First, take a deep breath.  It’s not the end of the world, and you’re not alone.  Given the tough economic time, thousands of consumers are facing lawsuits, especially from credit card companies.  View it as just another step in a debt collector’s attempt to collect.

Second, ask yourself if you owe the debt.  For all legal obligations there is a limited time period during which you can be sued.  For written contracts, like credit card debt, it is within four years of your last payment.  If a debt collector sues you on an expired debt,  you may have a lawsuit against them.

Third, determine the date by which you must respond to the lawsuit.  You generally have 30 days after a lawsuit is served on you to file a written response with the court.  If you do not know when it was served on you, look at the handwritten date  on the bottom of the summons.  That is the very earliest the lawsuit could have been served on you, so go by that date.

Fourth, decide whether or not you should respond to the lawsuit.  If you do not respond,  you will automatically lose and the debt collector can then obtain a judgment and begin garnishing your wages and/or levying your bank account.  It is not recommended that you ignore a lawsuit and do nothing, unless you plan to file a bankruptcy and your bankruptcy attorney advises you otherwise. 

By responding to the lawsuit it will at least prevent the debt collector from obtaining a judgment against you and give you the opportunity to settle or mediate the debt with the debt collector through the court system.  When I say respond to a lawsuit, I don’t mean write a letter.  To properly respond to a lawsuit you must file an answer in proper form with the court.  You can get the proper form from the Superior Court or off of the Judicial Council website.  http://www.courts.ca.gov/

Fifth, take this opportunity to consider the options available to resolve all of your financial challenges. We tend to put off dealing  with our problems, and only address them one by one as they need immediate attention   The lawsuit has captured our immediate attention on this one debt, but how many more are right around the corner.  This is the time to ask for help from a consumer law attorney and  lay out all your problems on the table.  At Delta Law Group we offer a free consultation to review your consumer debt and the options available to resolve it.  Give us a call.  We can help. 

        You have the right to be treated with dignity and respect when contacted by a debt collector.  They are regulated by both federal and state laws. The Fair Debt Collection Practices Act (“FDCPA”) is the federal law which states what a debt collector may do when collecting a debt.  The Rosenthal Act is the California state law which regulates debt collectors and is very similar to the federal law. 

        Debt collectors may not contact you at work if you have told them your employer prohibits it and cannot contact you if you are represented by an attorney.   They cannot tell others about your debts, like your family, neighbors, or coworker, and boss.  They cannot embarrass you or humiliate you to get you to pay a debt or use obscene or profane language or lie to you.   Simply put, debt collectors may not violate any law when collecting a debt.  So if a debt collector is “robo” dialing your cell phone and you have not given consent to be contacted on that number, it is violating the Telephone Consumer Protection Act.   As a consumer, you can file a lawsuit against any debt collector who violates either the federal or state law.  You can be awarded actual damages and up to $1,000 penalty and your attorney’s fees and costs.  As a consumer, you should protect yourself from abusive practices of debt collectors and exercise your rights under the FDCPA and the Rosenthal Act.  If you or anyone you know has been subject to any harassment by debt collectors, contact Delta Law Group.  We don’t get paid unless we recover for you.

           Some homeowners are receiving written offers from the lenders on their second mortgages. Their loans have been approved for participation in a principal forgiveness program offered as a result of the Department of Justice and State Attorney General’s national settlement with major banks.

            If a homeowner who receives an offer does not act, acceptance is automatic and the principal balance is forgiven.  While having the principal balance on your second mortgage forgiven is definitely good news, it may carry tax ramifications.   As explained in the offer, homeowners will have to report the amount of cancelled principal debt to the Internal Revenue Service. Some homeowners will have to pay income tax on the forgiven principal balance.  As the offers explain further, there are certain exemptions that may apply to avoid taxation. 

           If you or someone you know receives one of these letters, they should act quickly upon receipt of this letter to determine the tax effects.  Steps to avoid taxation may need to be taken before the offer becomes final within 30 days of its date.

            Delta Law Group is offering free consultations to homeowners who receive these offers to explore whether there may be tax liability and options to avoid the tax liability.

       To add insult to injury, debt collectors are trying to collect on second mortgages after homeowners have already lost their homes in foreclosure.   Depending upon the facts, many homeowners have no personal liability for these second mortgages.   During the Great Depression, the California Legislature passed a number of laws to protect homeowners from lenders.  One of these laws provide that, if a lender lends money on a home purchase, one to four units, owner occupied, the lender’s sole remedy on default of the borrower is to foreclose on the home,  and the borrower has no personal liability on the loan.

       Many debt collectors ignore these laws and threaten and harass unsuspecting homeowners into paying money they have no obligation to pay.   Chase has been particularly aggressive.  There are laws to protect consumers.  At the Federal level we have the Fair Debt Collection Practices Act and California has the Rosenthal Act.  Both acts provide that a debt collector who wrongfully attempts to collect may be liable to the consumer for a penalty of up to $1,000 actual damages and attorney’s fees. 

 If you or someone you know has been abused by a debt collector, call Delta Law Group for a FREE CONSULTATION. We sue abusive debt collectors!