How to Stop Collection Attempts When You Are Protected by Arizona's Anti-Deficiency Statute

Disclaimer: The information contained in this blog post is specific to Arizona, and should NOT be construed as legal advice. If you are experiencing a similar situation, you should seek legal counsel.

So you sold your home in a short sale, or worse, lost it to foreclosure. For many, this is the end of the nightmare, or so they thought. What do you do when you've done everything right yet your old bank is still trying to collect or has sent you to a collection agency or a law firm after completing your short sale? Or after they took the property back by foreclosure?

Arizona has an Anti-Deficiency Statute that protects a homeowner that loses their home to foreclosure. It also protects the homeowner that sells via shortsale where the bank agrees to a waiver of the deficiency. Unfortunately, there has been a steady increase in the number of people who are being threatened and harassed by law firms and collection agencies. This can be very scary for anyone who thought this nightmare was behind them and are now being threatened and harassed. You can imagine how intimidating it is to get a call from a law firm that is stating that unless you agree to pay the debt back, they will sue you and get attorneys fees too.

Whether intentionally ignoring the law, or simply not taking the time to see if the collection effort is legitimate, collection efforts are all focused on three things - get money, get the money and get the money. Why can law firms and collection agencies harass someone or threaten to sue them if the law says they can't do it? The answer is that even though there are Federal laws to protect people from this type of guerilla collection efforts, not enough people know about them and aren't aware that their rights are being violated. These law firms and collection agencies are hoping that people won't know what their rights are.

One of the most effective laws in combating these greedy collection companies is the Fair Debt Collections Practices Act (FDCPA). The FDCPA makes it illegal for a company to attempt to collect a debt that is not owed. In addition to making it illegal, it provides up to $1,000 per violation for each attempt to collect. It also says that the people trying to collect have to pay all the attorney's fees that someone incurs trying to defend themselves. It even goes so far as to say that not only is the company trying to collect liable, but the individual actually calling or sending the letters is personally responsible as well. So you see, the FDCPA has some teeth!

Does this mean you have to file a lawsuit to be protected? No. In fact, lawsuits are rarely needed. In most instances a simple letter that explains the law and the remedies available under the FDCPA is enough to stop most of these improper collections attempts. Of course it doesn't hurt to make sure send a carbon copy (cc) to the Federal Trade Commission, who is responsible for administering the FDCPA. Their address is: The Federal Trade Commission ~ One Bowling Green, Ste 318 ~ New York, NY 10004

Once put on notice, it is likely that the collection activity will stop. Many times, the actual perpetrators will call, hat in hand, begging for forgiveness for their transgressions.

The bottom line is that the law protects you. You don't have to sit back and let these collection companies or law firms make your life hell. You can fight back. There are laws that protect you and there's no reason to continue to be victimized. If you or a client is facing collection efforts that you don't think are right, it may pay to visit with your attorney to discuss the best way to solve the issue for you. Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com