circuit Court of Appeals overruled Judge Roberts in one part of its ruling and affirmed her holding in one very important aspect.   The 6^th circuit, using the Least Sophisticated Consumer standard that it had previously adopted, found that a consumer could be misled into believing that he had missed a critical date by receiving a Motion for Summary Disposition along with the complaint.  The court found that to be a violation of the FDCPA.  While this was an aggressive move by L & I that with previous eyes, bordered on violating the FDCPA, it is now a clear violation of the act.

What surprised me, however, is the 6^th Circuit’s holding that the communication by L & I to the consumer that he owe a $1,000 when in fact, he only owed about $500, was not a violation of the FDCPA.  The court first held that a communication, to come within the ambit of the FDCPA, must be a communication in connection with the collection of a debt.  That is what the statute requires.  The court then properly found that not all communications from a debt collector are necessarily communications in connection with the collection.  OK, I accept that.  The Sixth Circuit held the animating purpose of a communication, to come within the FDCPA, must be to induce payment.  In this case Grden was only inquiring about the balance due and L & I were merely responding to his request.  The Court characterized L & I’s response as “ministerial” and hence held that that communication did not fall within the ambit of the FDCPA.

To me, this case represents the 2^nd case to acknowledge that not all communications between a debt collector and a consumer come within the scope of the FDCPA.  What makes this case a bit confusing is that the Grden asked for a balance on his account and L & I responded incorrectly.   I know L & I to be an honorable firm with respectable lawyers.  Everyone makes mistakes an L & I is no different from us in this regard.  BUT….the erroneous communication came from a debt collector AND the FDCPA is a strict liability statute.  So, how do we accord this case with these two premises?  That’s a problem for me.

You see, in Michigan, liability for dog bites is also premised upon strict liability.  Your dog bites me, I sue you, I win.  It’s a very clear and straight forward cause/effect situation.  You cannot defend on the basis that your dog did not mean to bite me.  Indeed, you cannot advance the argument that my butt was in the wrong place and too close to your dog’s teeth so ergo, it was my fault that Cujo yawned and close his mouth on my tush.  Nope.  In Michigan strict liability means (or used to mean) just that.  With due deference to my colleagues George Leikin and Paul Ingber, I am sorry, but this case is good for you, but makes for strange law in Michigan.

Advice to collection attorneys – Do not file Motion for Summary Disposition with your complaints.  Recognize that the FDCPA is a strict liability statute and that you will be held liable for violating it.  Keep in mind that the standard for violating the FDCPA is “the least sophisticated consumer.

If you have questions about credit or collection issues, contact Attorney Gary Nitzkin or call toll free (888) 293-2882 for a free consultation.  For more information about our firm, visit www.creditor-law.com.  For more information about debt collection, follow our blog at www.michigancollectionlawblog.com. statute.

Any collection worth his or her salt knows enough to file a lawsuit with a claim for Breach of Contact, Account Stated and Open Account.  We plead the latter two claims when our contract claims is weak or when we simply want back up positions in the event that a court dismisses our Breach of Contract claim.

In Michigan a Breach of Contract claim generally has a six year statute of limitations (MCL 600.5807(8)), meaning that the Plaintiff has six years from the date that the contract was breached, to file his lawsuit against the Defendants. Under the Michigan UCC, however, if a transaction involves the sale of goods, then there is a shorter 4 year Statute of Limitations.

In this case,the Plaintiff’s claim involved the sale of goods to the Defendant.  The Defendant had breached this contract more than four years prior to the Plaintiff having filed its lawsuit to enforce its contract.  The trial court allowed the plaintiff to file an amended complaint to add a count of Open Account.  This was a futile amendment to the complaint.  The trial court subsequently found that the Open Account claim must fail on the same grounds as its Breach of Contract; namely that the four year Statute of Limitations under the UCC controls the transaction.  The Court of Appeals agreed with the trial Court.

I found the Plaintiff’s attempt to sever the Defendant’s obligations under Breach of Contract from its obligations for Open Account to be an excellent argument allowing for different limitations time periods.  While the Plaintiff’s effort was valiant, I believe that the trial court and the Court of Appeals came to the correct conclusion.  A Plaintiff cannot separate the nature of its Breach of Contract claim from its claim for Open Account as both of these claims involve the sale of goods. More importantly, the Defendant’s duties to pay under each claim is virtually identical.  As discussed below, I think the courts would have to arrive at a different result for a claim under Account Stated.  Its undisputed that the sale of goods is governed by the UCC and its statute of limitations.  So, where does this leave us collection attorneys?

Moral of the Story for Collection Attorneys – Know that if your breach of contract claims is out of statute, then your Open Account claim is equally out of statute.  BUT….take heart.  This opinion does not foreclose you from filing a claim for Account Stated claim.  Arguably, a court could hold that the same 4 year Statute of Limitations applies to Account Stated claims but I think that that argument would be less persuasive.  A debtor’s obligation to timely object to an invoice in a timely fashion in order to defeat an account stated is independent of whether the underlying contract involves the sale of a good or the sale of service.  A court would have to do a bit more reasoning to hold that the UCC Statute of Limitations applies to an Account Stated claim.

Moreover, if there were a contract between the parties that involved a sale of goods, a Plaintiff may choose to forego that argument if its claim is beyond the four year statute and simply attempt to enforce it on common law claims such as Unjust Enrichment or Promissory Estoppel.

I could admonish my fellow collection attorneys to be careful about taking cases that are outside the statute of limitations, but I think you know that already.  So I will advise you that if you take such a case, think creatively and consider your common law options.

If you have questions about credit or collection issues, contact Attorney Gary Nitzkin or call toll free (888) 293-2882 for a free consultation.  For more information about our firm, visit www.creditor-law.com.  For more information about debt collection, follow our blog at www.michigancollectionlawblog.com.

Johnson Rodenburg and Lauinger is a  North Dakota law firm accused of trying to collect a $3,800 debt after the statute of limitations had expired.  Mr. McCollough obviously had done his homework and learned of his rights under the FDCPA.  A law firm previous to JRL had file a lawsuit against McCollough on the very same debt.  McCollough had represented himself and had the case dismissed on the basis of the Statute of Limitations.

The debt was sold to another entity who hired JRL to file the lawsuit.  This new entity was not truthful with JRL and had misinformed it that a payment was made on the account and thus the statute of limitations had been renewed.  JRL filed a second lawsuit on the same debt prompting McCollough to file his FDCPA lawsuit against JRL.

An appellate court has upheld a $311,000 jury award to a McCollough for violating his rights under the FDCPA.  The trial court awarded McCollough $1,000 in statutory damages, plus $60,000 in punitive damages and $250,000 for emotional distress.

The judge granted partial summary judgment on the Fair Debt Collection Practices Act claims against JRL, in part because JRL sought to have McCollough admit “facts” that were not true – that he had never disputed the debt, that he made a partial payment in June 2004 and that every statement in JRL’s complaint was true. The requests for admission didn’t include a notation that under Montana Rule of Civil Procedure, the requests would be deemed admitted if McCollough didn’t respond within 30 days.

Moral of the Story to my fellow collection attorneys – When you accept a claim, you have to look at it.  You cannot blindly file a lawsuit on it without challenging every number that comprises the claim.  Frequently, clients send me claims to pursue that include interest that they are not entitled to.  I always call a client who is suing for interest to find out the legal basis for interest.  I obtain documentary support for a claim including invoices, statements and copies of checks.  I hate to throw salt into the wound of JRL, but I never accept old credit card debt for collection.  It is just too risky and this is a case in point.

Nitzkin and Associates has been collecting debts for over 20 years.  We represent businesses and frequently consult with other lawyers to collect “uncollectible debts.”  If you have a claim or judgment that you need collected, contact Attorney Gary Nitzkin by email at gnitzkin@creditor-law.com or call toll free (888) 293-2882.  For more information about Nitzkin and Associates, Debt Collection Attorneys, visit our website at www.creditor-law.com.

Tennessee ranked second in the nation last year for bankruptcy filings.  In this case, a federal grand jury indicted John O’Neal for making a false statement in a bankruptcy matter.  In my 20 years of practice, I have seen very few criminal actions resulting from claims made in the bankruptcy court in Michigan.  That’s not to say that they have not happened but only that I have not heard of any.  Nevertheless, it appears that Mr. O’Neal submitted false documents in June 2010 in an attempt to influence his bankruptcy plan.  If convicted, he faces up to 20 years in prison.

From my perspective, if bankruptcy courts will refer debtors to the prosecutor’s office, there is nothing to stop them from referring creditors who file false or highly inflated claims as well.  The article suggests that Mr. O’Neal’s case appears to be the beginning of an initiative in the Eastern District of Tennessee, to make debtors and probably everyone else involved in a bankruptcy proceeding, accountable for documents that they submit to the court.

If you have questions about credit or collection issues, contact Attorney Gary Nitzkin or call toll free (888) 293-2882 for a free consultation.  For more information about our firm, visit www.creditor-law.com.  For more information about debt collection, follow our blog at www.michigancollectionlawblog.com.

According to the FTC, some of the company’s practices included repeatedly calling consumers with the intent to harass, illegally revealing debts to third parties and misrepresenting itself as a law firm that would garnish wages, sell consumers’ properties or have them arrested or jailed if they did not pay.  The company also falsely claimed that partial payments would be accepted as full settlements, the FTC said.

Here is my problem….Why did this happen?  How did this happen?  I don’t think that a collection agency gets to be that large and operate in that many states without doing a number of things RIGHT.  Think about it.  This company is not a fly by night operation.  It operates in 13 states and there were no allegations by the FTC that it was doing so illegally.  So what the hell happened?  It would be very easy to simply dismiss West Asset Management as a sleazy operation.  I refuse to do so because to operate in as many states as it does, it had spent a pile of money on legal fees to do so.  I can’t believe that it received a pile of bad legal advice along the way.  I am even more convinced that it intended to do things the right way.  So, again…what the hell happened?

I think that a number of theories should be examined. Remember, those who don’t study history are condemned to repeat it.  I have no intention of committing any acts that the FTC finds so objectionable as to fine me for $2.3 million.  I assume you don’t wish to make this mistake either so lets think about what happened at West Asset Management so that we don’t make the same mistakes.

One theory that I have  is that Wests’ collection agency managers were asleep at the wheel.  They were not monitoring the calls made by their collectors. This is a possible but unlikely theory.  The managers had to have received some complaints along the way and even if they only mildly astute, they would have noticed a pattern amongst the complaint or the collectors who were the subject of these complaints.

Another theory I have is that the agency managers are compensated based upon what their collectors collect and hence have an incentive to break the law. Using the “follow the money trail” to explain the unexplained, this theory gets my vote.  The collection agency managers may have been afraid to disrupt the cash flow that addressing these FDCPA violations was creating.  This would have meant that the collection agency managers were required to choose between their wallets and consumer’s rights.  If this theory were the reason why West Asset Management was fined by the FTC, then the collection agency managers made a bad decision

Another theory I have  as to why West Asset Management got spanked is that it did not train its debt collectors thoroughly enough to avoid breaking the law. From my experience I can tell you that this happens a lot.  Many collection agencies do not pay enough time and money into collector training.  The FDCPA is not a very complicated statues, but it does take some time to read an understand it.  Agencies that don’t spend money training their collectors had better save up money for defense attorneys’ fees because I can almost guarantee you that an agency is going to spend that money one way or the other.

Unfortunately for us, these are all only theories as to why West Asset got fined by the FTC.  Fortunately for us, these theories are good places for you to start examining your collection practices and your agency’s practices.  The FTC may be based in Washington, but from personal experience, I can tell you that you should not underestimate its reach.

Attorney Gary Nitzkin is a profession debt collector with the Law Offices of Nitzkin and Associates, Debt Collection Attorneys.  If have commercial debts that you need collected or have questions about debt collection issues or tactics, please call or email Attorney Gary Nitzkin at (888) 293-2882.  Visit us at www.creditor-law.com.

The General Rule against Contacting Third Parties under the Fair Debt Collection Practices Act.

As a general rule, a collector may not discuss a debt owned by a consumer with anyone other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.  See 15 U.S.C. 1692(c)(b).  This rule is straight forward.

The term “location information” means a consumer’s place of abode and his telephone number at such place, or his place of employment.

If a debt collector does not have a consumer’s location information, then she may contact third parties to the debt as follows:

Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall–

(1)	identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;
(2)	not state that such consumer owes any debt;
(3)	not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;
	15 U.S.C. 1692b

The FDCPA is a strict liability statute so any violation of it by a debt collector will probably result in liability of that debt collector to the consumer.

CASE IN POINT

I recently read of a Texas woman who filed a lawsuit against a debt collection company after it called her mother to get personal information.  Nicole Tommarazzo filed suit against Enhanced Recovery Co. on March 11 in the Eastern District of Texas, Sherman Division.  According to the lawsuit, the collection company allegedly called Tommarazzo’s mother in connection with an attempt to collect a debt and disclosed information regarding the debt on a voicemail.

The Debt collector will probably settle the case for $1,000 to the consumer plus costs and attorneys’ fees.  The attorneys’ fees almost always are at least double, if not triple what the consumer owes the consumer.

Moral of the Story - Collection agencies must spend some time and money teaching their debt collectors about the rules regarding third party contacts.  This is a big trap and its easily avoidable.

If you have any debt collection related questions, call or email Attorney Gary Nitzkin for a free consultation.  Call (888) 293-2882.

The Department of Justice’s investigation also uncovered McGavic’s pattern of falsifying fee affidavits in motions for default judgments by claiming services he did not perform. In addition, McGavic allegedly provided his office staff with a schedule to be used to arbitrarily increase the fees claimed — depending on the amount of money claimed or the venue of the action.

McGavic is further prohibited from acting as a debt collector or operating a law firm or a collection agency in the state of Oregon.

Unfortunately, cases such as these are not uncommon.  Rather, they are under reported.  Most consumers who have been abused by debt collectors are unaware of their rights under the Fair Debt Collection practices Act.  Indeed, it costs nothing for a consumer to hire an experienced Consumer Rights lawyer to file a lawsuit against the abusive debt collector and obtain damages.

If you have been the victim of an abusive debt collector, call or email Attorney Gary Nitzkin at Michigan Consumer Credit Lawyers for a free consultation, at (888) 293-2882.

Here’s the truth.  I am a collection attorney.  I collect debts for a living and have done so for over 20 years.  Yes, I have had debtors arrested and put into jail but not because they failed to pay a debt.  Rather, I usually ask the court to have a debtor arrested when he fails to appear in court after I have had him served with a subpoena.  When someone ignores a court’s subpoena, one can be held in contempt of court and be arrested for doing so.  Simply because one owes a debt and has friends in Congress does not magically elevate this person from a court’s jurisdiction.

One tool that we use to collect debts is called a creditor’s examination.  After I get a judgment against someone, I prepare a subpoena directing him to appear at the courthouse with his financial information.  The judge signs the subpoena and then I have it personally served on him.  When that person fails to appear in court, the judge rightfully wants to know why this person ignored the court’s subpoena.  I know that when a court orders me to appear in court, I show up.  No one is above the law, right?  Well…may be.

I just read an article by Jessica Silver Greenberg entitled Welcome to Debtor’s Prison, 2011 Edition.  Ms. Greenberg notes that many lawmakers are trying to reel in the collection industries’ use of arrest warrants in connection with debt collection.  I think Ms. Greenberg’s article is excellent.  However, I think these efforts by law makers is nothing short of shameless pandering to a liberal middle class voter demographic.  After all, courts use arrrest warrants in several situations.  For example, if a key witness fails to appear for a trial, a court may issue a warrant.  If a criminal defendant fails to appear for a hearing, the court may issue a warrant.  So, then, why should the fact that someone owes money, excuse him from complying with a court’s subpoena?  That just does not make sense to me.

I would love to hear your view.

Gary Nitzkin and Nitzkin and Associates are debt collection attorneys.  We have been in business since 1990 and collect commercial debts in excess of $5,000.  If you have any questions about debt collection issues, please call or email Attorney Gary Nitzkin at (888)293-2882 or email him at gnitzkin@creditor-law.com.

In Thomas v Dutkavich (Lawyers Weekly 07-74446), a 2010 decision, the Michigan Court of Appeals has opened the possibility that a creditor may foreclose on a lien by using a remedy other than the Michigan Judgment Lien statute. In this case, Thomas purchased property from Peletier. Peletier had owed money on a judgment to Dutkaviches who had placed a lien on the property. When Thomas purchased the property, the judgment lien was in place. Interestingly, the title company that insured the title in Thomas had missed the lien. Mr. and Mrs. Dutkavich wanted their money and would not release the lien and, in fact, attempted to seize the property. Thomas filed a lawsuit to quiet title.
The trial court dismissed the lien holding that Thomas was not indebted to the Dutkaviches. The Court of Appeals disagreed. The higher court reinstated the lien and noted that although the Judgment Lien Statute expressly forbids foreclosure of a judgment lien, that the Dutkaviches may nevertheless still be entitled to foreclose on their lien under the Revised Judicature Act. The appellate court remanded the case to the trial court for a determination of this issue.
It seems to me that the Thomas and Peletier are going to get a payday at the expense of the title company. The title company blew it when they missed the lien. Title companies insure against claims that are as of record and the judgment lien was certain one such lien of record.
The bigger issue, it seems to me, is whether one can foreclose on a judgment lien under the Revised Judicature Act even though foreclosure of judgment liens is expressly prohibited under the Judgment Lien Act.
Mr. Buckles, you may have satisfaction yet!

If you have any debt collection related questions, call or email Attorney Gary Nitzkin for a free consultation.  Visit our website at www.creditor-law.com.  For more information about collection law, follow our blog at www.michigancollectionlawblog.com or call (888) 293-2882.