Automated lawsuits?

[Brian]

There's an article in the latest AARP Bulletin warning that debt collectors
or buyers are waiting until interest and fees have accumulated to a large
level, then filing "automated lawsuits." Is this possible? How can you
file an automated lawsuit? And I thought that you were not liable for
interest and penalties unless your initial contract with the lender stated
that you were.

[d***@practical.org]

Post by Brian
There's an article in the latest AARP Bulletin warning that debt collectors
or buyers are waiting until interest and fees have accumulated to a large
level, then filing "automated lawsuits." Is this possible? How can you
file an automated lawsuit?

What is an "automated lawsuit"? That a computer created the
documents which it transmitted to the defendant's computer and that a
decision in the lawsuit is generated by a computer? That a computer
was used in whole or in part to draft the summons and complaint, for
example by the use of a computerized database and word processing
program? That in addition to defendant being served with a summons
and complaint by some method authorized by law, the filing of the then
needed papers with the court was accomplished by electronic
computerized means because the court in question provides for such
electronic document filing? Other?

Most routine collection lawsuits commenced and prosecuted
against individual consumers on behalf of credit card companies or
other mass-retail providers of credit are instituted with the aid of
some degree of automation.

Post by Brian
And I thought that you were not liable for
interest and penalties unless your initial contract with the lender stated
that you were.

You might also have mentioned an award against defendant of
plaintiff's reasonably incurred attorneys fees if the underlying
contract sued upon provides for that relief if the plaintiff prevails.

But generally speaking, what you thought about this subject is
correct although with the qualification that, whether or not the
parties' contract sued upon provides for the payment of interest, a
money judgment, if granted, ordinarily will provide that the defendant
pay therein stated statutory costs to reimburse the plaintiff for
filing fees and related court fees and also will bear interest at the
legislatively prescribed judgement rate in the jurisdiction.

[Greegor]

Collection agencies have gotten into trouble because
one way to stave them off is to pay small amounts
(like $5) every month. It pisses them off and they
will often refuse to take the small payments,
insisting that you have to make a larger payment
each month.

If you are in a state where it's legal to record them
saying this, and they refuse the smaller payment
you can beat them up badly in court, some
debtors have voided the entire debt over the violation.

A large portion of bank forclosures dragged into
court and approved by court COULD have been
stopped because the bank or their reps LACKED
all of the proper documentation.

Foreclosure people have apparently generated
lot of fraudulent documentation, fraudulently
signing so many things that they are called
"ROBO-signatures".

Some of those are being reversed.
Often the banks can NOT prove what bank
actually even OWNS the Mortgage!

If they're stupid enough to file a ROBO
or automated lawsuit, then there is a
very real chance that their documentation
is faulty. Get your attorney to VIGOROUSLY
examine and cross examine the documentation
for bogus signatures and bogus documents.

I am not an attorney.
I am also not a rutabaga.

[d***@practical.org]

Post by Greegor
Collection agencies have gotten into trouble because
one way to stave them off is to pay small amounts
(like $5) every month. It pisses them off and they
will often refuse to take the small payments,
insisting that you have to make a larger payment
each month.

It may piss off whoever is the them you have in mind.

But, while it is at least possible that there are a few special case
exceptions, it is highly likely that someone facing a claim of credit
card or comparable default and especially anyone being sued on such a
claim who acts on the mistaken belief that what you say above is
correct will become unhappy with the result.

Post by Greegor
If you are in a state where it's legal to record them
saying this, and they refuse the smaller payment
you can beat them up badly in court, some
debtors have voided the entire debt over the violation.

Can you quote from any actual judicial decision or even cite a case
that confirms what you say here? I'd bet Big Buck$ that you can't.

Generally speaking, someone who has borrowed and is in default of
repaying $x does not have a defense if he tenders a payment of only
$(x-y) UNLESS the creditor has agreed to accept a partial payment.

Your apparent implicitly made assumption that personal credit card and
similar personal consumer credit providing agreements have not been
drafted in a manner to implement this result and that courts called
upon to determine disputes about these matters do not rule in
conformity with such contracts in cases in which the creditor has
complied with such contracts is seriously mistaken.

Post by Greegor
A large portion of bank forclosures dragged into
court and approved by court COULD have been
stopped because the bank or their reps LACKED
all of the proper documentation.

This is so for residential mortgages sought to be closed upon in many
places in this country since +/- 2007.

Post by Greegor
Foreclosure people have apparently generated
lot of fraudulent documentation, fraudulently
signing so many things that they are called
"ROBO-signatures".

Not 'apparently' and, instead, actually, as numerous judges in various
parts of the country have ruled and as numerous well done studies have
also shown.

Post by Greegor
Some of those are being reversed.
Often the banks can NOT prove what bank
actually even OWNS the Mortgage!

DITTO.

Post by Greegor
If they're stupid enough to file a ROBO
or automated lawsuit, then there is a
very real chance that their documentation
is faulty. Get your attorney to VIGOROUSLY
examine and cross examine the documentation
for bogus signatures and bogus documents.

This is an ordinarily good suggestion although it is one that raises
the related question, Will the borrower facing foreclosure have the
economic resources to retain knowledgeable and capable representation?

Post by Greegor
I am not an attorney.

Good for you.

[McGyver]

Post by Greegor
Collection agencies have gotten into trouble because
one way to stave them off is to pay small amounts
(like $5) every month. It pisses them off and they
will often refuse to take the small payments,
insisting that you have to make a larger payment
each month.

Unwise. The $5 payment tells the collection agency that:

1. the debtor is alive,

2. the debtor acknowledges that the debt exists,

3. the address for the debtor in the agency's records is correct,

4. the debtor has no obvious defense,

5. the debtor has a bank account, with the bank who's name and address
are printed on the debtor's check along with the bank account number, and

6. the debtor can afford to pay $5 per month.

Any one of those revelations could influence the collection agency to not do
what they normally do when the get no response, which is give up and move on
the the next candidate.

The first and best defense against a collection agency is a policy of no
response whatsoever, until either (a) The collection agency files a lawsuit,
or (b) the collection agency does something that violates the Fair Debt
Collection Practices Act and the evidence of the violation is good enough to
make the debtor's attorney says: "Ooooo, goody."

Post by Greegor
If you are in a state where it's legal to record them
saying this, and they refuse the smaller payment
you can beat them up badly in court,

Beat them up how, for instance?

Post by Greegor
some debtors have voided the entire debt over the violation.

What violation? What court case? Show me.

<snip>

This answer must not be relied on as legal advice for the reasons posted
here: http://mcgyverdisclaimer.blogspot.com . And I am not your attorney.

McGyver

[David Jadidian]

Post by Brian
There's an article in the latest AARP Bulletin warning that debt collectors
or buyers are waiting until interest and fees have accumulated to a large
level, then filing "automated lawsuits."  Is this possible?  How can you
file an automated lawsuit?  And I thought that  you were not liable for
interest and penalties unless your initial contract with the lender stated
that you were.

Most credit card debt carries a high default rate of interest. This
is nothing unusual. However, the collection of consumer debt is
heavily regulated by statute and is coming under increasing judicial
scrutiny. Many creditors sell non performing debt in bulk to
investors who purchase the debt at a deep discount. Sometimes, the
investor does not have all the necessary documentation to establish
its case in a court of law. The investor has to prove, among other
things, that it is the owner of the debt and that there was an
underlying agreement between the debtor and the original creditor, the
terms of which have been breached by the debtor. In the case of
foreclosures, there have been some noteworthy cases where judges have
dismissed cases because the investor could not establish that it was
the rightful holder of the mortgage and promissory note. Most lawsuits
based upon defaulted debt are automated. The law firms who specialize
in debt collection often have enormous caseloads, often leading to
mistakes.

David Jadidian
Attorney

[Gordon Burditt]

Post by Brian
There's an article in the latest AARP Bulletin warning that debt collectors

Why are you reading something from an organization dedicated to the interests
of Rich (insurance) People?

Post by Brian
or buyers are waiting until interest and fees have accumulated to a large
level, then filing "automated lawsuits." Is this possible?

Waiting to sue is certainly possible. It may be much more economical to
wait, as many people whose payments are 30 days and 1 second overdue
eventually pay up without much more than a couple of warning letters,
maybe even included on the statement that would have been mailed anyway.

Post by Brian
How can you
file an automated lawsuit?

The paperwork needed to file a lawsuit for a particular reason (like
being delinquent on a credit card) is pretty boilerplate except for
filling in details of particular case, like name, address, amount
due, etc., which is pretty much all in a computer anyway, so it
could be automatically printed, or electronically filed. If you've
heard of mail-merge used to generate personalized advertising, you
can imagine the same thing being used for lawsuits. It may still
take a guy with an 18-wheeler to deliver the sets of paperwork to
the court. Or they could mail them the same way banks mail millions
of statements every month.

I'd like to see more automated lawsuits, such as dialing *86 after
receiving a telemarketing call when you're on the Do Not Call List,
with automated adjudication charging his phone for the fine and
crediting your phone bill for a portion of it.

Post by Brian
And I thought that you were not liable for
interest and penalties unless your initial contract with the lender stated
that you were.

Have you ever heard of a credit card or mortgage that DOESN'T have
interest and late penalties? (Even if you get a "teaser" rate of
0%, it will go up if you miss a payment.) Don't you think a lawyer
who drew up such a contract for a credit card company would be sued
into oblivion by the credit card company for malpractice if he left
such terms out?

Recently the state of Texas and some other states declared a 10-day
moratorium on foreclosures because banks are processing these things
without reading what they are filing, and some mistakes are made.
I believe there are a few cases where foreclosures on houses that
were never mortgaged (wrong address likely), houses *already*
foreclosed on and sold at auction to a new owner, and foreclosures
on mortgages that were current or already paid off showed up in the
court system. Some banks can't even produce the original paperwork
signed by the owner.

[Greegor]

Post by McGyver
Any one of those revelations could influence the collection agency to not do
what they normally do when the get no response, which is give up and move on
the the next candidate.
The first and best defense against a collection agency is a policy of no
response whatsoever, until either (a) The collection agency files a lawsuit,
or (b) the collection agency does something that violates the Fair Debt
Collection Practices Act and the evidence of the violation is good enough to
make the debtor's attorney says: "Ooooo, goody."

My impression is that collection agencies are
more tenacious than that.

The court/gov't had a 10 day moratorium on foreclosures.

It was just announced regarding home foreclosures that:

Several banks have also stopped filing foreclosures.

Bank of America stopped filing foreclosures and
admitted that they've been filing them without
even READING the paperwork!

[McGyver]

Post by Greegor

Post by McGyver
Any one of those revelations could influence the collection agency to not do
what they normally do when the get no response, which is give up and move on
the the next candidate.
The first and best defense against a collection agency is a policy of no
response whatsoever, until either (a) The collection agency files a lawsuit,
or (b) the collection agency does something that violates the Fair Debt
Collection Practices Act and the evidence of the violation is good enough to
make the debtor's attorney says: "Ooooo, goody."

My impression is that collection agencies are
more tenacious than that.

They are tenacious. The can harass a debtor for a long time and in
bothersome ways. But that doesn't cost the debtor any money. Only when
they sue is any money at risk, and the debtor can make a settlement deal
then just as easily as now.

Collection agencies are in a strange business. Their cost is in personnel.
They make money if the personnel can be efficiently used to collect on the
easy cases. They will spend extra personnel hours working a few of the
harder cases if the amount is large enough. But they have a low likelihood
of making money in litigation. Litigation costs a ton if it is necessary to
take it further than the initial filing. And if the defendant doesn't give
up at the initial filing, every mistake by any collection agency personnel
will become a counterclaim for violation of the Fair Debt Collection
Practices Act. And even if the agency defeats the counterclaim because
their work was pure, that defense is costly. And there could be a
settlement that reduces the agency's gain to little more than recovery of
expenses. And there is always the risk of losing. And worst of all, what
does the agency win if they win? A judgment. Then they get the pleasure of
doing their collection agency work again, to collect on the judgment. And
then bankruptcy could clobber any chance of getting paid anything.

It is true that the agencies go after some debtors aggressively, even to the
point of litigation. But they would be out of business if they didn't focus
on the easy collections and drop the difficult ones most of the time.
Difficult collections include (a) any case where there is any defense that
is good enough to get past the ridiculosity filter, (b) debtors who are too
poor to make payments in an amount that would get the debt cleared in a
reasonably short time, like a year or two, and (c) cases where the agency is
not certain that they have identified the right debtor. In those case, the
collection agencies give the case an effort consisting of a couple of
letters and several phone calls. Then they make a decision on whether to
drop it. I can't prove it, but my impression is that the non-easy cases get
dropped almost every time. At least enough of the time to make my first
line of defense good advice. Don't do anything that would get your case
moved from the difficult to the easy category.

With all due respect to your contrary view,

Mc

This answer must not be relied on as legal advice for the reasons posted
here: http://mcgyverdisclaimer.blogspot.com . And I am not your attorney.

McGyver

[Greegor]

Some deadbeat debtors might be real scumbags
but a lot of collection agencies are worse scumbags.

http://en.wikipedia.org/wiki/Collection_agency

Search on: Collection agency abuses

[Greegor]

Now the federal government is talking about
a complete ban on foreclosures!

[Gordon Burditt]

Post by Greegor
Now the federal government is talking about
a complete ban on foreclosures!

That sounds like the equivalent of a complete ban on home mortgages
other than those directly from the government.

It really doesn't have to be that way. Banks can be given great
incentive to file the paperwork properly, and ensure that they don't
file foreclosures in situations where they shouldn't.

Courts could probably make the penalties draconian enough with
existing law if they'd actually enforce laws against paperwork
fraud, which should be a felony.

Require the bank to have a bank officer specifically responsible
for a given foreclosure (if they don't already have this). This
person must sign the paperwork, certify that all the paperwork has
been checked under penalty of death, and be present and handcuffed
at all court hearings involving the foreclosure, so that he is
immediately available to be jailed. If the paperwork is discovered
deficient, or the responsible person misses a court hearing or takes
a bathroom break, the bank has "defaulted" on that foreclosure *and
every other foreclosure in progress that person is responsible for*.
Failure of the responsible person to show up on time due to an Act
of God is presumed to be an intentional act of an employee of the
bank ordered by the bank.

If the bank "defaults" on a foreclosure, several things happen:

- The mortgage is marked "PAID IN FULL". (That's all the mortgages
associated with foreclosures in progress this guy is responsible
for, even ones with accurate paperwork).

- The responsible person goes to jail for the sum of the original
terms of the mortgages for the defaulted foreclosures, or 10 years
minimum. On the third strike, the penalty is death. The death
penalty probably won't happen, as someone who screws up while
handling 20 20-year mortgages probably won't get another bank
officer job when he gets out in 400 years.

- The bank pays a penalty of the sum of the original amounts of the
mortgages, plus 30 years of penalties, interest, and late fees (as
defined by the bank for people paying their mortgage) on that amount,
to the government.

- The bank must remove any black marks on homeowner's credit reports
and put them on its own credit report.

- The bank has to disclose the details of this error on all statements
they send out in the future, and to all people who might open accounts,
and in any future use of their trademarks. This disclosure must be
in type no smaller than the largest type in the notification,
statement, or trademark (Note: this includes trademarks on signs
on buildings, and the type size rules apply).

[Bill Graham]

Post by Gordon Burditt

Post by Greegor
Now the federal government is talking about
a complete ban on foreclosures!

That sounds like the equivalent of a complete ban on home mortgages
other than those directly from the government.
It really doesn't have to be that way. Banks can be given great
incentive to file the paperwork properly, and ensure that they don't
file foreclosures in situations where they shouldn't.
Courts could probably make the penalties draconian enough with
existing law if they'd actually enforce laws against paperwork
fraud, which should be a felony.
Require the bank to have a bank officer specifically responsible
for a given foreclosure (if they don't already have this). This
person must sign the paperwork, certify that all the paperwork has
been checked under penalty of death, and be present and handcuffed
at all court hearings involving the foreclosure, so that he is
immediately available to be jailed. If the paperwork is discovered
deficient, or the responsible person misses a court hearing or takes
a bathroom break, the bank has "defaulted" on that foreclosure *and
every other foreclosure in progress that person is responsible for*.
Failure of the responsible person to show up on time due to an Act
of God is presumed to be an intentional act of an employee of the
bank ordered by the bank.
- The mortgage is marked "PAID IN FULL". (That's all the mortgages
associated with foreclosures in progress this guy is responsible
for, even ones with accurate paperwork).
- The responsible person goes to jail for the sum of the original
terms of the mortgages for the defaulted foreclosures, or 10 years
minimum. On the third strike, the penalty is death. The death
penalty probably won't happen, as someone who screws up while
handling 20 20-year mortgages probably won't get another bank
officer job when he gets out in 400 years.
- The bank pays a penalty of the sum of the original amounts of the
mortgages, plus 30 years of penalties, interest, and late fees (as
defined by the bank for people paying their mortgage) on that amount,
to the government.
- The bank must remove any black marks on homeowner's credit reports
and put them on its own credit report.
- The bank has to disclose the details of this error on all statements
they send out in the future, and to all people who might open accounts,
and in any future use of their trademarks. This disclosure must be
in type no smaller than the largest type in the notification,
statement, or trademark (Note: this includes trademarks on signs
on buildings, and the type size rules apply).

The proper way, of course, is to let banks who give loans to people who
shouldn't have them, go out of business when those people default on the
loan....Then, the banks who don't go out of business will take over those
houses and sell them to people who can afford them....It's called, survival
of the fittest, and it dates from the middle of the 19th century......But it
depends, in order to work, on people like Obama staying the hell out of the
way!

[Gordon Burditt]

Post by Bill Graham
The proper way, of course, is to let banks who give loans to people who
shouldn't have them, go out of business when those people default on the
loan....

That still doesn't mean you allow banks to foreclose on people who
DON'T HAVE a mortgage, people who are current in their payments,
people living in a house that's already been foreclosed upon and
then resold to them, and people who happen to live next to a house
in default. Nor do you allow one bank to foreclose on the mortgage
of another bank. If the banks can't get the paperwork right because
they can't be bothered to read it, they need to go to jail for
trying to steal property they have no business taking.

Post by Bill Graham
Then, the banks who don't go out of business will take over those
houses and sell them to people who can afford them....It's called, survival
of the fittest, and it dates from the middle of the 19th century......But it
depends, in order to work, on people like Obama staying the hell out of the
way!

I don't agree with an outright ban on foreclosures. That's pretty
much a ban on home mortgages, other than those directly from the
government. However, we can't have banks filing foreclosures with
reckless abandon and not even bothering to read the paperwork.
That behavior is just as bad as people taking out a mortgage never
intending to make payments on it. Most of the people in trouble
DID intend to make payments - then they lost their job, or business
went south, or they suddenly had big medical bills.

[Bill Graham]

Post by Gordon Burditt

Post by Bill Graham
The proper way, of course, is to let banks who give loans to people who
shouldn't have them, go out of business when those people default on the
loan....

That still doesn't mean you allow banks to foreclose on people who
DON'T HAVE a mortgage, people who are current in their payments,
people living in a house that's already been foreclosed upon and
then resold to them, and people who happen to live next to a house
in default. Nor do you allow one bank to foreclose on the mortgage
of another bank. If the banks can't get the paperwork right because
they can't be bothered to read it, they need to go to jail for
trying to steal property they have no business taking.

Post by Bill Graham
Then, the banks who don't go out of business will take over those
houses and sell them to people who can afford them....It's called, survival
of the fittest, and it dates from the middle of the 19th century......But it
depends, in order to work, on people like Obama staying the hell out of the
way!

I don't agree with an outright ban on foreclosures. That's pretty
much a ban on home mortgages, other than those directly from the
government. However, we can't have banks filing foreclosures with
reckless abandon and not even bothering to read the paperwork.
That behavior is just as bad as people taking out a mortgage never
intending to make payments on it. Most of the people in trouble
DID intend to make payments - then they lost their job, or business
went south, or they suddenly had big medical bills.

I never said that the banks shouldn't "bother to read the paperwork", and
should foreclose on those who are paying for their loans. All I said was
that if the banks loan money to people who are obviously bad risks, and so
many of them default on their loans, then those banks should go out of
business, and not be supported by government loans. Naturally, on their way
out of business, they will try to sell those loans to the highest bidder,
and whoever wins that bid,will attempt to continue to collect the money from
the occupant of the homes, and, if they don't pay, the new property owners
will have to foreclose on them. That's the nature of the business world.