Licensing requirements

Questioner: Katia

Subject: Law Firm Licensing Requirements
Question:
I have a case with a debt collection law firm. The law firm first acted as a collection agency by sending out a dunning letter and then proceeded to file suit after validating. I keep reading according to my state's laws and Federal Law that this firm is acting as a collection agency within the law firm and according to my state's law, the firm must be licensed as a collection agency. My lawyer, however, says I should settle for the full claim (including all fees). If this firm is supposed to be licensed as a collection agency, shouldn't they be unable to collect on this account since they are not licensed?

Answer:

That is a really dumb lawyer you have there. Be that as it may, you need to check with your state consumer protection division but in most states lawyers are specifically excluded from such license requirements. Of course, there is a catch to that because if the law firm is not licensed to practice law in your state then I tend to think they would have to be licensed in your state. More importantly, have they complied with all aspects of FDCPA? Here is a starter list of 15 things that debt collectors cannot do.
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The Fair Debt Collection Practices Act, FDCPA, dictates how debt collectors can act when collecting a debt from you. These are things a debt collector can't do. If you need to reference the law, citations have been provided.
1. Ask you to pay more than you owe
The collector cannot misrepresent the amount you owe. [15 USC 1692e] § 807(2)(a)

2. Ask you to pay interest, fees, or expenses that are not allowed by law. The collector can't add on any extra fees that your original credit or loan agreement doesn't allow. [15 USC 1692f] § 808(1)

3. Call repeatedly or continuously
The FDCPA considers repeat calls as harassment. [15 USC 1692d] § 806(5)

|4. Use obscene, profane, or abusive language
Using this kind of language is considered harassment. [15 USC 1692d] § 806(2)

5. Call before 8:00 am or after 9:00 pm
Calls during these times are considered harassment. [15 USC 1692c] § 805(a)(1)

6. Call at times the collector knew or should know are inconvenient
Calls at these times are considered harassment. [15 USC 1692c] § 805(a)(1)

7. Use or threaten to use violence if you don't pay the debt
Collectors can't threaten violence against you. [15 USC 1692d] § 806(1)

8. Threaten action they cannot or will not take
Collectors can't threaten to sue or file charges against you, garnish wages, take property, cause job loss, or ruin your credit when the collector cannot or does not intend to take the action. [15 USC 1692e] § 807(5)

9. Illegally inform a third party about your alleged debt
Unless you have expressly given permision, collectors are not allowed to inform anyone about your debt except:

* your attorney
* the creditor
* the creditor's attorney
* a credit reporting agency your spouse
* your parent (if you are a minor)

[15 USC 1692c] § 805(b)

10. Repeatedly call a third party to get your location information
The collector can only contact a third party once unless it has reason to believe the information previously provided is false. [15 USC 1692b] § 804(1)

11. Contact you at work knowing your employer doesn't approve
A collector is not allowed to contact you at work if you’ve let them know your employer doesn’t approve of these calls. [15 USC 1692c] § 805(a)(3)

12. Fail to send a written debt validation notice
Within five days of the collector's initial communication, it must send you a notice include the amount of the debt, name of the creditor, and notice of your right to dispute the debt within 30 days. [15 USC 1692g] § 809(a)

13. Ignore your written request to verify the debt and continue to collect
A collector can't continue to collect on a debt after you've made a written request to verify the debt as long as the request was made within 30 days of the collector's written notice. [15 USC 1692g] § 809(b)

14. Continue to collect on the debt before providing verification
After receiving your written dispute, the collector must stop collecting on the debt until you have receieved verification. [15 USC 1692g] § 809(b)

15. Continue collection attempts after receiving a cease communication notice
If you make a written request for the collector to cease communication, it can only contact you one more time, via mail to let you know one of the following: that further efforts to collect the debt are terminated, that certain actions may be taken by the collector, or that the collector is definitely going to take certain actions. [15 USC 1692c] § 805(c)
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That's a pretty broad list of potential violations and it is virtually impossible for a debt collector (lawyers are 3rd party debt collectors) to collect or attempt to collect a debt without running afoul of the law. When they do break the law the best bet is to take them to federal court where the fact that you owe them money has no bearing on the outcome. You can win the case that way if they broke the law which they most likely did on multiple occasions.

They might very well get a judgment in local court but they will be more than willing to drop that and pay you some good damages, expenses and maybe more to keep from going before a federal judge and jury where they have no chance of winning.

For instance, I have a situation where an elderly lady lost her case in local court then the lawyer attempted to garnish her SSI. They cannot do that according to item #8 so they have probably violated. I say probably because all they have done so far is send her a question sheet wanting to know all about her finances. That in itself is not a violation so she has to wait until they actually make some move to grab SSI money so she can see what they actually try to grab. Asking questions isn't a violation.

They didn't actually threaten to take money from her. While I realize that filing an action against her might seem like a threat to take her SSI they might only put a lien on her property and wait until she passes on. So until they actually make some palpable threat or make a move to go after her SSI money she doesn't have a solid case. At least not on that grounds but she does have a possible cause of action on another grounds. Combine multiple causes of action and then a solid case can be built.

So if you want to win then you need to think in terms of finding their violations and go after them in federal court where you can win.
You don't need a lawyer in either local or federal court and you will never see the inside of a federal courtroom.

Your lawyer says you should just pay up in full? With friends like that who needs enemies? What have you done to respond to the case? Nothing yet? I'm not a lawyer so obviously I can't give you legal advice but I sure know what I would do if I were sued for a debt. First thing I would do is file a denial as my response then I'd prepare my demand for admissions and send both of them to the plaintiff's attorney and we would go from there. You should have done that long ago instead of getting some lawyer who is only going to sell you down the river.