South Carolina BAR Journal
SC Lawyer, November 2012, #3.
Be a Confident Collection Lawyer
South Carolina LawyerNovember 2012Be a Confident Collection LawyerBy Michael H. SartipIn 1986, the Boston Celtics were playing the Seattle Supersonics in a televised NBA game. With 13 seconds left in the game, the game was tied and the Celtics called a timeout with the ball. During the time out, Larry Bird walks into the huddle and tells Coach K.C. Jones and his teammates to give him the ball and get out of his way. After the time out, Larry Bird walks over to Seattle's Xavier McDaniel, who is guarding him, and tells him he's taking the last shot, exactly where he'll receive the ball and the spot he'll shoot from, then says he'll bury the shot and leave no time on the clock. McDaniel tells Bird he'll be waiting. Bird gets the ball in the exact spot, makes the move and buries the shot with McDaniel's hand in his face and leaving no time on the clock. In a later interview, Larry Bird indicated he was very confident he would make the shot. He played to his strengths and avoided his limitations.
From time to time, I get calls on collection matters, and it is apparent that lawyers lack confidence, because they are confused about what is allowed and what is not allowed under the law. In the collections practice, lack of knowledge is a formula for failure. The law governing consumer debt collections, the Fair Debt Collection Practices Act (FDCPA), creates a minefield of liability. For those who collect debts, there is an inherent risk of substantial civil liability if you do not fully understand the FDCPA. Even the slightest mistakes are a basis for consumer lawsuits. While damages are limited to $1,000 per violation of the FDCPA, the real damages come in the form of attorneys' fees, which are recoverable. Second, FDCPA claims are exemptions in many attorney malpractice policies. Finally, if a debt collector sends multiple letters with the same mistaken language, class action lawsuits are permitted with money for damages up to $500,000, or one percent of the collector's net worth, whichever amount is lower. The good news for lawyers is that there is a one-year statute of limitations. The one-year statute of limitations begins to run when a collection letter is mailed or an improper legal action is filed.
The purpose of this article is to give some pointers and highlight some pitfalls to avoid rather than give a comprehensive overview of the FDCPA. This article does not focus on post judgment collections and does not address collection issues under the S.C. Consumer Protection Code. You can avoid considerable risk by reading the full text of the FDCPA set forth at the Federal Trade Commission's website at www.ftc.gov/os/statutes/fdcpa/ fdcpact.shtm and following a few simple rules.
Do you fall within the definition of a debt collector?
15 U.S.C. 1692a(6) provides that the term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another" (2006). In...