Reasons to Defend a Consumer
Collection Complaint
The distressed debt buying industry is a multi-billion dollar industry in which debt collectors purchase literally millions of old debts for pennies on the dollar that the original creditors have written off. The debt buyers receive minimal information on each account, and certainly do not receive the contract or copies of any communications in which the consumer might have disputed the amount owed. In addition, after having unsuccessfully attempted to collect the accounts, these debt buyers regularly resell repackaged portfolios of uncollectable debts to other debt buyers whose connection to the original creditor—and to original documentation and proof—is even more attenuated.
Statute
of Limitations
Because debt
buyers purchase very old debt, the statute of limitations is an important
consumer defense. Debt buyers who cannot produce the written contract often
bring the case on an account stated or other claim not based upon a written
contract. In many states, such causes of action have a shorter limitations
period than a claim based upon a written contract. Credit card collection
cases, even when brought on a contract theory, may have to be brought within a
shorter limitations period applying to non-written contracts. Moreover, the
action may have to be brought within a shorter limitations period found in the
law of some other state than the forum state.
Because the debts are old, the consumer often will have moved after the credit account was closed, and the debt buyer must first try to locate the consumer’s present residence. Debt buyers may try to serve the consumer at the wrong address or even sue the wrong consumer. Debt buyers rely on credit reports to locate the consumer, but the credit reports themselves are filled with errors, including incorrectly merged information that mixes the credit reports of two or more people with similar names and other identifying information, and that results in the collector then suing the wrong person.
Quite often, the debt buyer does not have sufficient evidence to prove its case, relies on business records that are not properly introduced into evidence, or tries to prove its case based on clearly defective affidavits. Debt buyers frequently cannot even prove that they own the debt they are collecting and they may not have access to better evidence or may not want to expend the resources acquiring that evidence, so they try to win cases by default without an ability to prove that money is owed.
Creditors
also may commit billing errors which may be the reason the creditor stopped
collection efforts—the consumer did not owe all or part of the money claimed.
When these debts are sold, the debt buyer does not receive or retain this
information concerning consumer defenses. The consumer can then defend the
collection action based upon the original dispute the consumer had with the
creditor.
Too often
debt buyers will bring actions against spouses and other parties knowing these defendants
do not owe the debt, but hoping to either pressure them into payment or obtain
a default judgment against them. Examples includes suits against authorized
user not liable on the account and against family members of a deceased debtor.
The debt buying business model is to cast a wide net without consideration as
to whether the consumer owes the money, and see what money is recovered.
Reason #1: Prevailing Can Improve Your Credit Rating
If your case is dismissed, the consumer can take action to ensure that credit reports indicate that the current balance of that debt is now reported as zero. If the judge also rules that the consumer never owed the money (for example, because the collector sued the wrong consumer), then the consumer can seek to delete information in their credit report that the debt had been in default in the past. In addition, the attorney can help the consumer dispute inaccurate information in a credit report, and the consumer has a cause of action under the Fair Credit Reporting Act (FCRA) if that information is not properly investigated and corrected.
Reason #3: Alleviate Stress
Being sued is an extremely upsetting and difficult experience. You probably have never been sued in your entire life and may be feeling distressed over the suit, even for a relatively minor debt. That distress can place strain on your intrafamily relationships, work, and health. Medical problems can be accentuated under stress. You need legal representation to explain what is happening and how to depend your interests.
Reason #4: Protection of Your Assets
and Income
A judgment
against you can have serious financial consequences. Your assets and income may
be at risk. Bank accounts, even those containing certain exempt funds, may be frozen
for days or even weeks, and may eventually be seized unless exemptions are
properly pursued. Your wages can be garnished. Cars and other property can be
seized. Defeating this collection action eliminates those threats. Even if a
default judgment has already been entered, an attorney can assist the consumer
either in setting aside the default judgment or in minimizing the impact of
these creditor remedies.
Reason #5: You May Have Legal Claims
Against the Debt Collector
Often we
discover that the consumer has separate affirmative actions under the FDCPA,
FCRA, and other federal and state statutes, resulting in significant actual and
statutory damages and attorney fees, either on an individual or class-wide
basis. Investigating the facts relating to the collection action will often
uncover various systematic law violations.
Reason #6: Debt Collector May Have to Pay the Consumer’s Attorney Fees
Often
Debtors wonder how they may be able to pay for an attorney. However, there are
a several ways that we may be able to recover our legal fees from the debt
collector. Fees may be recovered by statute in about twenty states. Fees are
also available to the consumer for prevailing on certain counterclaims, or as a
result of the collector’s bringing an action without adequate facts.
Reason #6: Stopping Systematic Abuse
of the Court System
Debt buyers
today are using the courts to engage in wholesale litigation abuse. They sue
huge numbers of consumers with no real knowledge of whether the consumer owes
the debt or whether the statute of limitations has run. Debt buyers sue with
little or no evidence to prove that the consumer owes the money, that the debt
buyer in fact owns the debt, or even that they are suing the right consumer.
This litigation strategy is effective because very few consumers obtain legal
representation, and the overwhelming majority of consumer defendants default in
the collection action.
When the
consumer contests an action, the collector utilizes various techniques to win
without having to produce admissible evidence to prove its claim. The collector
may take advantage of the unrepresented consumer by working out a stipulated
judgment without disclosing that the collector cannot prove the debt. Another
technique is to send the consumer a long list of requests for admission to
which the consumer does not timely respond. The requests are deemed admitted,
and the collector needs no other evidence to prove its case. Alternatively,
collectors seek summary judgment on junk evidence—attachments that are not
attached, affidavits from debt buyer employees (or even non-employees) who
state conclusory facts about which the affiant has no personal knowledge, or
about pretend business records created years after the fact.
If you have outstanding debts or judgments then let an Arizona bankruptcy attorney help you come up with a solution. Contact the Dunaway Law Group at 480-389-6529 or message us HERE.
