Five Rules for Fair Debt Collection as a Young Lawyer and The Importance of Careful Review of Affidavits
Recently, I was asked to assess a debt collection case filed by a large hospital against a person a limited financial means. The problem with these cases are many. From the attorney’s perspective, the potential client is being sued because they are poor. Ostensibly, this means your bill isn’t getting paid either, and rightly so.
Rule #1: Never bill a client who seeks your help fighting a debt collection action based on their inability to pay a creditor. Many lawyer’s know the feeling of mind numbing, spirit breaking, soul crushing debt. Don’t be the straw that breaks the camel’s back. If the potential client’s #1 problem is debt, don’t contribute to that problem.
Rule #2: Agree to review the complaint, affidavits, and other pleadings for free while being clear that you can offer advice, but it is very unlikely you will be able to take on the case.
Recently, I reviewed a case for a person being sued by a big hospital for past medical bills totaling less than $800.00. It took me less than 10 minutes to review the pleadings. Upon reading the creditor’s affidavit setting out the accounts allegedly due to the hospital, I noticed that 1 account was printed on the affidavit and 2 had been written in pen. Checking the dates it became clear that the two accounts written in pen were for debts which occurred after the affidavit was signed and notarized. This is more common than it should be and runs corollary to the robo-signing fiasco of the mortgage crisis. In any event, an altered affidavit of accounts is a clear violation of the Fair Debt Collection practices act entitling the debtor up to $1,000.00 in damages (or actual damages but it is rare that actual damages will ever exceed $1,000.00), plus attorney’s fees.
Rule #3: Include a counterclaim under the forum state’s version of the FDCA. Most states have acts similar to the Federal Statute and many have acts with greater protections for debtors. Perhaps because Federal case law is more clear and damages likely greater under the Federal act, many attorneys ignore the state version. This is a mistake. State FDCA statutes often have protections not available under the Federal act and also provide for attorney’s fees. Lastly, many state’s rules of civil procedure “frown” upon attorneys who fail to read the pleadings they submit, thus providing the opposing party with attorney’s fees in addition to the fees available under the Federal or State act.
Rule #4: If there is a potential violation, however small, of either Federal or state act (some states make just about anything a violation) and if the debtor’s potential exposure to judgment is less than the statutory fees awarded under FDCA and state law, try the case or prepare like you expect the case to go to trial. On the consumer debtor side, these are not complex nor work intensive cases to try. As a new lawyer, it should take you no more than an hour to draft an answer with counterclaims. Likewise, for new lawyers practicing as solos and in small firms, any chance you have to get into a courtroom is priceless. These types of cases are made better by the fact that if you drop the ball, your potential liability is very limited and it is extremely unlikely the unhappy debtor will pay a lawyer for sue you for malpractice.
Rule #5: Remember that your client very likely does owe the creditor money. When the creditor offers to eat the loss early on, don’t push it. Your client will think you by extolling your virtues as an attorney and in all likelihood, know someone who needs a lawyer that is willing to pay up front. But most importantly, the look on the face of client when you tell them they don’t have to worry about paying that “x” amount of dollars anymore is worth the one hour your spent on their case.
Getting back to the hospital case, shortly after filing the answer, opposing counsel mailed over a stipulation of dismissal with prejudice.