DEBT COLLECTION PERILS

If the basis of the collection action is a business debt, then you may avoid the formal consumer warning, which reads: NOTICE:  This is an attempt to collect a debt.  Any information obtained will be used for that purpose.  Unless, within thirty (30) days of your receipt of this notice, you dispute the validity of this debt, or any portion thereof, the debt will be assumed to be valid.  If you notify this office in writing within the thirty-day period that the debt, or any portion thereof, is disputed, we will obtain verification of the basis of the debt or a copy of the judgment upon which the debt is based, if any, and will mail a copy of such verification or judgment to you. When this wording is a preface to a lawsuit, another warning should say: NOTICE:  Disputing the validity of this debt will not change the time provided by the summons to answer this lawsuit. If you do not answer this complaint within time, a judgment may be taken against you independent of any verification of debt. If there is any question about if a debt is business or consumer, it is best to including the formal wording. Doing so will not change a business debt into a consumer one butt will be a step toward insuring that consumer protection laws are not violated. Consumer remedies for violation of consumer protection laws include Fair Debt Collections counterclaims and Unfair Consumer Practices Act counterclaims.  However, a business defending against a debt collection lawsuit may be limited to a simple denial unless the alleged debt is based on some type of fraud. In any event, if a debt is disputed, it’s better to defend or settle the lawsuit before judgment. Otherwise, the result may be post-judgment debt enforcement.  If you are the target of collections, reviewing your options with a knowledgeable attorney early-on may be worthwhile. Likewise, if you are a business collecting a debt, make sure that your debt collector will not get you tied-up in a debt collection counterclaim.