Buying debt is an interesting concept, but there are some important factors you should consider before signing on the dotted line. These include liability and errors and omissions insurance, as well as how to respond to a lawsuit.
Verifying the debt is yours
Getting a debt verification letter is a great way to check if a debt is actually yours. This is particularly important if you are planning to pay off the debt. This can save you the hassle of dealing with a collection agency that is unprofessional or wrongly suing you.
A verification letter is an excellent way to stop a debt collector’s aggressive efforts. Debt collectors are relentless in their efforts to collect. They may even accuse you of owing money, even when you are not. However, they cannot force you to prove that you actually owe the money.
In order to make your debt verification letter count, you should be as thorough as possible. You should include the date of the last payment, the amount of the debt, the name and contact information of the creditor, and the minimum amount you are owed. You should also include information about the fees and interest you owe.
If you receive a debt verification letter, you can either dispute it over the phone or you can negotiate a settlement. If you don’t want to dispute it, you can just pay off the debt and remove it from your credit report.
While you are disputing a debt, you should also check your credit report for any changes. If you notice that your debt is listed on someone else’s credit report, you should report this to the credit bureaus and the Federal Trade Commission. You can also check with the state attorney general’s office to find out if your collector has a license to collect debts.
You should also be aware of the Fair Debt Collection Practices Act, or FDCPA, which entitles you to get a debt verification letter. If you fail to receive one, you should report the collector to the FTC.
If you receive a debt verification letter, you should make sure to send it to the collector’s mailing address. You should also include information about the creditor, the original contract, and the amount you owe. The best debt verification letter will leave you with enough information to make a decision about the debt.
Liability and errors and omissions insurance
Having Liability and Errors and Omissions insurance (E&O) is an important protection for any professional who provides services for a fee. This insurance can protect you from lawsuits and other claims that could put your business at risk.
The amount of coverage that you need can depend on the type of business you have. Professionals who offer specialized services have a legal responsibility to provide a reasonable standard of care to their clients. If they miss a deadline, deliver a service that is not up to the standards of their clients, or provide an unsafe product, they could be held liable. This could impact their bottom line.
Errors and omissions insurance, also known as professional liability insurance, can protect you against lawsuits from clients who are not satisfied with your work. This coverage can cover costs related to the lawsuits, including attorney fees, court costs, and settlements.
While E&O insurance is available for professionals in many industries, the amount of coverage required varies by state. For example, in Colorado, all real estate businesses must have errors and omissions insurance. Similarly, many credit grantors require collectors to have certain amounts of E&O coverage.
Insurance companies offer many different kinds of insurance, including E&O, cyber liability, and service provider bonds. Some companies even offer employee dishonesty bonds. The cost of these policies can vary greatly. The average small business pays around $500 to $1,000 for an annual premium, although the cost of coverage varies based on the industry. Increasing deductibles can also help to lower the cost of E&O insurance.
Although errors and omissions insurance isn’t necessary for every business, it is a good idea for many. Having this coverage could prevent you from having to spend thousands of dollars out of pocket for legal expenses. In addition, it could resolve any issues that arise with clients.
Whether you’re in the real estate industry, insurance business, or another profession, errors and omissions insurance is a good idea. In some cases, it may even be required by law. As a result, it is important to know exactly what you need, and what you can afford.
Responding to a lawsuit
Whether you are being sued by a debt collector, an unknown plaintiff or a combination of the two, it is important to read the facts and consider what you are getting into. If you want to be considered a responsible debtor, you may need to file a formal response. This may include a payment plan or reduced payment. Depending on the circumstances, the court may award you additional fees.
For example, a credit card company may issue a summons or notice of lawsuit. These documents are important because they can be used to prove that you have been served with the lawsuit. If you don’t respond to a summons, the debt collector will likely win your case. If you’re served with a lawsuit, you have 20 days to file your answer. If you do not, the plaintiff may file a default judgment against you. If you do respond, you must explain why you are not able to pay off the debt and offer a payment plan.
The most interesting part of a debt collection lawsuit is the discovery phase. The creditor may issue requests for production (RFPs), Interrogatories, Requests for Admissions and the like. If you are not prepared for this phase, you may not get to claim the best possible defense. If you are lucky, the creditor may even be willing to settle for 20% to 70% of your debt. If your debt is more than a few thousand dollars, your credit rating may be adversely affected and your financial future may be in jeopardy.
Choosing the best response to a debt collection lawsuit is not always easy, but if you are smart about it you may be able to avoid a costly court battle and avoid the dreaded “debtor-in-possession” label. The most important step is to read the lawsuit carefully. Depending on the plaintiff, you may be dealing with a sleazy junk debt buyer, an aggressive debt collector, or both. If you are unsure of your legal options, you may want to hire a lawyer to assist you in deciding what course of action is best for you.
Defamation of debt buyers
Defamation of debt buyers is a serious legal matter. If you have a debt you do not owe, you may be able to sue debt collectors for the damages. The law requires that you prove that the debt collectors disseminated false information about you to a third party. The Seventh Circuit held that the dissemination of false information to a third party was sufficiently analogous to the common law tort of defamation.
The Seventh Circuit weighed in on the Hunstein decision and held that a plaintiff can establish Article III standing by showing that the dissemination of false information to a credit reporting agency bears a close relationship to the reputational harms recognized by the United States. In this case, plaintiffs demonstrated that their credit scores rose after disputes were raised with the debts on their credit reports.