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COLLECTIONS

You may find it interesting that a lawyer that does a lot of bankruptcy would also assist people with collections. One of the best ways to learn any legal field is to be involved on both sides. Over the years I have assisted people who are the target of collection efforts by helping them file bankruptcy or by finding errors in the way the collection agency has dealt with them. Since I had to learn the law to help debtors, I have been able to use that knowledge to help creditors. Of course, no one can collect an unsecured debt from a person who files bankruptcy. In that case you may receive some payment from the bankruptcy trustee. But where the debtor is collectable, I can help you.

The old saying that you cannot get blood from a turnip is often the rule that governs collections. If the person you are trying to collect from has no wages, you can't garnish his wages. If the person's only income is Social Security you can't take any of it. If the person only has property that is exempt from execution under state law (most household goods, for example, are exempt), you can't force the sale of his property to enforce your judgment. In such instances you just aren't going to get paid. That is why it is important that you limit your exposure to potential losses by being careful who you lend money to or extend credit to. Another old saying bears following. An ounce of prevention is worth a pound of cure.

Keep in mind also that you will never get all your money if you have to have someone help you collect the debt. Whoever is helping you will charge you for the help. You can only hope to come out better than if you did nothing at all.

There are a lot of steps and a lot of traps in doing collection work. Generally you will first try to contact the debtor by letter and demand payment. A lawyer or collection agency doing this must comply with the provisions of the Fair Debt Collection Practices Act (FDCPA), a federal law that protects debtors from abusive collection efforts. Under that law the following activity is forbidden:

Harassment.

Debt collectors may not harass, oppress, or abuse anyone or any third parties they contact. For example, debt collectors may not:

  • use threats of violence or harm;
  • publish a list of consumers who refuse to pay their debts (except to a credit bureau);
  • use obscene or profane language; or
  • repeatedly use the telephone to annoy someone;
  • False statements.

    Debt collectors may not use any false statements when collecting a debt. For example, debt collectors may not:

  • falsely imply that they are attorneys or government representatives;
  • falsely imply that you have committed a crime;
  • falsely represent that they operate or work for a credit bureau;
  • misrepresent the amount of your debt;
  • indicate that papers being sent to you are legal forms when they are not; or
  • indicate that papers being sent to you are not legal forms when they are.
  • Debt collectors also may not state that:

  • you will be arrested if you do not pay your debt;
  • they will seize, garnish, attach, or sell your property or wages,
  • unless the collection agency or creditor intends to do so, and it is
  • legal to do so; or
  • actions, such as a lawsuit, will be taken against you, which legally may not be taken, or which they do not intend to take.
  • Debt collectors may not:

  • give false credit information about you to anyone, including a credit bureau;
  • send you anything that looks like an official document from a court or government agency when it is not; or
  • use a false name.
  • Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:
  • collect any amount greater than your debt, unless your state law permits such a charge;
  • deposit a post-dated check prematurely;
  • use deception to make you accept collect calls or pay for telegrams;
  • take or threaten to take your property unless this can be done legally; or
  • contact you by postcard.
  • If the letters or phone calls don't work, you must take the person to court. To do that you must know where the person who owes you the money (the debtor) is so he can be served with a copy of the complaint. Once the person is served it is usually not difficult to get a judgment, but it can be difficult if you don't have proper documentation of the debt and any payments that were made on it. Good records are very important. Trying to get the judgment is governed by the Ohio Rules of Civil Procedure. Once you get a judgment you have to try to collect it.

    Where you are trying to get money from someone who is employed you can file for garnishment of his or her wages. That must be done in compliance with the Ohio Rules of Civil Procedure and a federal law that limits the amount of money that can be taken from a person's wages. If that person already has a garnishment or is paying child support, the amount taken from his pay already may prevent you from getting anything - at least for a while. Your claim for garnishment will be put in line behind any other claims for garnishment filed against the same person, and all of you will take turns getting the garnishment money on a six month rotation. The number of people in the rotation will diminish as some of the creditors get paid off, so you could go from getting paid six months out of eighteen to six months out of twelve to just you getting paid.

    Where the person you are trying to collect from is self-employed or for other reasons you cannot use wage garnishment, you may ask for an execution and sale of certain of his or her property. A lot of what the average person owns cannot be taken and sold to satisfy a debt. That is true of most household goods, a modest vehicle, tools of the person's trade, about $20,000 of net equity in his home, his pension, cash value in life insurance policies that are payable to a dependent, and a lot of other items. Many people truly are turnips and you simply can't collect what they owe you. You can be worse off for trying to do anything to collect the money because you will have to pay for court costs when you sue or schedule a debtor's examination. You only get that money back if the person is eventually made to pay.

    Sometimes a waiting game will work. You can get a judgment then ask for a certificate of judgment and file it in the county where the person lives. If the person owns real estate the judgment becomes a lien against that real estate. He will not be able to sell the real estate or refinance it without paying your judgment. The ultimate waiting game is waiting the person to die. You could then file a claim against the person's estate. An estate cannot claim the exemptions a living person can claim.

    As you can see, there are a lot of ways to try to collect the money that is owed to you and a lot of ways that your efforts can fail. That is why it is important that you get good advice before you decide what to do. I can help you with that advice and with the legal work involved if you decide you want to pursue the matter.

    To learn more, visit our Fayette office!
    104 East Main Street P.O. Box 40
    Fayette, OH 43521
    (419) 237-2661

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    Ohio Lawyer