Expert: John R. Sabol - 1/24/2005

Question
Mr. Sabol,

I am being sued by a junk debt buyer alleging I gave a personal guaranty on a business account. I NEVER authorized nor consented to a personal guaranty for the account. I have answered with a denial and submitted an affidavit attesting to that fact.

1) What laws govern the collector's actions since a personal guaranty doesn't come under the FDCPA?

2) The collector sent a payment demand with the FDCPA "Mini-Miranda" language, but when I filed a counterclaim they said the FDCPA doesn't apply to them. The collector harassed me before filing, so I want to file additional counterclaims.

3) I'm in Maryland and removed it to federal court. The plaintiff is trying to have it remanded. Any thoughts? Diversity doesn't apply since the collector is also in Maryland and the amount is $10,000.00

Thanks for your help.

John R.

Answer
Debt buyers are in fact bound by the FDCPA. If they are making an attempt to collect a debt, they are bound. Period. I was just at a seminar in which this exact topic was adressed by a huge buyer of delinquent debt. No exempt business with even think about throwing a mini miranda on all documention. I think they are inferring that this is a business debt with a personal guarantee. Since commecial collections aren't bound by the FDCPA, there would be some truth to their comments. I dont think I would would want to argue it in court, not that I am an attorney. I think the judge would see this ploy as an obvious attempt to circumvent the law as a matter of convenience.

As for the courts, I'm afraid I dont have enough experience to offer advice with any semblence of intelligence. Federal court is extremely expensive. THis must be a huge debt and or you are a person of means in order to suppport this case financially.

I would continue to press for verification that you in fact personally guarnteed the debt. If I may make a suggestion, I would approach in a soft manner, stating that you will be more than happy to pay the debt if in fact they have proof that you guaranteed.

The debt buyers may or may not have a copy of the original contract. If they dont, you can rest comfortably with the understanding that they have a very week case.

If you are currently in court, you need to see a copy of the contract ASAP. This should easily be obtainable through discovery.

If not, I cant imagine that any attorney would want to show up without documentation of the guarantee. The judge would toss the case as long as the plaintiff didnt have proof of co-mingling funds, piercing the corporate veil, etc.

Im sorry I couldn't be of additional help. Please feel free to ask me to clarify if I have done a poor job of elaborating.