Summary: Restitution is basically another word for compensation. Here is SoloSuit's guide on restitution and how it can apply in debt collection lawsuits.
Restitution is a court-ordered payment one party makes to another to compensate them for damages caused by the crime. All US states have laws requiring convicted defendants to pay restitution to their victims. Here's all you need to know about this form of payment and how it works.
When does restitution apply?
Not every case warrants the need for restitution. However, the court can award restitution if:
- It's necessary for rehabilitation.
- It's required to make the victim of the crime feel 'whole' again.
- If the victim suffered financial losses due to the defendant's crime.
Restitution applies in different contexts, especially in personal injury cases. Examples of such cases include sexual assault, drunk driving, identity theft, etc.
Real-life examples of restitution orders
The Fair Debt Collections Practices Act usually governs the activities of a debt collector. When a creditor or debt collector violates this act, they might be subject to a fine. In addition, in some cases, the court might order restitution for certain offenses.
For instance, in the summer of 2021, a Washington state court ordered Machol & Johannes, a Denver-based debt collection agency, to return approximately $475,000 to at least 5,000 consumers in Washington. In addition, the court ordered the company to forgive up to $250,000 in fees and costs for many more consumers in the state.
This ruling was triggered by a lawsuit filed by the Washington State Attorney General, Bob Ferguson, over a series of unlawful debt collection practices by the agency. According to the lawsuit, the collection company had failed to offer consumers garnishment exemptions as required by law. They also charged consumers fees and other costs despite not collecting any money from them.
Further investigations also revealed that the company operated illegally without a license between 2011 and 2012.
That aside, the AG's office found that the company had failed to inform consumers that they could legally protect a portion of assets in their accounts from garnishment. As a result, the collection agency garnished more than was allowed by debt collection laws.
The ruling required the company to return the money collected during the period they operated without a license. The reasoning behind this order was that the company should not have collected money from consumers if it was not operating legally in the first place.
Is restitution the same as a fine?
Although these two usually involve financial payments, they are quite different from each other. The main goal of restitution is to compensate the victims of a crime. On the other hand, fines are paid as a form of punishment for the defendant's crime.
What to do if contacted by a debt collector
From the example above, it's clear that many debt collection companies violate the rights of consumers across the country. But they tend to get away with it because many consumers are not aware that the law protects them from such practices. Additionally, some consumers are even more afraid of being in debt than actually confronting debt collection companies when they violate their rights.
For this reason, it's becoming increasingly important to understand how to protect yourself from unfair practices by debt collectors. Here's how:
Do not ignore debt collectors
Debt collectors will try to reach you as many times as possible unless you ask them to stop. Ignoring them won't make them stop contacting you. Instead, it gives them more reasons to use different tactics to recover the amount you allegedly owe.
Ask for debt validation
If a debt collector contacts you about a debt, the most important thing is to ask them, in writing, to verify the debt. The debt collector must prove that you owe the debt when you ask for verification. This buys you some time to evaluate your options. Send a formal debt verification request by mailing a Debt Validation Letter to the collection agency.
Know your rights
The FDCPA protects you from unfair debt collection practices. Generally, debt collectors cannot:
- Keep calling you if you ask them to stop.
- Discuss the debt with anyone else other than you or your attorney.
- Report false information on your credit report.
- Use aggressive or abusive language when contacting you.
- Contact you before 8 a.m. and after 9 p.m.
- Threaten you with violence or jail if you don't settle the debt.
- Lie about who they are.
- Lie about the amount you allegedly owe.
If a debt collector has violated the FDCPA, you may eligible for compensation (also known as restitution) of up to $1,000 per violation.
What if a debt collector files a lawsuit against you?
Since debt collectors can't contact you when you ask them to stop, the only time they may be able to contact you is to inform you of their next course of action. In most cases, they'll let you know that they plan on filing a lawsuit against you.
If they file the lawsuit, you'll receive a Summons and Complaint letter. The Summons is a document confirming that you're being sued. The Complaint explains why exactly you're being sued. For example, if you defaulted on your payments, the Complaint will list that down as a reason for the lawsuit.
You will have up to 35 days to respond to the debt lawsuit, depending on which state you live in. After the deadline is up, a default judgment may be granted to the debt collector which gives them the right to garnish your wages or put liens on your properties to get the money back. This is why you should never ignore a debt collection lawsuit.
In your response, you should respond to each reason listed in the Complaint document for the lawsuit. You can either admit, deny, or claim you don't understand some or all of the allegations brought against you. In that case, the other party will have to prove that you owe the debt.
SoloSult makes responding to a debt collection lawsuit much easier and straightforward. Instead of filling out complex paperwork and wondering where to send it while done, you can use SoloSuit to draft your Answer in just 15 minutes.
What is SoloSuit?
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
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