Legal Aid Explained
Legal aid assures that the law supports you in debt collection issues; it protects you if you cannot afford to finance your own legal work on your debts.
Where people require debt collection support, and they cannot afford to hire a lawyer to help them, the legal aid system steps in to help. In Canada, legal aid is administered through grants from both federal and provincial/territorial governments to the provinces and territories. The funding goes to each province and territory in order to create a base of legal aid services and coverage in regard to criminal law or criminal prosecutions. Women’s legal aid, children’s legal aid, family legal aid and civil legal aid is available to most citizens, unless certain exceptions or Evidentiary Questions arise. For example, if a client is required to come to a lawyers office with their father , mother or some other legal guardian as an intermediary, then "Evidentiary Questions" may result. That is where there is a question of the validity of the Community Agency or Intermediary signing the legal documents on behalf of the debtor-client.
Legal aid exists to address traditionally recognized barriers and power imbalances in legal matters. It allows citizens, who cannot ordinarily afford to cover the costs of a qualified legal expert, to get access to those experts, and it helps lawyers find hope in the national legal system when they are helping the most vulnerable in society. Even lawyers must seek legal aid from time to time, and with the same seriousness that they seek compensation for labour and expertise. Legal aid recognizes that the most vulnerable in society still need expert advice and representation in legal practices such as debt collection.
The Role of Legal Aid in Debt Collection Cases
Legal aid organizations serve an important role in debt collection cases. First, legal aid organizations help both defendants and plaintiffs with civil legal issues who cannot afford to hire a private attorney for their court cases. They assist with negotiating and litigating debt collection claims in Iowa courts and even argue cases before the Iowa Supreme Court.
Legal aid also helps consumers deal with unscrupulous creditors and oppressive debt collectors. It is important to know that debt collectors must follow strict guidelines under both federal and state law. These laws include the Fair Debt Collection Practices Act (FDCPA) and the Iowa Consumer Credit Code. These federal and state laws prohibit debt collectors from practices such as: aggressive collection tactics; harassing phone calls to your home or at work; contacting friends, family and co-workers without your permission; and threatening legal action.
Legal aid lawyers are in a position to help consumers who face abusive collection tactics. When clients come to legal aid with a debt collection problem, lawyers at legal aid look to see if the consumer qualifies for a fresh start on debt, which can be gained through bankruptcy. If the case is appropriate for bankruptcy, legal aid lawyers assist clients in filing for Chapter 7 bankruptcy.
Eligibility Criteria for Legal Aid in Debt Collection
When evaluating whether or not you qualify for legal aid in dealing with a debt collection, there are a number of criteria which will be considered. A debt collection lawyer will generally assess your situation for three basic qualifications: income guidelines, asset thresholds, and other special considerations. Revenues and assets are the two most common factors for exclusion from legal aid, but there are exceptions for those with children and for those living in low costs of living areas. Once your eligibility is determined, the legal aid lawyer should provide you with a income and expenses worksheet so you can then proceed to the next step in having your debts handled by a professional.
Income guidelines are based on your income for the past 30 days or year. You must be at least $1,000 below the poverty line in your respective area to be eligible for free legal aid. That means that if you made less than $1,000 total in the last month, you should qualify. A household of more than four members has a higher threshold (currently $2,000 under the Federal poverty guidelines). This is also adjusted based on whether you plan to buy a home or not.
The second way you may be excluded from assistance is by having assets that exceed qualifying limits. However, your income and assets are not the only things a legal aid lawyer will look at when determining whether or not you qualify for aid. Your possessions will also determine if you are eligible to receive pro bono legal services. When a lawyer from the legal aid office determines whether or not they can help with your debt situation, they will ask for information about your assets. If this information suggests that you have the means to pay, you may be excluded from eligibility even if your income is under the set income threshold. An asset test may be used to show that you cannot afford an attorney, even though the guidelines are set at being at or below 125% of the poverty rate. The purpose of having such limits in place in legal aid is to prevent abuse by wealthy people who try to qualify for free services when they do not actually need it.
How Legal Aid Affects Entities Pursuing Debt
The Impact of Legal Aid on the Debt Collector Database
The presence of legal aid often has a significant impact on how debt collectors approach a given case. The most obvious areas of adjustment revolve around the way in which legal aid alters dynamics, with the possibility of extending into added processes, opportunities, and even costs for debt collectors further down the line.
The negotiation and dispute resolution landscape can change substantially with the involvement of legal aid. The most straightforward form of influence often comes in the form of negotiation assistance, but it also extends into the creation of desirable outcomes for the debtor. It can lead to more favorable deals, or at least some form of debt restructuring if not total forgiveness.
The future of the debt, even if at a reduced cost, often becomes a focus, with the reality being that lenders may be more accepting of a manageable debt than a collection process that requires significant external investment. The debt collector, on the other hand, may want to protect their interests by avoiding any concession that leads a debtor into yet another unmanageable situation .
The negotiation approach, then, can become a delicate balance that directs the progression of the case. Debt collectors may find themselves extending new offers due to legal aid, or vice versa, while possibly needing to push for mediation when the debtors’ existing debt prevents settlement. Legal aid can also alter the legal obligations faced by debt collectors as cases progress.
In some cases, legal aid might need to be involved virtually from the start, particularly with vulnerable debtors who might not have adequate awareness of their rights, obligations, or potentially exploitable vulnerabilities. This is an obvious form of protection for the debtor, on top of the benefits already offered by legal aid itself.
In the end, the base influence of legal aid on a debt collection case often comes down to two distinct areas — negotiation assistance and legal protections. In both areas, it’s possible to see shifts in debtors’ behavior, but debt collectors are also afforded greater protection — to some extent — those who call for legal aid can expect debtors to be acting far more ‘by the book’ as they pursue the collection process.
Case Examples: Effective Use of Legal Aid
While searching for examples of legal aid involvement in debt collection, our research came across a number of documents and papers that cataloged different ways in which legal aid and pro-bono attorneys have successfully helped clients with their debt collection hurdles. The information is of mixed quality and, more often than not, incomplete. However, for the purpose of this article we found enough information to build a brief case-study library. The Texas RioGrande Legal Aid has a debt collection pilot project to assist clients with insufficient income to repay debts. Through a collaborative effort with a local bankruptcy law firm, TRLA was able to cross-train their attorneys and obtain free legal assistance for clients in the bankruptcy courts. Many debtors residing in rural South Texas have a high negative equity in their vehicles, making them a target for aggressive repossession practices. The team involved with the debt collection project has had a 70% success rate in saving vehicles from repossession through loan modifications. The Texas law firm working with TRLA has helped over 25% of clients who seek assistance to file for bankruptcy.
The Northwest Justice Project, a non-profit law firm dedicated to serving low-income earners in Washington state, has a Debt Collection Defense Project that focuses mainly on assisting debtors who have been sued by credit card companies. The NJP provides service throughout the state using both litigation and alternative dispute resolution methods. With a rate of 50% of cases transitioned into full representation, and an average litigation filing cost of $50, the NWJP is able to provide endless pro-bono support and representation to low-income consumers facing large debts.
The United States Compassion Project provides free, direct representation for low-income clients in consumer debt and bankruptcy cases. Working specifically with immigrant communities in the U.S., the Project has a track record of saving homes from foreclosure, repossessed vehicles, and large amounts of debt from seized paychecks. The priority of the project is to file preemptive lawsuits against creditors to prevent them from taking any actions against their clients. With a success rate of 75% of filed lawsuits at an average filing cost of $20, the Compassion Project has been able to save numerous low-income consumers from hundreds of thousands of dollars in debt and foreclosure.
A recent survey from the National Legal Aid and Defender Association compared how legal aid spending can produce a return on investment. They examined legal aid programs in Golden Gate, California and the state of Delaware. In Delaware, for every dollar spent on legal aid programs, the state saw a return on investment of $5.31 to $10.76. Meanwhile, California was able to generate a return on investment of $2.64 to $7.94 for every dollar spent when comparing legal aid programs to government departments working in the same area of law. As you can see, funding a legal aid program is one of the most productive methods of reducing debt, foreclosure rates, bankruptcies, and homelessness.
Applying for Legal Aid in Debt Collection Cases
The legal aid application process is often viewed with daunted anticipation and deservedly so; the unknown is always unsettling and this process is no exception. However, once you know what’s in store, you can and should take steps to make the process go as seamlessly as possible. The first step is to schedule an appointment with your prospective legal aid representatives. You may be able to find out your options for legal aid by searching online, such as by searching "legal aid near me" or "legal aid South Carolina" for residents of North or South Carolina. You can also just walk into your local legal aid office if you prefer. In most cases, you should be prepared to fill out an application. When it comes to the documentation needed, your legal situation will dictate the details. Since the case in question is a debt collection, you will need to provide all of the available information that pertains to your case. This may include all communications with the other party, credit reporting agency numbers, bank statements, any previous legal action taken (if any), and all of the details regarding the collection effort . As summarized in the video below, collectors must follow the Fair Debt Collections and Credit Reporting Acts, and you will be required to provide all evidence of any violations of these laws. For example, if the collection agency is making continual calls even after formal notice to cease and desist, you will need to provide all of the supporting evidence. To ensure the fastest possible processing time, you will want to be prepared for your legal aid in debt collection appointment. That starts with being aware of the specific documentation that will be necessary, but it doesn’t end there. You should also expect for the process to be slow. It may take several weeks to be assigned the legal aid attorney, so be prepared for that from the get-go. When you have all the necessary information available and keep your expectations realistic, you can more quickly move through the legal aid application process and onward to beginning your fight against the debt collector.
