Thursday, June 2, 2011

An FDCPA Claim Is not a Defense to A Debt Collection Case, But it is a Claim Worth Pursuing

An FDCPA Claim Is not a Defense to A
Debt Collection Case, But it is a Claim worth Pursuing

by: Robert J. Nahoum

June 2, 2011

The Law Offices of Robert J. Nahoum, P.C, practices in the area of consumer protection and stopping debt collectors. Contact us today to see if you have a case against a debt collector. (845) 232-0202;;;

Many clients who walk through my door understandably confuse their FDCPA claim with a defense to a collection case. In other words, consumers sometimes have the impression that because the debt collector’s conduct was false, misleading or harassing, as a punishment to the debt collector, they no longer have to pay the underlying debt. Oh how I wish it were true. Unfortunately, it is not.

However, all is not lost; under the FDCPA (Fair Debt Collection Practices Act, 15 U.S.C. §1692 et. seq.), if the debt collector is found liable for illegal debt collection practices, it is on the hook to you the consumer for at least $1,000.00 in statutory damages. That $1,000.00 may go a long way in helping to resolve the underlying debt.

What’s more, the FDCPA also allows the consumer to recover his “actual damages”. What are actual damages you ask? Actual damages can include:

· Stress induced Health Injuries:

o Heart attack, angina, chest constrictions;

o Miscarriage;

o Ulcers, diabetic flare-up;

o Shock;

o Loss of appetite;

o Nightmares; insomnia, night sweats;

o Emotional paralysis;

o Inability to think or function at work;

o Headaches;

o Shortness of breath;

o Anxiety, nervousness; fear and worry;

o Hypertension;

o Stress to children;

o Irritability;

o Hysteria;

o Embarrassment, humiliation;

o Indignation and pain and suffering.

· Monetary damages:

o Payment of a debt barred by the statute of limitations;

o Payment to lawyers in defending a lawsuit that never legally should have been brought;

o Unlawful repossession of property;

o Long distance phone calls to debt collectors who insist that call him back.

So, while it is clear that an FDCPA claim is not a defense to a collection account, pursuing your consumer protection rights can go a long way to mitigate that debt.

About the Author

Robert Nahoum is a New York State attorney practicing consumer protection and general litigation in the Tri-State Area including New York City, Westchester, Rockland, Nassau and Suffolk. His practice includes Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), putting an end to illegal debt collection practices and debt collection harassment, debtor’s rights and mortgage foreclosure defense.

Contact The Law Offices of Robert J. Nahoum, P.C today to see if you have a case against a debt collector: (845) 232-0202;

Robert J. Nahoum, Esq.

99 Main Street, Suite 311 · Nyack, NY 10960
845.232.0202· Fax: 888.450.8640

Web:· Email:

Wednesday, May 4, 2011

Soldiers’ Rights Under The Servicemember's Civil Relief Act

Soldiers’ Rights Under The Servicemember's Civil Relief Act

by: Robert J. Nahoum
May 4, 2011

The Law Offices of Robert J. Nahoum, P.C, practices in the area of consumer protection and stopping debt collectors. Contact us today to see if you have a case against a debt collector. (845) 450-2906;;


Brave members of the American armed forced are often away from home and their loved ones for extended periods of time. As America now wages war on no less than three fronts, extended deployments are more and more of a reality for many American families. The professionalism with which our soldiers do their work requires, among other things, freedom from worry of their finances back home. Congress recognized this need in 2003 when it revisited the Soldier’s and Sailor’s Civil Relief Act of 1942 (SSCRA)[1] and enacted the Servicemember's Civil Relief Act (SCRA).[2]

The SCRA replaces the SSCRA, clarifies the rights and obligations promulgated thereunder and extends numerous protections for service-members. This article discusses these rights, obligations and protections.


The SCRA was intended to enable service-members to dedicate their attention to their work in defending the Nation. To foster this, Congress recognized the prudence in temporarily suspending judicial and administrative proceedings that could adversely affect the rights of service-members while engaged in active military duty.[3]


A. Who is Covered

Eligible service members under the SCRA include active duty[4] members of:

· Army;

· Navy;

· Marine Corps;

· Air Force;

· Coast Guard;

· National Guard[5];

· Commissioned Officers of the Public Health Service;

· Commissioned Officers of the national Oceanic and Atmospheric.

Certain provisions of the SCRA (some of which are discussed herein) provide protection for service-members’ dependents including spouses, children, or anyone for whom the service-member provided over half of such person’s support for 180 days immediately preceding application for relief under the Act.

B. What Tribunals Are Covered?

Any court or administrative agency of the United States, a state or a political subdivision thereof is covered. Generally, the only exempt tribunals are those involving Criminal proceedings.[6]


A. In Judicial Proceedings

Among the most vital protections afforded to service-members under the SCRA are those relating to civil judicial proceedings. Included in these protections are the following:

i. Vacatur of Default Judgment:

The SCRA allows a service-member to vacate default judgments against him/her in civil proceeding where (1) the service-member failed to appear in court; and (2) the service-member did not receive notice of the proceeding. In fact, if a defendant has not appeared in the proceeding, the burden falls on the plaintiff to submit a sworn affidavit stating whether or not the defendant is in the military and thus it is the plaintiff’s burden to research and investigate the existence of such service.

If it appears to the court that the defendant is on active duty, the court is precluded from entering a judgment against the defendant until an attorney is appointed to represent the service-member. The court must then issue a stay of proceedings for a minimum of 90 days upon application by the service-member's appointed counsel. If court is unable to determine whether the defendant is on active duty, it may require the plaintiff to file a bond to indemnify the defendant against any damages that may result in the event the default judgment is later set aside.

If a default judgment is entered against an active duty service-member or within 60 days after termination or release from active duty, the service-member has up to 90 days from release to make an application to set aside or vacate the default judgment. Upon such application, the court must vacate the judgment and allow the service-member to defend the action if: (1) it appears that the service-member was “materially affected” by reason of the military service in making a defense to the action; and (2) the member has a meritorious or legal defense to the action.

ii. Stay of a Civil Proceeding:

Where the service-member did receive notice of a civil proceeding while he or she is engaged in active duty, or within 90 days of termination or release from active duty, he or she may make an application for a stay or a delay of the proceedings at anytime.

Any such application must include (1) a statement why the current military duty requirements materially affect the member's ability to appear at the proceedings; (2) a date when the service-member will be available to appear; (3) a statement from the service member's commanding officer indicating that the service member's current military duty prevents his or her appearance and that military leave is not authorized for the service member. Upon receipt of the application, the court must stay the action for a period of at least 90 days.

Upon expiration of the initial stay, the service-member may apply to the court for an extension. If the court refuses to grant an extension, it must appoint counsel to represent the service-member in the proceeding. Importantly, an application for stay does not constitute an appearance for jurisdictional purposes and will not act as a waiver of any defenses.

iii. Statute of Limitations:

Federal and state statute of limitations are tolled for all proceedings for the duration of a service-member's military service (except the statute of limitations on IRS violations). The tolling rules apply to actions brought by or brought against the service-member.

iv. Rental Evictions:

Irrespective of whether a rental premises were rented before or after the service-member's entry to active duty, absent a court order, a landlord may not evict a service-member on active duty or his or her dependents where (1) the premises are occupied or intended as a primary residence; and (2) the monthly rental payments are less than $2,975.54.[7]

B. Reduced Interest Rates

In consideration of the reduced income of active duty service-members, protections under the SCRA extend beyond judicial proceedings to various credit transactions. All interest rates in excess of 6% must be forgiven by the creditor and cannot be shifted to the principal or shifted for payment at a later time. These interest rate provisions apply to credit card debts, car loans, mortgages, personal loans, and other similar obligations and liabilities incurred by the service-member (or jointly with his or her spouse).[8]

In order for the reduced rate protections to apply, the debt must have been incurred by the service-member (or jointly with his or her spouse) before her or she entered active duty. All applicable debts shall not bear an interest rate greater than 6% per year during the term of active duty. Additionally, the creditor must re-amortize the payments on the loan based on the 6% interest rate. The definition of "interest" under SCRA is expansive and includes interest on the loan, service charges, renewal charges, fees, or any other valid charges. All such additional charges combined cannot exceed the 6% annual rate of interest on a debt.

However, it is important to note that the SCRA interest rate provisions do NOT apply to obligations incurred by the service-member while on he or she is on active duty.

For the service-member to reap the benefits of the SCRA interest rate provisions he or she must (1) provide the creditor with written notice and a copy of the military orders; and (2) such notice must be given to the creditor at any time up to 180 days after the member's termination or release from active duty. Upon receipt of proper notification, creditors must apply the 6% interest cap beginning from the service-member's first day of active duty.

C. Protection From Creditors On Installment Contracts:

The SCRA protects service-members who have contracted for the purchase, lease, or bailment of real and personal property prior to entry into the military. Where a deposit or installment has been paid by the service- member on the obligation before he or she entered military service, the creditor cannot rescind or terminate an installment contract for breach thereof without a court order. Additionally, the creditor cannot repossess property purchased, leased or bailed by a service-member without a court order.

D. Mortgage Protections:

The SCRA protects a service-member's obligations on any real or personal property that is secured by a mortgage, trust deed, or other similar security instrument. To apply, (1) the obligation must have been incurred before entry into military service; (2) the property must still be owned by the service-member; and (3) the alleged failure to meet the secured obligation must have occurred before or during the period of military service.

E. Invalidation of Sale, Foreclosure, or Seizure of Service-Member's Property

Under the SCRA, any sale, foreclosure, or seizure of property for breach of security including a mortgage or deed of trust will be invalidated, if made during the period of military service or up to 90 days thereafter except where it is done by court order or upon written waiver.

F. Service-Members May Terminate Leases on Premises

Under the SCRA, service-members may terminate residential, professional, business or agricultural leases (1) at any time after entry into military service; (2) after the date of military orders for a permanent change of station move; or (3) after the date of military orders for deployment with a military unit for at least 90 days.

In order to make such a termination the service-member must deliver to the landlord a written termination notice, notifying that the termination is being made pursuant to the SCRA and include a copy the service-member’s military orders.

G. Service-Members May Terminate Motor Vehicle Leases:

Under the SCRA, service-members may terminate motor vehicle leases when (1) called to active duty for at least 180 days; (2) by active duty members receiving permanent change of station orders outside the continental U.S.; or (3) deploying with a military unit for at least 180 days. Applicable leases include those of the service-member or such service-member's dependents for personal or business transportation.

For the termination to be effective, the service-member must deliver to the lessor written termination notice and a copy of the applicable military orders and return the vehicle no later than 15 days after delivery of the written termination notice.

H. Protection of Service-Members’ Life Insurance Policies:

The SCRA includes protections for service-members' individual whole, endowment, universal, or term life insurance policies (but NOT Service-members' Group Life Insurance or any other group term life insurance coverage). Applicable insurance policies will not lapse or terminate or forfeit due to nonpayment of premiums while the service-member is on active duty.

I. Taxes:

Under the SCRA, no property owned by a service-member, or jointly with a dependent, can be sold to enforce the collection of a tax which became due before or during the service-member's active military service without (1) a court order and (2) a determination by the court that the military service does not materially affect the service-member's ability to pay the tax. The court may also stay the proceedings during the term of military service and for up to 180 days after the conclusion of such service.

Properties covered by this protection include:

· personal property, (including motor vehicles, owned by the service-member or jointly with a spouse or dependent); and

· Real property used by the service-member or the service-member’s dependents, or employees, as a dwelling or for professional, business or agricultural purposes.

As with other obligations, delinquent taxes or assessments cannot be taxed at a rate in excess of 6% per year.

An income tax obligation arising before or during military service may be deferred for the duration of that service together with an additional 180 days thereafter if the service-member's ability to pay is materially affected by the military service.

In consideration of the heroic and selfless work performed by Rockland County service-members and the sacrifice of their families, The Law Offices of Robert J. Nahoum is proud to represent any Rockland County military families pro bono (for free) in any consumer debt matters such as credit cards, medical bills and mortgage issues.

These brave men and women deserve our gratitude and respect. If you or your spouse is a Rockland County service member and you have a legal issue relating to a debt, contact The Law Offices of Robert J. Nahoum to discuss your options and our Rockland County Service-Member Pro Bono Program.


The Law Offices of Robert J. Nahoum

99 Main Street, Suite 311
Nyack, NY 10960-3109
Ph: (845) 450-2906
Fax: (888) 450-8640

[1] 50 U.S.C. Appx. §§ 501 et. seq. (2002). The SSCRA was initially enacted by Congress at the start of the Second World War to provide protection for soldiers serving in the armed forces. The SSCRA was amended and updated in 1991 after the Gulf War but was generally unchanged until 2003.

[2] 50 U.S.C. Appx. §§ 501 et. seq. (2003). The SCRA was intended to clarify language of the SSCRA, to incorporate decades of court interpretation and to reflect new developments in American life since the SSCRA was initially enacted in the 1940s. The SCRA was signed into law in December, 2003 and extended its protections from those on active duty to Reservists and members of the National Guard.

[3] 50 U.S.C. App. § 502.

[4] Active duty covers the period from which orders are received to discharge.

[5] Who are called to active duty as authorized by the President or the Secretary of Defense for over 30 consecutive days under 32 U.S.C. 502(f) to respond to a national emergency declared by the President and supported by federal funds.

[6] 50 U.S.C. App. § 512.

[7] Qualifying rental amounts are adjusted each year for inflation. For the year 2004, the amount was $2,465.00, 2005: $2,534.32; 2007: $2,720.95; 2008: $2,831.13; 2009: $2,932.31; and 2011: $2,975.54.

[8] The 6% interest rate cap does not apply to federal guaranteed student loans.