Defense of Debt Collection Suits

Lex Loci April 2012

In recent years a new industry has developed around the purchase of old and defaulted credit card debt. Financial institutions who are the original issuers of credit cards will bundle defaulted accounts into huge Portfolios and offer them over the open market to bidders who purchase these accounts literally for “pennies on the dollar.” The bidders or purchasers of these portfolios refer to themselves as “distressed debt buyers.” We refer to them as something less flattering. These portfolios typically contain thousands of accounts. Upon purchase the debt buyer will begin dunning an individual consumer to the extent that an account for which it paid(on the average $10) may result in the demand for the original face value of the account which frequently ranges between $1000 and $10,000 and sometimes more. A huge chunk of it will include accrued interest and other charges which will result in an amount that will be unrecognizable to the debtor. This can be avery profitable business for these people. Unfortunately, precious little information and documentation is passed along about the individual accounts and the debtors themselves that are contained in these portfolios. Typically, these portfolios will not include the credit card agreements and other account documents which could support any claim which might be brought on these accounts. This explains how these accounts are obtained so cheaply. Yet the lack of these documents does not appear to be much of an obstacle to the assertion of claims in lawsuits for non-payment. These distressed buyers, by necessity, will align themselves with large debt collection lawfirms prepared to file thousands of lawsuits within your state which, obviously, cause a great amount of congestion to an already seriously clogged court docket. 90% of the time these collection suits result in default judgments which is anticipated and actually hoped for. Therefore, if you’re sued the worst thing you can do is nothing and allow a default to be taken against you.

Before you contact the debt collection firm and throw-in the towel, it is worth it for you to call our office to see if the claim sued upon is valid or if you have a defense.There are many ways to attack these suits that are available to you as a consumer. First, if nothing else, we always start-off with the premise that the amount sought exceeds what is actually owed. The very first thing we do is look to see if there has been an fdcpa violation which, if one is found, allows us to pursue a claim on your behalf which can result in a dismissal of thecase against you and even potential damages in your favor. Call us.

Ask Steve.