Credit Buster: Tucson Accountant Katz Shows Debtors How to Fight Back and Collect Damages and Attorney Fees

Editor’s Note: I don’t know him but I am going to get to know him. It sounds like you should too. Every  time the servicer violates the law, you have a  remedy. Katz is leading the charge collecting damages and there are usually awards of attorneys fees. I would add that if they don’t pay the judgment you can levy on an asset you know about — like your own mortgage. Think about it.

Servicers usually try to get out of being called a debt collector even if they put it on their demand letters and other correspondence. The way they do it is by saying they are not collecting the debt for another, they are collecting it for themselves. That’s fine. It brings us right back to proving that the identity of the creditor is being hidden from the court. Just because they say it doesn’t make it so. And while they can say it and that is evidence if the Judge allows it in, it cannot be presumed from an affidavit or some other document. You have every right to challenge that assertion and to ask for discovery demanding answers to questions (interrogatories) and demanding documents (requests to produce.)
April 23, 2010

Learning How to Fight the Collector

By ANDREW MARTIN

Among debt collectors, Steven Katz is known as a “credit terrorist.” For years, he has run what he calls the Steven Katz School of Bill Collector Education, otherwise known as the “credit terrorist training camp.”

Mr. Katz, a 58-year-old accountant in suburban Tucson, spends his free time schooling debtors on the finer points of consumer protection law to help them turn the tables on debt collectors. On occasion, he thumbs his own nose at them too.

“How many times can I sue you? Let me count the ways,” he wrote under his pseudonym, Dr. Tax, in a March posting on Inside ARM, a debt collectors’ Web site.

A former bill collector himself, Mr. Katz rebelled after a debt buyer damaged his credit score with what he says was a bogus bill. Mr. Katz sued, and in 2003 he collected his first damage award, a $1,000 check that he now keeps framed behind his desk.

“The bill collectors, when they call, make you feel like the only option you have is to lay down and play dead. That’s not true,” said Mr. Katz said, who does not charge for his advice. “Nothing validates this more than getting a check.”

Call this movement revenge of the (alleged) deadbeats. Even as collectors try to recoup debts from millions of Americans struggling to pay their bills, a small but growing number of lawyers and consumers are fighting back against what they describe as harassment, unscrupulous practices — and, most important to their litigiousness, violations of the Fair Debt Collection Practices Act.

In fact, 8,287 federal lawsuits were filed citing violations of the act in 2009, a 60 percent rise over the previous year, according to WebRecon, a site that tracks collection-related litigation and the most litigious consumers and lawyers on behalf of debt collectors.

On Wednesday, the Supreme Court made it even easier for consumers to use the courts to fight debt collectors, ruling that collectors cannot be shielded from suits by claiming they made a mistake in interpreting the law.

When a consumer stops paying a bill, creditors often try to collect on their own for a few months. In many instances, the creditor hires another company to collect the debt. In other cases, they may dispose of the debt by selling it to a debt buyer for a steep discount.

Debt collectors and debt buyers are the targets of litigious consumers, since the debt collection law primarily applies to third-party collectors.

Peter Barry, a Minneapolis trial lawyer, is so bullish on the future of debt collection litigation that he holds several “boot camps” each year to share his secrets with other lawyers who want in on the action. If the debtor wins a court case under the act, the debt collector must pay the lawyer’s fees.

The next boot camp is being held in early May in San Francisco, at a cost of $2,495 a person for two and a half days of instruction.

“I can’t sue every illegal debt collector in America, although I’d like to try,” Mr. Barry said.

Mr. Katz can also claim some credit for the increase in lawsuits. For six years, he has run a free Web site called Debtorboards.com, where people share tips on topics like keeping a paper trail and recording calls from collectors.

He said the site received two million hits in 2009, a 60 percent increase over the previous year.

“Debtorboards is geared to help people use the laws as they are on the books as both a shield and a sword,” said Mr. Katz, who says he has won $36,000 from his own litigation against collection agencies. (Since many of the settlements are confidential, it is difficult to prove the claims of Mr. Katz and others).

Of course, debt collectors are hardly pleased with the litigation trend.

Rozanne M. Andersen, chief executive of ACA International, a trade association for the debt collection industry, said she was “extremely concerned” about the increase in lawsuits, which she said cost her industry hundreds of millions of dollars a year. She said much of the increase was the result of ambiguous language in the Fair Debt Collection Act.

Debt collectors are required, for example, to identify themselves on a voice message left for a consumer, she said. But they are also prohibited from telling a third party — including someone who might overhear a phone message — about a consumer’s debt.

“We are between a rock and a hard place,” Ms. Andersen said.

Ms. Andersen said she had little patience for Web sites that encouraged consumers to thwart debt collectors.

“We believe those types of Web sites are encouraging people to not take responsibility for just debt,” she said.

Jack Gordon, who runs the fee-based WebRecon site, said it was no wonder lawsuits were increasing, because consumers were being bombarded with ads from lawyers when they searched online for information on debt collection. He said the proliferation of discussion sites like Mr. Katz’s had, to a lesser extent, also contributed to the trend.

On the boards, he said, “There’s a lot of hot air, a lot of people who overinflate their accomplishments.”

Regardless, Mr. Gordon’s database has become a badge of honor among the devotees of Debtorboards.com. As Brandon Scroggin, a 37-year-old from Little Rock, Ark., puts it, “That’s one list I’m a proud card-carrying member of.”

Mr. Scroggin, who provides price estimates at a body shop, said he was the type of person who refused to be taken advantage of, even for petty offenses. For instance, years ago, he said he joined in the class-action suit against the pop group Milli Vanilli, accused of lip synching, and collected a $1.25 check.

After a messy divorce, Mr. Scroggin was stuck with a $7,000 bill that he said belonged to his ex-wife. Instead of paying it, he began researching the law and stumbled on Debtorboards.com.

Armed with lessons he learned on the site, he demanded proof of the debt from the collection agency, and the calls stopped. But two and a half years later, they started up again so he sued the collection agency, National Loan Recoveries, for failing to provide proof of the debt, among other things.

The case was settled in 2008. The terms were confidential, but he says he never paid National Loan a dime. “Let’s just say I’m a very happy person,” he said. A lawyer for National Loan, Kathryn Bridges, did not return messages seeking comment.

Mr. Katz said his Web site was not intended to help people avoid paying legitimate debts. But if they do so, so be it — he feels no need to apologize.

He said Congress gave consumers certain rights, and he is simply making people aware of them, sometimes colorfully.

As Mr. Katz says at the bottom of each Dr. Tax posting, “A telephone in the hands of a collector is like a crowbar — it can be used to pry a mouth open wide enough to insert a foot.”

Barbara Thompson, 46, of Atlanta, said she challenged $11,000 in credit card debt using online research about collection laws. She does not dispute the debts but reasons that the credit card company wrote off her charges long ago. By her account, she owes the credit card company, not the debt collector.

“The credit card company, they sell it off, they charge it off, it’s just business as usual,” she said, adding, “I’m adamant about not paying a collection agency.”

11 Responses

  1. Time for a new Deal just as they did in the 1930s.

  2. Hello,

    Thanks for your this great post. Which is providing information about Debtors, How to Fight Back and Collect Damages and Attorney Fees

  3. Debtorboards went down as a result of a massive DOS attack, at times generating 12,000 hits per second. No web host can survive that and our Host, sensing the attack, shut down the site to protect it.

    DB is back up in a much more secure site now.

  4. Been a member at DB for a long time. Settled for 8500 this year so far and abolished about 4k worth of debt from existence without a 1099-c.

    FlyingIFR knows what he’s talking about, and the community there is highly intelligent and the combat is evolving all the time. Watch out for arbitration being the next big train ride, especially since NAF shut down it’s consumer cases.

    Oh, and aside from the FDCPA, the FCRA, UCC, and TCPA also come in handy if you decide to sue a debt collector for breaking the law.

    Thank whatever deity may be out there for sites like these.

    BofA is next on the list of “You’re about to get sued!”

    Again, thanks for the inspiration guys.

  5. I could use a lawyer who wants to sue the collection companies working for CITI. They keep calling me about a 2nd MTG debt from several of my foreclosed homes. I have told them they can’t collect on those in AZ and sent them proof of the foreclosures. But they continue to harass me. Any attorney who wants to handle these on several of my properties contact me at mtgbob1@aol.com

  6. Perhaps these individuals can educate people on how to get detailed information of the recent “write-off’s” by the various tax payer bailed out banks… this would be a hugh help to combat the assault on the American homeowner.

    Just a thought, but perhaps like minded people could pitch in to pay for a subscription to the same data base that “Fab” & Friends used to gleam through loan pools to create their “synthetic” CDO’s.

    Knowledge is power!

  7. THIS IS ANOTHER GREAT WEBSITE FOR CONSUMER LAW.

    http://shop.consumerlaw.org/

  8. It looks like his site has been shutdown and his youtube videos have been stalled. Any further contact info?

    Teresa Moore

  9. Credit is created out of thin air, so there really is no such thing as a “just debt.”. Go Katz!

  10. bank of americfraud is a modern day Osama Bin Laden

  11. Looks like someone is pissed about debtorboards.com!

    http://catastrophist.wordpress.com/2010/04/28/debtorboards-attacked-shut-down-ny-times-credit-terrorist/

    As of today, Debtorboards is offline, and there are messages at Yahoo Answers — apparently written by Debtorboards admins — saying that the site was targeted by denial-of-service attacks and has been temporarily shut down “as a security precaution”:

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