Credit Card Debt Collection
Debt collection in today’s economy looks very different than it did just ten or more years ago. These days, the bank that extended you credit will not likely be the one to collect it if you fall behind. A new industry has blossomed, waiting in the shadows of traditional banks to buy up portfolios of defaulted consumer debt. These bottom feeders are called “debt buyers” and they gobble up thousands of credit card debts at a time for pennies on the dollar and then collect the full amount for their own pockets.
When credit card accounts are assigned from original creditors to debt buyers or from one debt buyer to another, very little information about the consumer is provided. Most often, the debt buyer is not given the credit card contract or account notes. In fact, most debt buyers only acquire spreadsheets listing the consumer’s name, address, phone number, the amount of the credit card bill and the charge off date. To a debt buyer, the consumer is little more than an entry on that spreadsheet. For this reason, debt buyers routinely lack the evidence necessary to prove its case 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 has the right to collect your debt, the debt buyer must prove how it came to acquire it. The sale of a debt from a creditor to 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 the debt buyer. 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 never allegedly 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 such personal knowledge, the evidence is “hearsay” and it cannot be used.
The Law Offices of Robert J. Nahoum, P.C. routinely represents consumers in lawsuits brought by debt buyers in New York and New Jersey.
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 against a credit card debt lawsuit generally range from between $750 and $1,500.00.
If you have questions, concerns, or legal needs regarding a credit card debt collection case, we urge you to contact The Law Offices of Robert J. Nahoum, P.C. today by calling 845-232-0202.