By: Robert J. Nahoum
Debt collection lawsuits brought by junk debt buyers like Midland Funding differ significantly from those brought by original creditors because junk debt buyers often lack the proof needed to win the case.Â 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.Â To meet this burden, a junk debt buyer must prove that (1) it has the right to sue you (called â€œstandingâ€); (2) the debt is yours; and (3) you owe the amount for which you were sued.Â 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 (â€œstandingâ€), it must show how it came to acquire it.Â The sale of a debt from a creditor to a debt buyer or from one debt buyer to another is memorialized through an â€œassignmentâ€ in which the original creditor â€œassignsâ€ ownership (and the right to collect the debt) to a new creditor.Â 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.Â When this happens, the debt buyer must prove each and every assignment by showing a â€œchain of titleâ€ reaching all the way back in history to the original creditor.Â Again, each assignment must sufficiently identify your particular debt.
It is common knowledge among debt collection attorneys (both plaintiffs and defendants) that debt buyers lack the evidence needed to prove their cases.Â Debt buyers try to get around this lack of evidence by the use of â€œdiscoveryâ€ and default.
Here is how this happens â€“ there is a procedure in a lawsuit called â€œdiscoveryâ€. During discovery, each party is entitled to ask the other party to admit facts, answer questions about the claims and defenses and admit or deny alleged facts.Â Junk debt buyers like Midland Funding routinely use discovery to try and trick the defendant into admitting that he or she owes the debt or by defaulting. Â Default most commonly happens when the defendant doesnâ€™t answer the lawsuit.Â However, another way a defendant can default is upon a â€œmotion to strike the answerâ€.
If a defendant fails or refuses to answer discovery without legal justification, the plaintiff can ask the court to strike the defendantâ€™s answer resulting in a judgment by default.
Debt buyers routinely use the motion to strike when a defendant answers the lawsuit but fails respond to discovery demands.Â If successful on a motion to strike, the debt buyer may win without ever having to prove that it has standing to sue.
In a recent case, Judge Ignatius L. Muscarella of the First District Court of Nassau County thwarted an attempt by the infamous debt buyer Midland Funding, LLC to prove its standing through discovery.Â When served with Midland Fundingâ€™s discovery demands, the defendant made his own motion to the court asking for a â€œprotective orderâ€ excusing him from answering discovery until Midland had shown that it properly acquired the debt.
Judge Muscarella ruled that
â€œPlaintiff’s discovery requests, comprised of Interrogatories, a Demand for Documents and a Notice to Admit, appear in part legitimately directed toward factual issues in the litigation. Nevertheless, plaintiff’s right to pursue the subject claim is largely dependant upon the assumption that it has standing to do so through one or more assignments of the claim beginning with Citibank, N.A.
In the absence of a satisfactory showing of the necessary assignments of the original claim sued upon to demonstrate plaintiff’s standing to bring an action against defendant for any amount, a defendant will not suffer the consequences of failure to comply with or respond to disclosure devices served upon him notwithstanding that such devices may otherwise seek discoverable information.â€
If you need help settling or defending a debt collection law suit, stopping harassing debt collectors or suing a debt collector, contact us today to see what we can do for you.Â With office located in the Bronx, Brooklyn and Rockland County, the Law Offices of Robert J. Nahoum defends consumers in debt collection cases throughout the Tristate area including New Jersey.
The Law Offices of Robert J. Nahoum, P.C