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Beating Junk Debt Buyers

Many attorneys representing debt collection agencies do not have the documents necessary to prove their case. Summons and complaints cannot be simply sent out to people for them to then automatically give up the money. It doesn’t work that way; and if people are giving up their money that easily, they shouldn’t. In the U.S. court of law, most states require that proof be attached to the complaint in order to initiate the credit card lawsuit. Most of these junk debt buyers’ attorneys don’t even expect the average person to respond to the summons because they believe that they will be too scared or they won’t know how to challenge the lawsuit.

It is unfortunate that collection attorneys get away with so much. If the consumers don’t know their court rules or what is required for a legitimate lawsuit, the attorney will get away with collecting the money. The more that a consumer knows when dealing with a debt lawsuit, the better chance he will have at overcoming the case. Consumers must be aware of what needs to be attached to the complaint and write up the correct motions in order to dismiss their case for non-compliance of court rules.

Debt lawsuits are typically filed by a debt buyer who possesses little or no documentation of the underlying debt. About 97% of people facing third party debt collection lawsuits do not respond to their lawsuit.

Here is the scenario that hundreds of Americans go through when dealing with debt:

Upon receiving a credit card, many consumers will run experience financial hard times, job loss or economic distress and end up having a difficult time making payments. Some will try to work with the credit card company, but still fail to catch up on payments.

After the credit card account is about 120 days delinquent, the account is “charged off”. When an account is “charged off” it means that the original creditor has written off the “bad debt” for accounting purposes.

At this point the original creditor may do one of three things:

  • Clear their books of bad debt.
  • Take a generous tax write-off.
  • Collect from bad debt insurance.
  • Sell the debt to third party debt collectors.

Charging off a debt does not mean that a person no longer owes the debt to the original creditor.

Next, the original creditor will sell the account along with thousands of other accounts to third party debt collectors. Once the creditor sells the charged off accounts to debt buyers, they package the accounts into portfolios. Each portfolio normally contains thousands of charged off consumer accounts. Now, the portfolio has a “face value” – the total amount of debt from all the charged off accounts.

Junk debt buyers like Midland Funding or LVNV Funding buy the portfolio of accounts for a huge discount off the face value. At this point the original creditor is no longer involved with the account.

Once they have obtained the account, the junk debt buyer will file a lawsuit against the consumer for the full amount and sometimes even more. Not only will the junk debt buyer sue for the full charged off amount, but they will also ask the court to grant pre-judgment interest, post judgment interest, attorney fees and court costs.

Junk Debt Buyers File Credit Card Lawsuits by the Thousands

Typically a junk debt buyer doesn’t even receive much information about the debt. The junk debt buyer receives no more than a spreadsheet with thousands of names, addresses, telephone numbers, account numbers and charged off amounts, which is just enough to call and send consumers letters demanding payment or to file a lawsuit. Junk debt buyers almost never have to prove their case because consumers will not answer the lawsuit. They see the summons and just ignore it, either in hope of it going away or for fear of losing the case.

Since they lack sufficient documentation to support a debt lawsuit against the consumer, fighting back is a viable option for the everyday consumer who receives a summons in the mail from a third party collector. Junk debt buyers are counting on the fact that oftentimes consumers need to clear blemishes from their credit reports and are usually willing to pay old, mysterious debts without question. Don’t pay on random debt without having proof that all of this money is definitely owed and owed to the collector demanding it. Get evidence of a contract agreement and documentation.

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