In recent years, local state courts have become increasingly clogged up with cases involving third party debt buyers. These companies are also known as ‘junk debt buyers’ and ‘ghost debt buyers’.
As a consumer, you probably have not done any direct business with them yourself and you may not have even heard about them before. That is because they don’t arrive on the scene until you have financial difficulties and even then, it might be a while until you are acquainted with them.
Long before you received a Summons and Complaint from this junk debt buyer you, the consumer, applied for a credit card with a bank or Credit Card Company. Later, a job loss or other unforeseen circumstances makes it very difficult for you to make payments on your Credit Card balance. You may try to work something out with the Credit Card Company but unfortunately, it does not work out and you cannot continue paying back the debt.
After a few months of unsuccessful attempts at retrieving the debt, the Credit Card Company charges off your account. This means that they write it off and deem it as an uncollectable debt. Although this doesn’t clear you of the debt, it means they have given up trying to collect it from you and they can dismiss it as a tax loss or make a claim under some form of insurance.
The original creditor then may bundle up your debt with thousands of other accounts and sell them onto a debt buyer. Even though the face value of the debt may be high, the accounts are bought for pennies on the dollar. Now, the debt buyer will attempt to sue you for the full debt that you owe plus their own largely inflated fees and interest.
At that point, to the junk debt buyer, you are nothing more than a name, telephone number and dollar figure. In the portfolio they receive, they may not have anything more than that along with some robo-signed documents to ‘support’ their case.
These junk debt buyers will then file a lawsuit against you in an attempt to collect their pay out and currently it is estimated that they are successful in over 90% of their cases. Before you panic and abandon all hope, it is important to note that there is a very good reason why they win over 90% of their cases: it is because over 90% of consumers ignore their lawsuit.
Most of these cases are won by the junk debt buyer because the defendant either doesn’t respond to the Summons and Complaint or further down the line they fail to show up in court. All of those things play very nicely into the hands of the junk debt buyer and means a cheap win for them. In these instances the judge will award a default judgment against you giving the junk debt buyer access to your wages, bank accounts and essentially, your livelihood.
You must respond to the Summons and Complaint and it is essential you attend any pre-court hearings and the trial itself in order to avoid a default judgment. Many consumers have found The Defendant’s Package a huge aid to knowing how to respond to the Summons and Complaint.
As mentioned above, the junk debt buyer may not have much documentation regarding your debt and what they do have may not be valid. This may surprise many consumers but if in over 90% of cases the junk debt buyers have no opposition to their case as the defendant doesn’t even turn up, there appears to be little point in sweating over the legally required documents.
For that reason, it’s essential to check the documents they provide as proof. Try and check that the signatures are authentic and belonging to real people. Some lawyers have suggested searching for the names on the internet to see what comes up.
A robo-signer is someone who signs all kinds of documents without looking at or checking what they are signing. For example, the junk debt buyer needs to hold and present an affidavit which is a statement confirmed by oath saying that the information is accurate, in this case that the defendant owes the amount stated.
You must check to see who has signed the affidavit. Is it someone from the original creditor, someone from the junk debt company or someone else?
To be a valid affidavit, it must be signed by an employee from the original creditor and who was employed there when your account was opened. If not, all the evidence provided by the junk debt buyer is classed as ‘hearsay’. In other words, their so called evidence is nothing more than unfounded, speculative allegations and these cannot hold up in court.
Similarly, the junk debt buyer must prove that they have the right to sue on the debt. To do this they should present the chain of title beginning with the original creditor and terminating with their company. There should be an assignment of debt establishing legal ownership of the account. Once again, verify the signatures and names on the documentation, if they even provide you with it.
Unfortunately, the practices of junk debt buyers are far from ethical and many times are not even legal. You have to be alert and ready to fight back to be in with a chance of success. Research every aspect and step of the case and follow the direction of your local court. Familiarize yourself with the Fair Debt Collection Practices Act (FDCPA) to be able to identify which of the junk debt buyer’s tactics are in fact illegal.
Consumers who have done these things have successfully defeated the likes of LVNV and Midland Funding, some of the nation’s biggest junk debt buyers. You too can beat a lawsuit from a junk debt buyer and it may not even be as hard as you first thought.
For real case examples, tips, templates and more information on how to win your case, check out The Defendant’s Package.