The last thing someone with a legal issue wants to deal with is an attorney who doesn’t know their head from a hole in the ground. But that happens far too often in the bankruptcy and collections world. Many attorneys that are great at helping businesses with other legal matters make huge mistakes when they decide to dabble in collections.
In 2018, Wisconsin Lawyers Mutual Insurance Co. (WILMIC), one of the leading legal malpractice insurers in our state, paid out more in bankruptcy and collections cases than it did in cases tied to any other area of law. This is because bankruptcy and collections cases are easy to mess up if you don’t know what you are doing, and even small mistakes are expensive to fix.
A Compliance Nightmare
From a creditor’s perspective, bankruptcy and collections cases are tricky because complying with the Fair Debt Collections Practices Act (FDCPA) is not easy. The FDCPA is designed to protect debtors, and it does a great job of it. Creditors must follow very specific rules on disclosures, communication with debtors, and timing, or face serious consequences.
Working with an attorney who isn’t familiar with the FDCPA puts you at risk of not just losing the opportunity to collect on your debts, but of being sued by the debtor.
The FDCPA is a strict liability statute that allows for fee-shifting. This means mistakes are easy for debtors to prove and expensive for creditors to fix.
Strict liability means liability attaches even when a creditor doesn’t know or intend for their action (or inaction) to violate the law. All the debtor has to show is that the creditor did something wrong. It doesn’t matter if the creditor, or the creditor’s attorney, thought what they were doing was fine.
When a creditor or a creditor’s attorney makes a mistake that violates the FDCPA, the debtor can then sue the creditor. If the debtor wins, which they almost certainly will because the FDCPA is a strict liability statute, then the creditor will have to pay damages or a fine, and pay the debtor’s attorney’s fees.
If the creditor was trying to collect from multiple debtors, a debtor’s rights attorney may file a class action lawsuit against the creditor. Such lawsuits are devastatingly expensive for all but the largest companies.
Don’t Hire Someone Who Dabbles In Debt
If you need to collect debts that you are owed, or a debtor you work with has filed for bankruptcy, you need to work with an experienced attorney to protect yourself from easy but expensive mistakes. Working with an attorney who has handled other business disputes for you is not a good idea.
At Hanson & Payne LLC we work with both debtors and creditors so we are intimately familiar with the ins and outs of the FDCPA and the bankruptcy courts. Financial disputes are all we do, so we know how to take care of them quickly and efficiently so you can get back to taking care of business.