Increasing amounts of Florida credit card lawsuits and debt collection lawsuits are filed by debt buyers rather than original creditors. Often, the lawsuits brought by debt buyers rely on incomplete and unreliable data and cause significant abuse of consumers. This post will describe the difference between debt buyers and original creditors. Other posts will describe some of the documented abuses of the legal system by debt buyers and will present recommendations on how Florida law can be modified to reduce those abuses.

An original creditor is typically a bank or finance company that has extended credit to a person or business. For example, credit card companies such as Capital One, Bank of America, Chase / WaMu, Citibank or Citibank (South Dakota) N.A., Target, Discover and American Express are usually original creditors. A debt buyer is simply a company or person who buys the debt from someone else. Examples of debt buyers we have encountered here in Central Florida (including Orlando, Sanford, Oviedo, Deland, Deltona, Orange City, Port Orange, Daytona Beach, Melbourne / Cocoa, Mt. Dora, Tavares, Leesburg, Palm Coast, Bunnell and surrounding areas) include Arrow Financial, Asset Acceptance, CACH, Cavalry Portfolio Services, LVNV, Equable Ascent Financial, LLC, Mainstreet Acquisitions Corp., Portfolio Recovery Associates and Financial Independence Services.

Debt buyers usually pay pennies on the dollar to buy the debt. For example, a large debt buyer’s report indicates that it paid an average of only 3 cents on the dollar for the debt they purchased. This means that if you had a debt of $3,000 purchased by such a debt buyer, it would have paid only about $90 for your debt. However, if they sue you for this debt, they would sue for the entire $3,000, not for the $90 they actually paid for it. So, even if they collect only 10% of your debt ($300), their profit margin could be as high as 333%. No wonder there are so many debt buyers out there trying to squeeze money from consumers.

And, even if the debt buyer does not collect any money on the debt, it can (and often does) resell the debt to another company who can also try to collect the debt. This is one reason some consumers are contacted by multiple companies who try to collect on the same debt. This cycle of debt buying, attempted collection, and reselling can be repeated several times. Each time, the “quality” of the debt is worse: each subsequent debt buyer has less information about the legitimacy and amount of the debt, and the consumer may have additional defenses. These secondary debt buyers are often referred to as “junk debt buyers“, “bottom feeders” or “scavengers”.

If you have been sued by either an original creditor or debt buyer, please don’t ignore the lawsuit. If you do, chances are you will have a default judgment entered against you. That means that you will likely lose the case automatically, without any trial. This is true even if you have potential defenses – and we normally see several potential defenses in most cases we review. So don’t delay, contact us right away for a free, no obligation consultation to learn about your rights and potential defenses.

We recently had the privilege of representing a client who was subjected to improper debt collection tactics employed by a Florida debt collection lawyer.  That lawyer prepared a writ of garnishment that failed to comply with Florida laws for wage garnishment.  Generally, that law provides that the employee’s paycheck funds seized from an employer under a writ of garnishment be kept by the employer until the Court decides who is entitled to those funds: the consumer or the debt collector.  Even after the Court dissolved the writ of garnishment, the debt collection attorney failed to return the wrongfully seized money.

Based on these facts, we sued the Florida debt collection law firm for its violations of the Fair Debt Collection Practices Act.  We were able to quickly obtain justice for our client, including the return of the improperly seized garnishment funds, payment to her of statutory damages of $1,000.00 under the FDCPA, and reimbursement of the additional expenses she was forced to incur when her money was wrongfully seized; all of this was done at no charge to our client.

You too have rights under the Fair Debt Collection Practices Act if your rights have been violated by a debt collector or debt collection attorney, even if a judgment has been entered against you.  If this has happened to you, please feel free to contact us; there is no charge for our review.  Moreover, we do not charge our clients for either our attorney fees or our costs in a case involving the Fair Debt Collection Practices Act (FDCPA); instead, we seek recovery of those from the debt collector who violated the law.  We understand that the wrongful seizure of your money can have immediate consequences and create a “ripple effect” on your finances.  So don’t delay, contact us today to enforce your rights.

A recent study confirmed what most of us already suspected: the credit card companies are back at it, raising rates yet again.  In fact, that study revealed that average interest rates are near an all-time high.  Here’s the reason: The new credit card laws and regulations have strict requirements on how and when a bank can raise interest rates for existing customers, but those requirements often do not apply to new customers.  The banks and credit card companies are taking advantage of this loophole to ensure their new customers are paying a high interest rate from the beginning, just in case they have difficulty raising the rates later.

In my opinion, this is a shame and simply wrong.  Just remember, all of us taxpayers paid for a bailout that included many of the same banks that are now trying to charge you these very high rates.  So, after we collectively paid to bail out the banks, they now turn around and try to stick to new customers for the sake of their profit.  One can only wonder how many of those credit card companies would have failed if we taxpayers did not pay for the bailout.

Of course, don’t expect the credit card companies to stop filing lawsuits against consumers, even if they dispute the amount or even existence of the alleged debt.  If you have been sued in a credit card lawsuit in Central Florida (Seminole County, Orange County, Lake County, Brevard County, Volusia County or Flagler County), please feel free to contact us for a free consultation and evaluation of your rights.  There are numerous defenses to a credit card lawsuit that may be available to you.  Please also feel free to review Taras Rudnitsky’s background, experience and qualifications, as well as a summary of some of the credit card lawsuits we have defended on behalf of other Florida consumers.

A recent article reveals that certain late fees and delinquency notices from National Credit Solutions may be a scam.  National Credit Solutions is apparently trying to collect on debts that they claim arose from late fees imposed by Hollywood Video or Movie Gallery.  However, some consumers are disputing any suggestion that they owe those late feees, indicating that the video rental chains would not have allowed them to subsequently rent videos if they actually had late fees that were owing.

As the old saying goes, “where there’s smoke, there’s fire”.  Attorneys General in half a dozen states have received complaints about National Credit Solutions, and at least one state (Montana) has filed a lawsuit against it.  There are two common complaints.  First, consumers were never provided notice of the alleged late fees, and therefore were not able to dispute them before they were placed on consumers’ credit reports.  Second, National Credit Solutions has tried to impose a $75 collection fee, which some feel is outrageous.  Please click here for more information about filing a complaint against a debt collector.

There is no question that placing a delinquency notice on a consumer’s credit report exerts pressure to pay National Credit Solutions, especially when the consumer is trying to obtain credit for a large purchase such as a home or car.  In all, about a half-million consumers have had their credit report damaged by the notices from National Credit Solutions.  If this has happened to you and you believe you do not owe the charges, make sure to promptly dispute the debt in writing with each credit reporting agency that has placed it on your credit report.

In addition, if National Credit Solutions failed to comply with state or federal debt collection laws, you may be entitled to sue the the debt collector to resolve this issue and recover any damage you may have suffered from their conduct.   If this has happened to you here in Florida, please do not hesitate to contact us to learn how we can assist you in preserving and vindicating your rights.