Explain A Lawsuit Against A Debt Collector That Typically Settles Quickly

Explain A Lawsuit Against A Debt Collector That Typically Settles Quickly


Explain A Lawsuit Against A Debt Collector That Typically Settles QuicklyWe are often asked this question or some variation on it such as “will my case against an abusive debt collector settle quickly or will I have to go to trial?”

Great question.

The truth is that nobody can tell whether your Fair Debt Collection Practices Act (FDCPA) case against a debt collector will settle quickly or not.  Remember it takes two to settle.

Here are a couple of quick examples.

We have had six figure cases settle quickly with no discovery being done. We have had cases that should have settled for a five or ten thousand dollars go to trial and cost the collectors hundreds of thousands of dollars.

But having said that there are some patterns and general “rules of thumb” that we can share with you.

First, the more clear cut the violation, the more likely the defendant debt collector will want to settle with you.

For example if you have a voicemail message from a collector that does not contain the required disclosures that the call is from a debt collector and the call is an attempt to collect a debt, then the collector really has no defense.

If your neighbor has a voicemail where the collector is clearly looking for you and reveals details about the debt to your neighbor, then hard to argue there was no violation.

Same is true sometimes of debt collectors who get a dispute letter from you but don’t mark your credit report as being “disputed” — not much defense so they typically will settle quickly.

If they fight, it just adds to the expense of the case (as they will owe attorney fees to your lawyer) that they know they will lose.

When we sue them for this, they again know they have no good defense so it often prompts them to approach us about settling the case as they know these can be explosive cases at trial.  Now understand that there are idiots who run these firms and sometimes they let their own pride and arrogance blind them and they believe they are bullet proof.

So our job is to make their pride cost them if they choose not to settle in a clear cut case.

Second, the debt collector will want to see if your lawyer is familiar and experienced in litigating these types of cases.

There is almost a “hazing” process in FDCPA (and even more so in Fair Credit Reporting Act cases) where some of the defense lawyers (particularly national counsel) will be less than candid with your lawyer.

Less than candid about what?

About what happened.

The amount of insurance the collector has.

About the FDCPA law, etc.

If your lawyer is new to this area of the law, this garbage can happen.

This is not right but they want to test or prove whether or not your lawyer knows the law, knows the industry, and can respond to bogus arguments.

So if your lawyer is an experienced FDCPA attorney, sometimes you can avoid all of this nonsense and get right to a settlement number.

Third, the debt collector will want to know what your attorney’s hourly rate is so it can calculate the risk in fighting a legitimate violation.

This is tied in with the second point but is slightly different.

Remember that if a collector loses a case under the FDCPA, they are normally responsible for paying your lawyer an amount equal to the number of hours reasonably worked on the case times your lawyer’s hourly rate.

Take two identical cases with identically skilled lawyers but one lawyer has a rate of $150 per hour and the other has a rate of $400 per hour.

It makes a big difference.

Our hourly rate, for example, is at least $400 an hour.

This is what people pay us who hire us on an hourly basis pay and often times it is more.

So in the last case we tried our fees were around $125,000 just in hourly time.

Now obviously even with our hourly rate we have collectors that don’t want to settle so understand that statement above — “it takes two to settle” — is a true statement.

We can’t make abusive collectors settle.

But . . . we can only put them in a position where it is dangerous for them to not settle a case where they know they have violated the law.

Finally, and perhaps most importantly, is your attitude towards settlement.

Sometimes prospective clients come to us and view a lawsuit as their chance to make some money or pay off debt.

We don’t take these people as clients.

The real reason to come to us and to become a client of ours is to stop the abusive debt collector from violating your rights.  Whether that is in harassing calls or bogus credit reporting or frivolous collection suits, etc.  And any money you get out of it is a nice bonus but is not the reason to bring the suit.

So if your attitude is you want a fair compensation then you greatly increase the chance of settling your case. The more reasonable you are, the more pressure it puts on the collector to settle.  And the more willing you are to go to trial, the more the feeling is communicated to the debt collector.  That makes them nervous.

That you are not afraid to go to trial.

And when you combine that with being reasonable in your settlement demand, this puts them in a dangerous position.

Because if it doesn’t settle for a reasonable amount, then the judge will not be sympathetic to reducing the fee award.  Not in a case where you were willing to settle for a reasonable amount early on.

In a trial we had no settlement offer from the defendant.  So it had no hope of any judge cutting our $125,000 in fees.  Especially as it could have settled the case for under $10,000 early on.

Final thoughts — we can’t tell you with certainty if your case will settle early on.

But what we can tell you is that the clearer the violation, the more experienced your lawyer, the higher your lawyer’s approved hourly rate is, and the more reasonable your expectations are then you greatly increase the likelihood of settling your case early on.

Do remember this . . . every case that we file we do so with the expectation that the case will try.

We prepare every case for trial.

Now we know most cases don’t try — instead they settle.

But if we have the attitude of being willing to go to trial.  And you do as well, then we increase the chances of the case settling for a fair and reasonable amount.

Contact us if you would like us to help you think through your situation dealing with an abusive debt collector.

You can call us at 205-879-2447 or fill out a contact form and we’ll get right back with you.

Look forward to chatting with you!

John Watts

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