Legal Terms Debt Collection

Here are some legal terms relating to debt collection. These terms are oversimplified for general use and understanding.

A Line of Crap:The idea that a Cabinet full of billionaires and bankers will act in the best interest of consumers and their families.

Conditional Confession of Judgment: A term I made up. See Judgment. We use conditional confessions of judgments in a win/win settlement, where a consumer enters into a payment plan, usually on a reduced amount, but signs a confession of judgment for the full amount. The collector dismisses the lawsuit without prejudice. The confession of judgment is not filed unless the consumer fails to make payment. In this settlement, the consumer avoids a credit ruining judgment if she pays, the creditor gets paid or gets a judgment without having to litigate. My clients have a very high rate of completing such payment plans. We may be able to negotiate such a settlement for you.  Call or E-mail us.

Default:  You got sued, served and did nothing. The judge ruled for your creditor without you even putting up a fight. You now have a judgment against you. With few exceptions, you should never default on a collection lawsuit. Bankruptcy or a judgment proof person may be exceptions.

Dismissal With Prejudice: The case is over. It cannot be refiled. If you were sued on a debt, you are out of it.

Dismissal Without Prejudice:  The Court case is dismissed, but the creditor could re-file  against you. Commonly used in settlements where the consumer is making payments on the debt. See Conditional Confession of Judgment.

Electronic Filing: In Iowa court documents generally need to be filed electronically unless the court makes an exception for you. Exceptions are said to be limited. While electronic filing certainly is here to stay and has allowed us to represent clients for less money and much more efficiently, there can be no doubt they system has also been an obstacle for many consumers trying to defend themselves in collection lawsuits. Judgments have been entered against collection defendants solely because of their inability to navigate the system. Contact us for help. It is a little surprising, however, that more consideration is not given to struggling defendants who may not know the difference between a .pdf, .rtf, or .std.  I attended training sessions when the switch to electronic filing was being made and witnessed lawyers and judges who were also stumbling through hours of training to figure out how to use the system.

Financial Hardship:  Nearly all consumers who default on credit cards do so for one of the following reasons: (1) Job loss or loss of income; (2) Illness or disability; (3) Divorce; (4) Death and loss of an income. All of these are compounded as the credit card bank then charges default interest rates and fees and the credit card debt explodes, making it difficult or impossible to pay.

Garnishment: A legal procedure used to take money from a bank account or to take your wages. Definitely not good. Garnishment can result in frozen accounts, checks bouncing with more charges, bills not being paid or a pay check way short of the funds you need to live on. If you are sued, for the love of God call us and avoid this. If you are garnished, we might be able to provide information, but at that point the collector knows where you work, how much you make and whether you are collectable. There can be defenses to bank garnishments. Once a case is at the garnishment stage, we generally do not take the case.

Judgment: A court ruling potentially giving a creditor the legal right to take your money or your assets. A judgment can remain on your credit report for seven years. In Iowa, it can be enforced for 20 years. A judgment can lead to wage or bank garnishments. Many credit card judgments, however, are NOT liens on your homestead even though banks, creditors and title companies would like you to believe it is. Call or e-mail us for a free consultation if a lender tells you a credit card or similar judgment has to be paid to sell your home.

Judgment Proof:  You are broke and have no income or exempt assets or income. Very good actually if you get sued–not so good for paying bills. If you are judgment proof and getting harassed by collectors, give us a call. We can generally get the calls stopped. keep in mind for younger people or college students, you may be judgment proof now but may not be five or ten years from now and a judgment is still collectable.

Lawsuit Abuse: A term promoted by insurance companies, big business and rich people who attempt to equate the extremely rare frivolous lawsuit filed by an individual with the legitimate lawsuits filed against them. The purposes is to discredit the legitimate lawsuit. The term apparently does not include the thousands of unsubstantiated and unwarranted lawsuits filed by businesses against consumers. Personally, I can’t imagine continuing to turn down hundreds of meritorious lawsuits I don’t have time to do just to file a frivolous lawsuit I will lose money on.

Pro Se:  A person representing himself. In district court debt collection cases, generally not a good idea. A lot better than doing nothing though. Actually, not always.

Right to Cure Notice: This is not an ordinary collection letter. Once a consumer received a right to cure notice form a collection law firm, most likely a lawsuit will soon follow. A right to cure notice is NOT a settlement offer, consumers routinely think the cure amount listed in the cure notice is the amount required to settle the debt. That amount just cures the default. Monthly payments need to be resumed to pay the debt IN FULL. It rarely makes sense to send the cure amount. Call us instead.

Tax Cuts and Jobs Act:  Smoke and mirrors. You will pay more in taxes, large corporations and billionaires pay less.

And here are some interesting numbers:

3:1:  The ratio of Financial Industry lobbyists to members of Congress.

0:535: The ratio of your lobbyists to members of Congress

60: The number of members on the House Financial Services Committee-the largest committee in Congress. Why?  Because banks make huge campaign contributions to the members of the committee that regulates banks.

Ever wonder why you are charged 30 percent compound interest on your credit card? I don’t. I know why. Perhaps ACDC could help connect the dots: “Come on, come on, listen to the money talk. Money Talks!”

And while we are connecting song lyrics to the plight of consumers, let’s see some number related to what I call the Edgar Winter “free ride.

700 billion dollars: The amount of taxpayer funds allocated to the TARP program to bail out banks and other business with their “financial hardship” (largely caused by their own behavior).

0 dollars: The amount of taxpayer funds allocated to you to assist you with your financial hardship. In fact, you may have been sent a 1099 to pay tax on any cancelled debt (although there are legal ways to avoid doing that). Talk about kicking you while you are down.

11.2 billion dollars:  Amazon’s 2018 profit.

0 dollars:  Amazons 2018 federal income tax burden.

Less than a billion dollars:  The amount of money you made in 2018.

More than 0 dollars:  The amount of income tax you paid for 2018.

Less than 2 cents on the dollar:  What the debt buyer paid for the debt it sued you on for the full amount of the debt.

A few more numbers to digest:

More than 90 percent: The percentage of consumers that default on credit card or auto deficiency collection lawsuits in Iowa

Close to 100 percent:  The percentage of Iowa consumers who had credible defenses to those lawsuits and who could have avoided a judgment.

0:  The number of times I have regretted helping a consumer pay less money to a credit card bank.

Finally, the answer to the questions I regularly get: How can they do this to me? There out to be a law against that.  Please see above.