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Eliminating Debt after a Repossession Using Creditor Harassment Laws

This week’s blog post is a modified transcript of The Crushing Debt Podcast Episode 84 that I wanted to share with you about a success story where we were able to help client eliminate over $21,000 in debt! I’m sharing this episode as a blog post to review the scenario and exactly how we helped this client, in the hopes that we may be able to help you eliminate your debt.

This client was referred to us by another attorney and was being sued for about twenty-one thousand dollars after repossession of a jet ski. After voluntarily turning in the jet ski, the creditor that loaned him the money to buy it sued him for the deficiency (the difference between the amount owed to the loan company and the value of the jet ski).

Unfortunately, the creditor filed a lawsuit in 2014 to collect the deficiency. This client was referred to me in 2017.  His previous attorney did a pretty good job of keeping the lawsuit delayed but he never really pushed it towards a resolution. I’m not making any opinion on whether the previous attorney did a good job or bad job, he just he never really pushed the case towards a resolution. He did, however, do a good job of delaying and stalling the case for about three years.

I met with the client towards the end of the summer in 2017 and reviewed the documents and information. My first instinct was to try to settle the case, so I tried to be a thorn in the side of the opposing attorney to position the case to where we can make an offer to settle, either in a lump sum or some type of payment plan. I typically don’t like settling with payments because payment plans are hard to stick with and they just become another monthly budget item that that can be difficult for a client to pay. I reached out to the opposing attorney and he was having none of it – full payment ($21,000) or we continue to litigate!

After taking a close look at the documents, I noticed some anomalies. One thing that I noticed was that the contract contained a clause that if the borrower ever fell behind in payments, his default interest rate was going to be 21.99%. The normal interest rate on this loan was around nine or ten percent, but if payments fell behind, the interest rate would jump up to a payment default 21.99%. When compared that default interest rate to the invoices that the client received from the creditor, I noticed that they were charging a default interest rate of 24.99%, a three percent difference between what the contract provided and what the creditor was billing!

I then filed a motion to amend the answers and defenses filed by the previous attorney and brought in as a defense that I questioned the calculation of the amount due to the plaintiff because the interest was off by three percentage points – the default interest rate should have been 21.99% but was actually 24.99% and that three percent difference over the length of time since the default (remember this is a lawsuit that was filed in 2014 with the debt allegedly prior to that) made the interest calculation inaccurate. My argument (at that time) was that because of the discrepancy in the interest rate, the lender should be prohibited from getting a judgment unless or until they corrected their own numbers to account for the correct contractual interest rate.

In talking to the client, one interesting thing he said is that he turned in the jet ski to the lender. What typically happens in home foreclosure is that there is a deficit that is owed on the house if there is a difference between the amount owed to the bank and the value of the house. In other words, take the amount owed to the bank and subtract the value of the house. If there’s any money left, that becomes the deficiency that is owed to the mortgage company. If the amount owed is less than the value of the house, then there is a surplus that is returned to the borrower. The same analysis applies to any secured asset, including cars and jet skis!

It appeared in this case that the lender never gave my client credit for the value of the jet ski, so I raised that as an additional defense. I argued that the balance owed can’t be $21,000 and allow the creditor to keep the jet ski. The creditor should sell the jet ski and apply whatever money from the sale against the balance of the debt owed.

After I raised those two issues as defenses, I contacted the creditor’s attorney again to see if they would settle. Neither one of those issues persuaded the creditor to settle. While I raised both the interest rate and lack of any kind of deficiency as defenses, they are both also potential violations of debt collection law, both violations of the creditor being too aggressive in collection pursuant to the the Florida consumer Collection Practices Act (FCCPA). Therefore, I decided to file a counterclaim against the jet ski creditor under the FCCPA, to see if I can offset some of the money owed by my client against the damages owed by the creditor to my client under the FCCPA. About two days after I filed the counterclaim against the finance company, I get an email from their attorney that says (paraphrasing) “My client proposes that both our clients walk away from any claims they may have against the other and consider this case settled, with each with each side responsible to pay their own attorney fees and costs.” In other words, they drop their lawsuit against my client, and we drop our counterclaim against them. In essence, what that did was brought the alleged debt owed from $21,000 down to $0. Of course the client instantly agreed. A few days later I got the release & settlement documents.

The whole point of this story is that I felt good that I was able to help this client make a $21,000 debt go away for $0 using the creditor’s mistakes in being too aggressive in collecting the debt. That is the focus of the Crushing Debt Podcast, The Crushing Debt Book, and Yesner Law – I want the people we interact with to feel like everything is going to be okay after they’re done listening to an episode of the podcast, reading the book, or sitting down for a consultation. The whole point of the law firm is to help my clients eliminate the financial bullies in their lives.

If you have questions that we can answer on our blog or on the Crushing Debt Podcast on topics ranging from real estate law, bankruptcy law, debt settlement, creditor harassment, or any other topics, please contact us. If you’re facing any of these issues, you can also schedule a free initial consultation to discuss your options at 813-774-5737 or email me directly at shawn@yesnerlaw.com. You can also order Crushing Debt: 9 Strategies to Eliminate Financial Bullies on Amazon.com. Please also subscribe to the Crushing Debt Podcast, on Apple Podcasts, Spotify, and other podcast players, including Amazon Echo (“Alexa”) for more free information about these topics.

Shawn M. Yesner, Esq., is the host of the Crushing Debt Podcast and founder of Yesner Law, P.L., a Tampa-based boutique real estate and consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Tampa, Westchase, Odessa, Oldsmar, Palm Harbor, Clearwater, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay Area.

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