| A crucial factor in determining the value of a case to | | | | doing. Once you start forcing the lawyer to do some |
| the debt collectors is an accurate assessment of the | | | | work, you highlight the facts that they might not have |
| risk of collection. And this risk in turn is divided into two | | | | what they need to go after you and that you might |
| questions, both vital to the decision. First, what is the | | | | win the case. You also increase the dollar value of the |
| chance of winning a judgment if the case is litigated? | | | | risk by forcing the company to spend dollars to chase |
| We'll call that the "legal risk." And second, what is the | | | | you. |
| chance of collecting a judgment if it is won? We'll call | | | | Collection Risk |
| that the "collection risk." The first is a question of how | | | | Collection risk, or the risk that the company might not |
| well and how hard you will fight the case, and the | | | | be able to collect from you even if it wins the suit, is a |
| second is a question of how much money you have | | | | much more hazy concept than legal risk. On the other |
| that the debt collector can find. | | | | hand, they do have some tools at their disposal to help |
| That is, and to be very specific about this, these are | | | | them with this. |
| the debt collector's guesses about these issues. They | | | | Bear in mind that, like the legal risk, collection risk is |
| look at what they know and try to figure out what will | | | | barely considered before the suit is filed. Again, this is |
| or may happen. Let's look at the issues separately. | | | | simply a question of economics. They believe they will |
| Legal Risk | | | | win the suit if it is filed, and it does not cost much to file |
| As surprising as it may seem, the debt collector usually | | | | suit against you. The costs of filing garnishments at |
| starts with very little actual idea of what its case's legal | | | | your job or taking your bank accounts is also low-if |
| "merits" (chance of winning if it goes to a judgment) | | | | they can find them. In other words, they do not |
| are. They normally do not need to know their cases' | | | | consider the collection risk before filing suit because |
| legal merits because so few cases are actually | | | | the cost is so low. Start fighting the case, though, and |
| defended. The FTC estimated that as much as 80% | | | | you bring this issue to life for them. |
| or even more of what one large debt collector | | | | If you ever paid on the debt, you have given them a |
| collected was never owed by the people they | | | | checking account, and that is the first place they will |
| collected from at all. They have some basic | | | | plan to go for collection. Nothing stops you from |
| information, and they file suit. As far as I can tell, that is | | | | changing accounts, though. Likewise, if you have told |
| what most debt collectors do. Later, if necessary, they | | | | them about your current job, they will probably know |
| may try to find the documents that would help them | | | | that information. If the debt collector doesn't know |
| win the case. So at the beginning the debt collector | | | | these things about you, though, can you see how you |
| starts with a sense that it will win the case, but not by | | | | might not want to volunteer that information? |
| fighting. | | | | Certain kinds of income are not subject to |
| Does that seem cynical? Well, welcome to the | | | | garnishment. Federal disability would be a prime |
| business world. If it costs a lot of money to assess the | | | | example, but there are others. The less income the |
| legal merits of a case that you thought you would win | | | | debt collector sees, the higher the collection risk. |
| just by filing, would you spend any more than you had | | | | Although the collectors do not usually do an individual |
| to? Perhaps some of them do the back-up | | | | assessment of your case's collectability before they |
| research...but you might take it as a rule of thumb that | | | | bring suit, they do know they are usually suing people |
| the company suing you might not have done it. And | | | | without much money. They may also have credit |
| that would mean that the lawyer you're talking to is | | | | reports and other information about you, so they know |
| basically just bluffing in any statement about the case, | | | | this is a big risk for them. If you make the price of that |
| at least at the beginning. | | | | risk-the cost of chasing you higher, you reduce your |
| Would they do that? You better believe it. | | | | attractiveness as a defendant. |
| You can change the equation by defending yourself | | | | That's legalese for, "you make it more likely that they |
| and by knowing, or seeming to know, what you are | | | | will go away and leave you alone. |