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  • FDCPA and Foreclosure Defense

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    Using the FDCPA as a Defense to Foreclosure

    While most people may have heard of the Fair Debt Collection Practices Act, they might not be aware that it may apply to foreclosure cases in addition to abusive debt collection tactics by debt collectors to collect other types of debts. Courts are divided on whether or not the act is available to people who are going through foreclosure, but in jurisdictions where it is accepted, it may be used as a defense to foreclosure, filed as a counterclaim or filed in a separate action.

    Explaining the FDCPA

    The FDCPA prohibits debt collectors from engaging in certain activities in their attempts to collect debts. Under the federal statute, debt collectors are defined as parties whose business regularly involves collecting debts, including collection agencies, attorneys whose practice includes regularly collecting debts and companies that buy debts and try to collect on them. Debt collectors are prohibited from doing the following:
    → Continuing communication with debtors after the debtors have sent written notices from the debtors to not be contacted anymore or of their refusal to pay the debts
    → Contacting debtors who have attorneys when the collectors know that they are represented
    → Contacting debtors after the debtors have sent requests in writing to verify the debts' existence and amounts
    → Trying to collect amounts that are not justified
    → Making false reports to consumer credit reports

    California Inheritance Law

    If only it were as easy as reading a will (if it exists) and carrying out what is specified inside. However, California inheritance law is nuanced and incredibly specific. Often times, people will attempt to go through the probate process alone and without legal counsel, only to mire themselves in a pile of mistakes, clerical errors, missing forms, and huge (but avoidable) taxes and fees. As with most legal matters, it is best to leave the probate proceedings to an experienced and qualified inheritance attorney, rather than attempting to complete the process yourself.

    How the FDCPA might interact with the foreclosure process

    It is common for mortgage lenders to hire attorneys or other entities to pursue foreclosure proceedings on their behalf. Courts are divided on whether or not the FDCPA covers the entities and attorneys who are representing mortgage lenders in pursuit of foreclosures. Jurisdictions that do not believe that the FDCPA applies to foreclosures point to the fact that the attorneys and entities are trying to enforce secured interests, which the courts believe are different than other types of debts.

    Jurisdictions that do believe that the FDCPA extends to foreclosure proceedings believe that attorneys and entities who pursue foreclosure proceedings while also making requests for payment of the debts are covered under the law. These collection actions may include seeking amounts to cure the defaults, deficiencies and collection costs.

    Asserting FDCPA Foreclosure Defenses

    An FDCPA foreclosure defense may be asserted in the foreclosure proceeding as a setoff action. For every violation of the FDCPA that is found, the lender may be ordered to pay a fine of up to $1,000, the actual damages caused to the debtor and the debtor's attorney fees and legal costs.

    Using the FDCPA to stop a foreclosure

    If the attorney or entity has committed multiple violations, it is possible that the fines and damages could add up enough to bring the balance owed to the lender down to zero in the best case scenarios. In cases in which the fines and damages do not exceed the amount that the mortgage is in default, the balances may still be substantially reduced.

    Filing actions with FDCPA claims

    Since FDCPA claims are considered to be separate matters from the foreclosure proceedings, filing actions with FDCPA claims as separate cases are allowed. When a person chooses to file an FDCPA claim separately, he or she may be able to demand a jury trial, which would allow the jury to determine the damages amounts that should be paid to the debtors if they find that violations were committed.

    Foreclosure defense is a complex area of the law. The FDCPA may be available to some people who are facing foreclosure. It is important for people to keep copies of all written communications they receive from entities and attorneys who are trying to collect on the balances that they owe and to log all of the calls that they receive that are in violation of the law. A foreclosure defense attorney may be able to assert the FDCPA to stop a foreclosure or as a setoff to reduce the amount owed or to negate a deficiency.

    Meet Your Attorney

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    Michael Avanesian

    Michael Avanesian specializes in the field of corporate restructuring and litigation. Mr. Avanesian has a wide range of experience in Chapter 11 bankruptcy cases and has represented corporate and individual debtors, secured creditors, unsecured creditors, lessors, lessees, trustees and other interested parties in bankruptcy cases and related litigation.

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