contract law, the FDCPA, and M

Discussion in 'Credit Talk' started by PFM, Feb 16, 2001.

  1. PFM

    PFM Guest

    Rights under consumer debt contracts may be freely assigned, and duties may be freely delegated unless the parties agree otherwise.

    The FDCPA requires that a debt collector (note that original creditors are not usually debt collectors under the statute) inform the consumer of his right to dispute the validity of a debt within 30 days of the first debt collection notice.

    If the consumer disputes the validity of the debt, a debt collector must confirm the validity of the debt before pursuing further debt collection activities.

    Third party debt collectors, whether asignees or agents, obtain judgements all the time.

    There is no affirmative defense to a collection action involving the FDCPA if a debt is valid (if one really owes it).
  2. dave

    dave Well-Known Member

    RE: contract law, the FDCPA, a

    Thanks for this info, PFM. I suspected this was the case.
  3. Marie

    Marie Well-Known Member

    Affirmative defense

    You must not have completely read the previous posts (and the follow-up posts with sources). You also seem to be completely missing the fact that this is a reality. While I also enjoy discussing theory, Iâ??ve actually used the validation letters in January and February of 2000. They worked. I won. The Atlanta Gas Light Collection ceased immediately. My credit reports (all 3) were cleared completely of all trade lines. I sent 3 letters. It took less than 2 months to complete. The trade lines were cleared because 3 different collection supervisors sent Universal Data Forms to Equifax, TransUnion, and Experian requesting full removal. The credit bureaus complied. I still find it interesting that I got 3 letters from 3 different supervisors confirming the deletion. My letters must have been passed around a bit in Atlanta.

    To date, the matter is still closed. All my reports are still clean as of my January 3, 2001 copies.

    I posted this method, theory, case logic, links, letters, and even people elsewhere who can validate and verify not only the method but also the results. Iâ??ve even given the names of several other people on the Yahoo credit-repair board who can be of great assistance. Iâ??m guessing you just havenâ??t had the time to research this and thatâ??s why youâ??re still confused.

    Now, since you're still stuck, let me see how I can help. Iâ??ll hit the high points and then I suggest that you go back and thoroughly read the links I provided.

    Your post is really messy. Are you talking about the original creditor, or about an assignment to a collection agency? You go back and forth on this. Iâ??ll just take it logically. That will be easier.

    You wouldnâ??t ask for a validation from an Original Creditor because you actually DID hand sign an agreement with them. You could ask for Original Creditor for a copy of a signed agreement if, for example, there was an issue of fraud (you didnâ??t enter into any agreement with the Original Creditor at all). But this is a completely different issue from a FDCPA validation from a Collection Agency.

    The FDCPA typically doesnâ??t apply to Original Creditors, but who cares. This method of validation concerns assignments. An Original Creditor wouldnâ??t initially assign the debt to themselves! So an assigned debt would be with a firm other than the Original Creditor. A Collection Agency would have an account because of an assignment of a debt by an Original Creditor to the Collection Agency. Pretty basic so far.

    Now the debt is at the Collection Agency (because of the assignment by the Original Creditor to the Collection Agency). You have the right to request a validation (and to add to this, if you fail to request validation initially, you donâ??t waive your rights). I posted the link to the FDCPA (809) entitled â??VALIDATIONâ?.

    We seem to agree that if you request legal validation and the Collection Agency doesnâ??t comply, or tries to bluff their way through it without the proper documentation, youâ??ve won. Without validation the Collection Agency must stop all collection activities on the debt. If the debt isnâ??t validated it doesnâ??t legally exist.

    Hereâ??s a quote directly from the 2nd letter I sent to the Collection Agency:

    â??you have not supplied the demanded proof of the alleged debt, under the doctrine of estoppel by silence, Engelhardt v. Gravens (Mo) 281 SW 715, 719, I may presume that no proof of the alleged debt, nor therefore any such debt, in fact exists.

    Case law is a beautiful thing! By daisy chaining statutes: logic tells us that if the debt legally does not exist, then the credit bureau information reported by the Collection Agency is erroneous. The FCRA requires complete removal of the trade line, or penalties and damages may be awarded to the debtor (or the now non-debtor!).

    Meaning: When the Collection Agency canâ??t or doesnâ??t validate the debt then you donâ??t owe anything to the Collection Agency and itâ??s off your credit reports or you can sue for damages from the Collection Agency. A debtor wins at this stage mostly because the Collection Agency is either incompetent or disorganized.

    Now to affirmative defense:

    You wrote â??There is no affirmative defense to a collection action involving the FDCPA if a debt is valid (if one really owes it).â?

    There are really 2 different issues here, so Iâ??ll take the easier one first. â??if one really owes itâ? is a totally different thing than â??legally validatedâ?. If youâ??re talking ethics, and youâ??re saying you â??really owe itâ?, well, then your statement is false. Letâ??s say you â??really owe itâ? but the collection agency canâ??t validate. Then even though you â??really oweâ? it, legally you donâ??t because of lack of validation. If the Collection Agency doesnâ??t do the following:

    Please evidence your authorization under 15 USC 1692(e) and 15 USC 1692(f) in this alleged matter.
    What is your authorization of law for your collection of information?
    What is your authorization of law for your collection of this alleged debt?
    Please evidence your authorization to do business or operate in this state.
    Please evidence proof of the alleged debt, including specifically the alleged contract or other instrument bearing my signature.

    Then via the FDCPA, the debt and collection agency are history.

    PFM seems to agree that FDCPA validation works with Collection Agencies. I think your real intent here is to say: You understand that the validation letters work if you send them and the Collection Agency canâ??t fully comply.

    But, PFM thinks that if you request validation from the Collection Agency and they truly provide all the legal documents to prove the FDCPA validation then a debtor might be stuck dealing with the assignment and might lose a lawsuit if the Collection Agency could validate the debt properly.

    What heâ??s really addressing is a very technical issue on an Affirmative Defense (if you get sued by a Collection Agency, what are your affirmative defenses against the Collection Agency).

    (ok, for everyone else out there this may be a bit confusing: but I really want to address what I think he really wants to know) and I want to be very precise here (itâ??s a technicality, but a lot of what we do hinges on the smallest technicalities being correct). I think heâ??s questioning whether not answering the validation is an affirmative defense.

    Case law tells us that even though a creditor can legally assign an account to a collector, it is not enforceable unless the debtor agrees to the assignment. The collector has no standing to collect without your consent.

    In order for you to be obligated to any assignee, you must have derived some benefit from the assignee, or paid a bill to them, or signed a new written agreement (a novation). You must agree to the assignment or it is not enforceable.

    With regards to an affirmative defense, I know of these (but there may be more): Accord and satisfaction, statute of frauds, and failure of consideration. These defenses are to be used when the "debtor" is sued by one of the assignees

    The first is "failure of consideration" which means, there is no evidence that an agreement was made, no payment, no exchange of any benefit or detriment to any party.

    The second is "statute of frauds" which means there is no contract in writing between the parties. Because the original creditor never actually named the new collector as an assignee in the credit agreement, the assignee can never be a party to that agreement unless permitted by both the debtor and creditor.

    The third is "accord and satisfaction" which means the debt has been satisfied in full. The analogy is if you owed your neighbor $100 and a friend paid the debt for you and your neighbor accepted $75 in satisfaction of the debt, neither your friend nor your neighbor can sue you for the $25 because they accepted another amount in lieu of the original debt. It can also be called a "novation." This also happens because of an assignment. If a debt is assigned to a third party collector, it is no longer legally enforceable because the creditor has waived his standing or rights to collect. The same applies to the third party collector. No one can put himself in harms way (incur a debt knowingly and voluntarily) and then expect to be awarded damages for his losses.

    Regarding the original creditor: You may not be able to do the same with the original creditors unless you can prove they repudiated the debts or that there was some accord and satisfaction in the form of an insurance claim or write-off, as a consequence of the assignment.

    Of course, you can agree to the Collection Agency assignment either inadvertently or purposefully. For example, if you make an agreement accepting the Collection Agency assignment or if you pay the Collection Agency you have agreed to the assignment. If you agree to the assignment and donâ??t uphold your end of the agreement, then the Collection Agency would have every right to litigate without the debtor being able to use affirmative defenses.

    The debtor might want to agree to the assignment. For example, if a debtor knew that the Collection Agency could provide the validation, the SOL was long from being up, and the Collection Agency was willing to make an equitable settlement, the debtor might want to negotiate a settlement in return for removal of all derogatory credit information. We all know how to do this strategy, and in these circumstances, it could benefit the debtor to accept the assignment.

    Finally, PFM stated: â??Third party debt collectors, whether asignees (SP) or agents, obtain judgements (SP) all the timeâ?.

    Big deal. Of course that happens all the time. Most debtors donâ??t even show up for the hearing either because of improper service (you didnâ??t get the notice you were being sued) or because theyâ??re too intimidated to defend themselves and so they donâ??t show. Then the Creditor gets a default judgment and the debtor is screwed. When the debtors do show up for the hearings rarely do they use any defense and so they lose the case and a judgment is issued. Most debtors donâ??t know their rights and canâ??t afford competent representation. The odds are totally stacked up on the creditor side and you know this! Collection Agencies getting judgments isnâ??t even relevant. Debtors are typically sheep to the slaughter.

    By the way, these validation posts have been interesting. Iâ??m about to be unavailable to post for a while so I think it would help you to read the all the information Iâ??ve posted: the links, the letters. Ask questions on the Yahoo credit-repair board. The Yahoo board members have done the validation process so much that itâ??s second nature. Theyâ??ve also used the affirmative defenses successfully in court. Mine were easy. No validation made it a quick victory. Iâ??ve done my best explaining it. If after youâ??ve done at least some research you still donâ??t get it, please donâ??t feel too stupid. Throughout my MBA I never really understood Calculus. But even though I didn't really understand it, Iâ??m told it works anyway!
  4. dave

    dave Well-Known Member

    RE: Affirmative defense

    Marie said:

    Hereâ??s a quote directly from the 2nd letter I sent to the Collection Agency:

    â??you have not supplied the demanded proof of the alleged debt, under the doctrine of estoppel by silence, Engelhardt v. Gravens (Mo) 281 SW 715, 719, I may presume that no proof of the alleged debt, nor therefore any such debt, in fact exists.


    What year is this case? It appears to be very old judging by the citation you gave. What are the facts? Has the case been overruled? If it is good law, is it good law anywhere other than Missouri? Does the case have anything to do with validating debts under the FDCPA? These are just a few of the questions I have.

    It is hazardous to make sweeeping conclusions based on a short quotation probably out of context and represented here as something the court did not intend. You have to read the entire case to understand the quote--and that's just the beginning because a case might have come along that overruled it.

    If the energy you've put into your posts is any indication, you probably prevailed out of sheer persistence. Their gang of lawyers could have decided that dealing with you was a nightmare so they went searching for more vulnerable prey.

    You can be wrong on the law and still win.
  5. keltex

    keltex Guest

    RE: contract law, the FDCPA, a

    Several questions along this topic-

    So are you saying that assignments can be made without notifying the debtor of the creditors intent to do so?

    And can you give some more info on what constitutes "validation." I have a phone bills that was turned over to collections and is now on my report from 1997. I moved, and paid the last bill that I had received for my final month of residence.

    Then, In Oct of 2000, I get a notice from a collection agency saying I owe MCI an additional 134$. I never received this bill.

    I ask the collection agency to Validate, or show me how they can come up with this.

    COllection agency sends me what is clearly a Word.doc generated printout claiming that I owe 97$. Is a printout, without detail, considered "validation"?

    And then whether a 3rd party collection agent has the ability to act on the behalf of a creditor in this particular situation. I see that my payment to MCI was never credited. So who to dispute this with? The Collection agency? Or the creditor?

    And finally, Marie mentioned the collection agents responsibility to define their abilties to collect in certain states, licensures, etc. What if the collector fails to do this?

    My limited experience with the collection agency involes vague "validation", over 45$ for fees incurred on an alleged bill that I didn't know about for 3 years, and failure to tell me that they are actually a legit business. And they did not provide me with any information on a payment that I had sent, and had record of on this account.

    Any input would be appreciated.
  6. Marie

    Marie Well-Known Member

    Sheer persistence... hmmm.

    You're a sweetheart. I appreciate the compliment. I am tenacious now. I also put a lot of time and energy yesterday into trying to answer all your questions because I do find this interesting. I also am very aware that I haven't argued this in court... so my explanations are somewhat surface level and I know that. Did my best though.

    You have some great questions! I've never researched the case. I thought about it since we have so many lawyers in my family, but when it worked so quickly I didn't really care. I also don't have easy access to Lexis etc, and I didn't really want to tell anyone in my family I was dealing w/ a collecion agency. ( I even vaguely remember thinking "I hope this really is correct" when I sent the letter.. but I guessed it it wasn't they'd tell me to go fly a kite... again). Up until this letter, I'd tried everything and they still came after me and the credit info had stayed... and after the validation process I was free of their bs.

    You make very good points, and frankly, if I still had any collection agency issues I might be willing to really research this with you. It would take some time. I can appreciate you also wanting to better understand this all.

    Fortunately, my days are mostly spent finding better deals w/Prov and Cap1, increasing my limits, and increasing my income! I don't have to look over my shoulder anymore.

    And I'm just not the right source for your continued search :( If I had any more info I promise I really would post it.

    Please accept my request for you to go to look at the other sources I posted.

    Also, on the Yahoo board, a more recent post was from a guy who had BIG success against a collection agency at litigation. He went to court, was there for 1 1/2 hours (I believe), argued the affirmative defenses etc... the collection agency lied and said he'd made arrangements to pay (and thus had agreed to the assignment... which he hadn't) and when all was said and done, he won. But he did have to fight to win. He could likely answer your questions.

    Also, the guy named "due process" seems to really get it. He actually does sell some info regarding this stuff. He has a website...but I can't remember it off the top of my head. Some of his ideas, in my opinion, are a bit too.. well, anti-establishment for my taste (his ideas on taxes, for example)

    But we all know that some of the best ideas come from noncomformists. So, I'd suggest to you that you read all Kielsky's free info, read all the posts (that will keep you busy for a few days... it did me) and then start asking "due process" detailed questions. Since he has dealt with this SO much, he's the subject expert here.

    Hey, please post your conclusions and results here too! We appreciate all your thoughtful posts. Good luck :)

    By the way, I've got to spend more time offline. My family is calling me a geek. :)

    You know, off this subject, you do have me thinking about a tangent to this that I don't have the answer to... maybe you can help me on this one too.

    If an assignment of a debt from original creditor to collection agency was always legally acceptable (I'm talking affirmative defense stuff, not FDCPA validation)... why is it that, in my early days, the collection agencies just sent the debt back to the original creditor. The collection agencies never tried to litigate with me. NEVER. They threatened but did nothing. Was I just lucky? Or was it Citibank? The accounts just kept jumping from one collection agency to another... about every 2 years or so. Maybe it could be that Citibank's hired guns were so aggressive that they got better results scaring people to death than going for judgments. Just thinking out loud. Wondering if there were trends that would learn from and use.

    I only found myself in court with Richs and Macys. They never assigned the debts to collection agencies, and they did eventually go for a judgment against me. In this case, I was screwed to the wall.

    As an aside, I actually benefited from some debts going to collection agencies. Most of my original creditors wouldn't take lump sum settlements. The collection agencies would. For a small debt, it was easier for me to just pay and negotiate credit removal. Course, if I'd known more back in the early 90s, I might have saved a lot more money.

    Well, it's a nice day, and I'm going to go have a life this weekend. :)
  7. Marie

    Marie Well-Known Member

    Keltex, you understand it...

    Forget about the assignments for a while. That's only even an issue if the collection agency tried to sue. We're debating a lot of theory in some of these posts :)

    If you paid it and have a copy of check, I'd also send a letter to MCI with the copy. Call them, if they can fix it quickly you're done. They'll recall the account from the collection agency and you make sure they remove it from your credit reports (if it's there)

    In the last week we've posted a lot about validation.. I put the letters I actually used on validation1, validation2 posts here.

    Just use the search function.

    Word doc is not validation. and they know it. they just hope you don't. You're totally correct about vague validation! They don't have it. Probably don't even have the right to collect in your state.

    I'd also do this if I were you. What are the SOLs on this one? In Ga it's 4 years so the Statute of limitations to even try to collect on this one may be up. So if your pmt wasn't posted and you did owe them... if the SOL is up they can't collect anyway (unless they've gotten a judgment in the interim).

    To the agency: I'd send the validation1 letter, followup with 2, and then removal of credit. 3 letters total. If I were you and they try the vague validation, I'd respond as though you haven't gotten validation... because you haven't.

    Oh, what you do if they don't provide legal validation and they keep trying: 3 things you can do
    1. wait out the SOL and do nothing. Hope noone tries to sue for such a small amount. When they're past the point of collecting, dispute the CRA tradeline and hope the agency doesn't respond. Then it's off your reports too.

    2. Mail copies of your letters (that have been sent certified, return receipt requested) and copies of the green cards showing the collection company got your letters to both the FTC and to the credit bureaus. Copy the FTC letter and put it in with the credit bureau package. Request removal of credit info based on no validation. The debt isn't legally yours. Here's the proof.

    3. Dispute the validity. See what they send you. If you do still owe the debt (the check was lost and never cashed) then you could always do a negotiated settlement w/the collection agency for, say, $30 or so with an agreement in writing that they'll remove the credit info completely. Course, if you don't owe anything, don't pay them a dime.

    You're probably close on the statute of limitations anyway. Most states are 4 years.

    As an aside, does MCI say anything about all this?

    FYI: the info I'm referencing is available online free at: and there's a Yahoo credit-repair group dedicated to discussing these approaches.

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