Frequently Asked Questions About Debt Defense

Creditors often include in a debt collection lawsuit a complaint for “unjust enrichment.” Often, this is brought as a secondary, alternative theory of liability along with a breach of contract claim. At its essence, an unjust enrichment theory alleges that a creditor has provided a benefit to a consumer, the that the consumer is aware of and received the benefit, and that it would be unfair for the consumer to retain the benefit without repaying the creditor back.

In other words, if a creditor can produce monthly statements showing that a consumer routinely used a credit card without paying for the credit obtained, they might ask that the court order the credit to be paid back under an unjust enrichment theory. If so, this liability would be based upon an implied contract, and would exist completely distinct from a breach of contract claim itself.

Creditors often include in a debt collection lawsuit a complaint for “account stated.” Often, this is brought as a secondary, alternative theory of liability along with a breach of contract claim. At its essence, an account stated theory alleges that a creditor: (1) sent a statement demanding payment on an account, and (2) that the consumer assented to or agreed that that balance was owed. Massachusetts courts have routinely held that the necessary assent or agreement can be based on either actions or inactions.

In other words, if you receive a credit card statement requesting a balance owed, a court could presume that you have accepted liability in the full amount requested simply because you didn’t dispute it within a reasonable time. If so, this assumed agreement forms a new theory of liability for an implied contract, which would exist completely distinct from a breach of contract claim itself.

Within five days after first contacting you, federal and state law requires that a debt collector send you a written notice. This notice must contain at least the following information: 

• The amount you owe
• The name of the creditor
• Notice that if you don’t dispute the debt in 30 days, it will be assumed valid by the debt collector. 
• Notice of your right to request validation of the debt.

Requesting validation of the debt is crucial. It serves two purposes: 

First, it requires the debt collector to provide proof that the debt is actually yours. This includes proof of the debt itself, and proof of assignment if the account is now owned by someone else. Even if the original account was yours, that doesn't automatically mean that the new company is entitled to collect it. Often, debt collectors will provide documentation that you might not otherwise have, which can be helpful in determining your options and/or defending a lawsuit (if necessary). 

Second, and perhaps more importantly, the debt collector is prohibited from taking any further collection actions against you until it provides validation of the debt. There is no ‘due date’ for a response, so this prohibition applies forever until the debt is validated.

Because of this, it is important to always dispute the debt and request validation, if appropriate. A validation request must be in writing and sent within 30 days after you receive the debt collector's original letter. A sample template is included with Brine Consumer Law's free downloadable report Stop Drowning in Debt - FAQs About Massachusetts Consumer Debt Collections & Bankruptcy. 

Finally, even if you don't dispute the debt (or didn't timely request validation) it is important to pay attention to everything debt collectors do. Keep every letter you get, and every voicemail you receive. For every phone call you get, write down who you spoke with and what they said as soon as possible. A sample call log template is also included with Brine Consumer Law's free downloadable report Stop Drowning in Debt - FAQs About Massachusetts Consumer Debt Collections & Bankruptcy.   There are significant restrictions on what collectors and legally do and say. By keeping thorough notes, you may uncover debt collection violations that could be helpful.

If you're being harassed by debt collectors, contact Brine Consumer Law today to see how we may be able to help. 

When you are behind in your payments on your credit cards and other debts, it can seem impossible to see how to bring your accounts current. On top of that, you most likely have the stress of having creditors and collection agencies hound you by sending you frequent threatening letters or emails and calling you—sometimes multiple times in a day.

You may know hiring a debt settlement attorney could help you develop a plan to get out of debt, but may not see a way to pay him. However, you may find that hiring an experienced debt settlement attorney is more manageable than you think.

How Do Debt Settlement Attorneys Charge Their Attorney Fees?

Different debt settlement attorneys could charge their fees in a variety of ways. When you first meet with an attorney, you should discuss how he would charge attorney fees in your case. If you decide to hire an attorney, he and you should enter into a written agreement that states how you will be charged for his services. Some of the ways that debt settlement attorneys charge attorney fees include:

• An hourly rate.
• A flat fee that is based on the number of creditors that you have.
• Percentage of your debt to be negotiated.
• Percentage of your savings in your settlements.

How You Can Pay Your Debt Settlement Attorney

When trying to figure out how you can pay a debt settlement attorney and whether it is worth it to do so, it is important to consider how a debt settlement attorney can help you because your attorney can actually save you money. Some of the ways that he can assist you include:

• Stopping abusive, threatening calls and other collection practices by debt collectors and creditors.
• Evaluating your financial situation to determine whether you can pay your debts or need to file for bankruptcy.
• Negotiating payment of your debts—sometimes for significantly less than you owe.
• Asserting your legal rights to compensation for illegal debt collection practices.
• Defending you in court if you are sued and raising defenses that could result in the dismissal of the lawsuit or reduction in what you owe.

How can you practically afford a debt settlement attorney? Here are some ways to do so:

• Keep in mind that a debt settlement attorney will understand the challenges you face in paying his fees when you are struggling to pay the debt you already owe. He will work to develop a payment plan that meets your needs and resources. Brine Consumer Law handles many debt defense cases on a low-cost flat fee that many of our clients have found affordable.
• Many debt settlement attorneys offer a free initial consultation. You should take advantage of this opportunity to meet with your top potential attorneys to discuss how they think they can help you, the fees that they will charge, and how they expect you to pay them.
• You may be able to work out a monthly payment plan to pay the attorney fees you owe. Some attorneys will agree to this or delay payment until they work out the settlement of your accounts for you.
• You may be able to pay the attorney fees from your savings in payments to creditors if your attorney is able to negotiate a settlement for significantly less than what you owe, reduces your interest rate, and reduces or eliminates late fees and other charges.

Given the long-term financial and legal benefits you will obtain, it will be worth the effort to figure out how to hire an experienced attorney who can help you to work with your creditors. At Brine Consumer Law, unlike other attorneys, we will look at all of your options to help you pick the one that is right for you.

Do you need help reducing your debt or stopping threatening collection actions by your creditors? Christopher Brine is committed to advising you all of your options and often offers a low-cost flat fee agreement. Call Brine Consumer Law today to schedule your free consultation to learn how we can assist you.

If you are like many people, you received thousands of dollars in student loans while you were in college. The monthly payments can sometimes be as high as a person’s rent or mortgage payment. It can be very challenging to pay every month, especially if you are also facing other financial hardships. However, defaulting on a student loan—especially a federal student loan—can result in your facing serious financial consequences.

What Are the Consequences of Defaulting on a Student Loan?

You may become delinquent in your student loan payments for a number of reasons, such as unemployment, low pay, lack of raises, and other financial obligations. You are delinquent when you miss one payment, and this is different than being in default. Once you start paying a student loan late, it is often hard to bring the loan current.

When a loan is considered in default will be determined by the type of loan you have and the terms of the loan agreement. Some federal student loans are generally not considered in default until the debtor has missed nine payments. However, a private student loan and some federal loans can be considered in default after you miss just one payment.

Some of the consequences of default on a student loan can be severe, such as:

• Accelerating the loan. Once you are in default of your student loan, the lender can accelerate the loan, which means the entire amount of the loan is now due. You could also owe additional amounts due to interest, late fees, and other expenses being added to the loan balance.
• Reporting to major credit reporting agencies. When your student loan is approximately 90 days past due, the lender will report your delinquency to the three major credit reporting agencies—Equifax, Experian, and TransUnion. The credit reporting agencies will report your delinquency on your credit report, which may limit your ability to obtain any credit and result in higher interest rates from lenders.
• Sending your account to a collection agency. If the lender cannot get you to bring your loan current, it could refer your loan to a collection agency to attempt to collect the debt. Unfortunately, a collection agency may engage in threatening and abusive practices when attempting to collect a student loan.
• Garnishing your wages. If you default on a federal student loan, your wages can be garnished without a court order. The government or guaranty agency can garnish up to 15 percent of your disposable income.
• Taking your income tax refund and federal benefits. If you are in default of a federal student loan, your federal income tax refund and up to 15 percent of your Social Security retirement and disability benefits can be taken without a court order to apply to your loan.
• Suing you. Both the federal government and private lenders could sue you to obtain a judgment against you if you default in your student loan payments. Unlike other debts, there is no statute of limitations for suing you for student loans.

Let Brine Consumer Law Help You With Your Defaulted Student Loan

Unfortunately, you cannot discharge a student loan in bankruptcy. However, if you are in default of your student loan, you still have options to avoid the harsh consequences you could face. Let Brine Consumer Law help you explore all your options and help you to negotiate a payment plan, enter into an income-based repayment program or other federal program, or consolidate your loans with the federal government or your lender. To discuss your situation and legal options, call our office to schedule a free consultation.

Credit card companies will often sell defaulted debt to another company who will then try to collect it at a profit. These companies are referred to as “debt buyers” and are considered debt collectors under state and federal collection laws.

In Worcester and Middlesex counties, Midland Funding LLC is one of the most active debt buyers. In 2015, Midland filed over 1,300 lawsuits in Worcester District Court alone.

The Consumer Financial Protection Bureau recently took action against Midland (and its parent and affiliated companies) for violations of consumer protection laws. Among other things, it found that they often filed lawsuits without knowing if they could substantiate the debt in court. They have also filed numerous cases where the debt was past the applicable statute of limitations. Most disturbingly, the CFPB found that they have obtained tens of thousands of judgments and settlements from consumers based on misleading affidavits it provided. A complete copy of the Consent Order is available here.

If you are served with notice of a lawsuit filed against you by Midland, you only have a short period of time to respond. If it was filed in district or superior court, you will only have 20 days to respond. If it was filed in small claims court, then your trial date should appear on the paperwork you received.

If you don’t respond to the lawsuit, then Midland can obtain a judgment against you by default. It can then try to collect that judgment by placing a lien on your property, garnishing wages, attaching your bank account, or other methods.

Attorney Brine has substantial experience in cases with Midland and other debt buyers. Phone consultations at Brine Consumer Law are free, so contact us today to discuss your case.