If you are reading this article, there is a good chance you have been sued by a junk debt buyer such as Midland Funding, Encore Capital, Portfolio Recovery, Cavalry SPV, CACH LLC, Midland Credit Management, LVNV Funding LLC, or Unifund CCR Partners.  These are companies that purchase delinquent credit card debts for generally 3 to 7 cents on the dollar.

Debt buyers typically buy nothing more than a list of names and balances owed without any real proof of the debt.  By that I mean they do not acquire a signed copy of the credit card contract or a record of all payments and charges made to an account.  They lack an explanation of how charges were assessed from month to month and almost never can provide a copy of the many amendments made to the credit card agreement.  In short, they generally lack any proof of the debt.  In fact, the seller of the debts usually states that there is absolutely no guarantee that the debts are actually valid.

Why would a debt buyer spend millions to purchase unverified debts?  Because 95% of the time when they sue for payment the debtor does not file a written Answer to the lawsuit and they obtain a Default Judgment for the entire balance due, whether they can prove the debt or not.  The debt buying industry is founded on volume and default judgments.  They don’t have to prove their case because nobody makes them.

So, if you have been smart enough to file a written answer to the debt buyer lawsuit, what happens next?  Well, in a surprising number of cases the debt buyer will just let the case get dismissed.  However, my general experience is that the debt buyer’s attorney will send you a variety of discovery documents in the form of Interrogatories, Requests for Admissions and a Motion to Produce Documents.  It is extremely important to respond to these requests within 30 days.  Failure to respond will allow the debt buyer’s attorney to seek a Summary Judgment .

Although filing a written Answer to a lawsuit and responding to discover is absolutely essential, if is this all you do you are missing a key element to your defense.  You are playing an entirely defensive game and are forgetting the most important factor or these lawsuits:  the debt buyer has the burden of proof and generally cannot prove their case.  You need to play offense.  You need to make them respond to questions and to admit or deny basic facts and to produce documents.  And if they cannot respond to your questions and requests, maybe you should file the motion for Summary Judgment.

Here are some questions you may want to ask the debt buyer’s attorney:

  • Identify every person who has or may have personal knowledge of the claims, defenses, or allegations in this lawsuit, including all persons you may call as a witness at trial.
  • Identify all documents you claim demonstrate Defendant’s consent to be obligated on the account.
  • Identify all documents you claim entitle you to ownership of the account.
  • State all transactions on the account. Include in your answer the following: All late charges assessed to the account, and the date of each charge; All over-limit charges to the account, and the date of each charge; All charges to the account, including cash advances, and the date of each charge; and All payments to the account, and the date of each payment.
  • Explain in detail how you calculated the total amount due on each date a statement was sent to Defendant.

In addition to asking questions (what lawyers call “Interrogatories”), demand that they send you every documents regarding the account, including the contract, amendments to the contracts, every billing statement, and all other documents relevant to the litigation.

After sending all this to the debt-buyer’s attorney, mark your calendar for 30 days later.  Did you receive a response?  If not call the debt buyer’s attorney.   It might be a good time to chat about a reasonable settlement.  They filed a lawsuit with no proof of the debt, and that is outrageous.  Put them on the defensive.  Why shouldn’t their attorney be sanctioned for filing a frivolous lawsuit?  How is this not a violation of the Fair Debt Collection Practices Act (FDCPA) to file a lawsuit with no proof of the debt?  Shake them up.  Turn the tables on them. Play offence.

* Image courtesy of Flickr by Paul De Los Reyes

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