Junk Debt Buyers
Over the last few decades an industry has blossomed, waiting in the shadows of traditional banks, credit card companies, cell phone companies, hospitals and doctors to buy up portfolios of consumer debt. These bottom feeders are called debt buyers and they make boat loads of money collecting old consumer debts for which they paid pennies on the dollar.
When these consumer debt accounts are assigned from the original credit to a debt buyer, or from one debt buyer to another, nothing more than spreadsheets are exchanged. Contract, bills, customer service notes and other records rarely if ever travel with the account. To a debt buyer, the consumer us just another entry on a spreadsheet. For this reason, debt buyers routinely lack the evidence necessary to prove their cases in court.
The difference between an “original creditor”, the company that originally extended the credit, and a debt buyer is important because often there are different rules that apply.
Federal debt collection laws known as the Fair Debt Collection Practices Act (FDCPA for short), regulates the conduct of third party debt collectors like debt buyers, collecting debts that are not originally their own. Debt collectors subject to the FDCPA must not use false, misleading or harassing debt collection tactics. Original creditors are generally not subject to these restrictions.
Debt collection lawsuits brought by debt buyers differ significantly from those brought by original creditors because debt buyers often lack the proof needed to win the case. In a debt collection lawsuit, the Plaintiff (the party bringing the lawsuit) always has the burden to prove that the Defendant (the party being sued) is responsible for the debt. To meet this burden, a debt buyer must prove that (1) it has the right to sue you; (2) the debt is yours; and (3) you owe the amount for which you were sued. It is never the burden of the Defendant to prove that he or she does not owe the debt.
To prove that a debt buyer owns your debt, it must show how it came to acquire it. The sale of a debt from a creditor to a debt buyer or from one debt buyer to another is memorialized through an “assignment” in which the original creditor “assigns” ownership (and the right to collect the debt) to a new creditor. To be valid, the assignment must sufficiently identify your particular debt.
Often, debts are sold and resold over and over again to a number of subsequent debt buyers. When this happens, the debt buyer must prove each and every assignment by showing a “chain of title” reaching all the way back in history to the original creditor. Again, each assignment must sufficiently identify your particular debt.
To prove that a particular debt is attributable to you, the debt buyer must prove the establishment of that debt. This usually means producing a contract such as a credit card agreement. Depending on the theory under which you have been sued, a debt buyer may also try to prove that the debt belongs to you by showing copies of bills to which you allegedly never objected.
To prove that the amount they sued you for is correct, the debt buyer must show a complete accounting of the charges they claim you made. This generally includes a full set of bills and account statements.
To meet its burden, the proof submitted by the debt buyer must be based on “personal knowledge”. Personal knowledge means that the person offering the evidence on behalf of the debt buyer must be a witness to the event shown in a particular document. For example, if credit card bills are offered into evidence on behalf of the debt buyer, the person offering the evidence must have personal knowledge of how the information in the credit card bill got there, how it is generated and how it is maintained. That person must have personal knowledge of the computer system and how it operates. If this person does not have personal knowledge, the evidence is “hearsay” and it cannot be used.
The Law Offices of Robert J. Nahoum, P.C. routinely represents consumers in debt collection lawsuits brought by debt buyers in New York and New Jersey.
As with all of our debt defense cases, The Law Offices of Robert J. Nahoum, P.C. analyzes debt collection cases brought by debt buyers to determine if any violations of the FDCPA have occurred. If so, we recommend to our clients that suit be brought in Federal District Court on behalf of the consumer and against the debt buyer.
We understand that our clients are under financial distress. Our job is to make things easier for our clients not harder. It is with this understanding that we have structured our fees. We charge our consumer clients based on a flat fees arrangement. Cases where we are hired to defend a debt buyer case generally range from between $750 and $1,500.
If you have questions, concerns, or legal needs regarding a debt buyer, we urge you to contact The Law Offices of Robert J. Nahoum, P.C. today by calling 845-232-0202.