I learned recently that a close family member has racked up some debt, and defaulted. As this person has no one else, they have asked me to help. To preserve anonymity, I will refer to this person as M.
Here's the situation:
M is well into retirement age, and has not worked for many years. They rely 100% on Social Security Income (this fact is significant, and I will come back to this) at well below $16,000 per year income. No other income. I occasionally buy stuff M needs and have it shipped to their door step. M does not own a car, home or have any assets of significant value, as they cannot afford any of this. They rent the place they live. Additionally, M speaks English as a 2nd language and does not always understand what you are telling them, but (due to culture) will agree that they understand even if they don't. They live in Arizona, Pima County (I'm in another state).
Unbeknownst to me, around 3-5 years ago, M started racking up some pretty serious debt, to the tune of around $40,000 or possibly more. This was not all at once. It took a few years to get to this level, and this is with several creditors. I don't think M really understood what he/she was doing because at the peak, they were using cash advances from one credit card to pay other credit cards and did not really understand that this did not pay down debt. When I discovered all of this, I had to explain all of this to them, as if they were a child.
The largest creditor is Bank of America and this person racked up around 33K with them alone. This was in the form of credit card debt. They kept pushing "cash advance checks" to M and M, not knowing any better (possibly getting senile), went ahead and signed and deposited the "checks" into their BofA checking account and spent the money.
Once I found out how bad the situation was, I spoke with a consumer protection law firm. While M cannot afford an attorney, I can. Basically our attorney said the following:
1) They can only help once M is sued and/or if any creditors have violated M's rights under the FDCPA or FRCA. They reviewed all of the demand letters received so far and did not find any issues. There were no phone calls, as M changed their number.
2) The attorney's assessment is that M is judgement proof: the BofA lawyers can sue and even get a judgement, but they cannot legally enforce it by garnishing money from M's bank account, as long as the money in that account came from Social Security (and no other sources - do not co-mingle funds, etc.). No problems or complications there.
3) If BofA sues and gets a judgement, and serves a garnishment notice (not sure of the terminology here) on M's current bank in an attempt to grab some funds, we can tell M's current bank that all of the funds in M's account are exempt from this judgement as all funds came from Social Security (this is 100% true), and that M only receives income from SS, so its also exempt.
4) Doing nothing may be the best course of action if BofA sues M, due to M being judgement proof. I'm strongly considering this course of action for M.
5) Our lawyer also said that BofA would be reluctant to sue an elderly person, though I understand that means that they still might.
BofA is aware that we have spoken to a consumer lawyer as we asked our attorney to respond to BofA's early demand letters (before they hired their own lawyers). I believe this is why they hired this firm instead of a normal CA, as we have raised BofA's guard. BofA hired the Moore Law Group (licensed in AZ and a few other southwest states) and they have recently sent a demand letter for around $14K on behalf of BofA. Its the usual demand letter and states we have 30 days to dispute the validity of the debt, etc.
Note that M used to bank with BofA, so they are well aware that they made large loans to an elderly retired person who had only a very meager Social Security as their only income, and they knew M did not have the means to pay all of that money back. If we had to fight BofA in court, arbitration or sue them for FDCPA violations, we would use that against them. While this is not a legal argument: I'm saying that we could easily paint a picture of BofA as a predatory lender of elderly immigrants that do not speak/understand english very well. The date of the last payment made to BofA by M was around the middle of 2016 (not sure of the exact date), so I think they are within SOL (note that they have not yet sued M).
M did not have the original BofA credit card agreement, so I am uncertain if arbitration is available. Attached are the agreements I could find online that I believe are applicable.
My questions are:
Should we bother with DV? They already stated in their letter that if M sends a DV letter, they will obtain verification and send it to M, etc. Note that BofA still owns the debt. They did not sell it to a JDB. To me, the DV letter seems like a waste of time.
Should we send a letter to the Moore Group explaining M's situation to them (elderly, SS income and bank funds from SS are exempt from judgements, garnishments, etc.)? I was thinking of letting them know that we would be on the lookout for any garnishments hitting M's current bank account (with another bank, where M gets Social Security deposited), and that we would sue if they did garnish anything. I believe this would be a FDCPA violation, though I'm not certain on this last point. Also, if they attempt a garnishment, but we manage to stop it by notifying M's bank all money is exempt, do we still have a FDCPA violation?
My goal in sending a letter stating this is to get them to understand that suing M would be a waste of their time and money. If BofA or the Moore Law group has done any background checks on M, they would see that M does not have any assets, or a job, and therefore is very unlikely to pay them.