Expert: Regan Shinski - 9/19/2010

Question
I am in NY. I've recently returned a leased car to the bank from which I borrowed. This is a small financial institution located in NJ. They picked up the car themselves from my home and performed an inspection of the car at their premises. I received a bill of $800 relating to the hole in the right door. They also provided me with a picture of the damage. I followed their letter and within 14 days issued them a certified inspection report of my own that was taken a day before a pick up that says there were no damages.
In addition, I provided them a picture of the right door taken during the pick up, where one can clearly see that there is no damage to the door. I explained to the boss of the bank collection department that the damage might have happened during the transportation.
The boss disregards all my evidence and keep sending me bills. He left me with a 10 day period after which he will send my account to collection which will affect my credit report.

1)   Are there any government agencies/institution that I can complain about this bank? What do you advice?

2)   If your only advice is to take it to the court, the amount is so minimal that I think I am better off to appeal myself. Which court would that be - a small claim court, which is less than $3,000. How can I press charges if they do not really owe me money? Can I press in NY or in NJ since the bank is there?

Thank you for your advice.
Regards,
Ilya Borukhov  

Answer
Hi Ilya:

I believe your intuitions are correct in that you may be premature in taking legal action yourself.  In general, there are two parts to every lawsuit:  liability and damages.  At this point, I am not certain what your damages are.  This would change once they report it to a credit bureau since your credit would clearly be damaged.

You have options for cease and desist, but they really are not directly applicable or worthwhile in a case like this.

One path you may choose is to send a certified letter to the person in charge (again) and his higher up or legal office at the bank.  State specifically in the letter that if this is reported to a collection agency, you will sue for damages under the FDCPA and FCRA.  It's kind of a last ditch effort to keep them from giving to collection agency.

You can also file a complaint with your state's attorney general office, better business bureau, and any licensing and profession trade organization your bank belongs to.

IF you receive a letter from a collection agency, it does not mean it is reporting on your credit files.  In fact, it likely is not.  They will typically send a letter that will have a passage in it to the effect of "if you do not notify us within 30 days of receiving this letter,..."  It is CRITICAL you do reply within that 30 days.  Send the same information to them, state you will sue if it reported.  FDCPA allows for $1000 plus damages and costs per violation.  They will likely drop it before they report it if you show you know your rights and have your evidence.  Try to get a response from them that states they have dropped the debt.  You can also typically pay the debt in this 30 day window without it being reported.

This being said, this is still a minor risk.  There are unscrupulous collection agencies that may report anyway.  You will have options and will likely win if you have the evidence you say you have, but it make take time, there is no guarantee, and your credit will be damaged in the interim.  It really just depends on the collection agency.

To answer you other specific question, you can file any small action in small claims but FDCPA lawsuits are best in federal court.  You do not need an attorney, although it is slightly more complicated.  Small claims can here cases involving damage to credit but usually lack the force to make a creditor change one's credit file.  They can assign monetary damages only.

So, I would get the information to bank higher-ups immediately and seek a letter from them that it will be dropped.  If they turn it over to a collection agency and how that collection agency responds - I cannot say - but you will have options at all stages.

Good luck, I hope this helps.

Regan