By: Robert J. Nahoum
There is an industry out there of companies who buy up portfolios of old consumer debts like credit cards and medical bills for pennies on the dollar. These debt buyers then try to collect those debts from consumers using tactics that often violate federal debt collection laws. Too often, debt buyers sue consumers in court without sufficient evidence to prove the existence of the debt or the debt buyers’ standing to collect it.
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.
- What Must the Debt Buyer Do to Prove It Owns Your Debt?
To prove that a debt buyer owns your debt, it generally must prove how it came to acquire it. The sale of a debt from one creditor 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.
- How Must a Debt Buyer Prove That the Debt Belongs to Me?
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 never allegedly objected.
- How Must a Debt Buyer Prove That the Amount for Which I was Sued is Correct?
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 such personal knowledge, the evidence is “hearsay” and it cannot be used.
What You Should Do:
The first step is to actually fight back. Do not ignore the lawsuit because if you do, you will end up with a default judgment. Don’t make it this easy on the debt buyer especially when it is already so hard for them to prove their case.
Next, you must use the debt buyers’ burden of proof to your advantage. The many things the debt buyer has to prove with personal knowledge are burdensome and costly. Also, the way consumer accounts are “assigned” is virtually 100% electronic. That is, your account information is sent from one creditor to another through nothing more than a spreadsheet. When push comes to shove, a debt buyer might occasionally be able to produce copies of the bills and possibly even a contract. However, usually nobody working for the debt buyer has “personal knowledge” of those documents and so that may not be admissible in evidence.
If you need help settling or defending a debt collection law suit contact us today to see what we can do for you.