The wrath of corporate greed and complete lack of respect for the average American consumer that we hear so much about on the news today gave birth to an animal that will stop at nothing to maximize its profits at your expense – the “debt buyer.” Unfortunately, the debt buyer has turned our civil court system into its own private casino. There is a good chance that if you have been harassed over a debt or sued by a debt collector Plaintiff with whom you have never even heard of before, you have become the target of a debt buyer.
What is a debt buyer? In the consumer world, debt buyers are typically corporate entities that buy large portfolios of charged off consumer credit obligations, like credit card accounts, for pennies on the face-value dollar. The debt buyer often then attempts to achieve a windfall return on its investment by suing and forcing individuals without a debt defense lawyer into settling, or by getting judgments against consumers who fail to respond to the lawsuit, called “default judgments.” Either result can be catastrophic to the consumer.
A default judgment is a conclusion by the court that you owe the debt buyer the money, and now the debt buyer will probably try to collect and may garnish (i.e. freeze and deplete) your bank accounts and “abstract” the Judgment, which may cloud title to real estate that you own. Settling with a debt buyer who probably would not have been able to prove its case at trial can be equally as bad – your hard earned money now belongs to them, and they never proved, in a court of law, that you owed them a dime, which would have been their burden had the lawsuit been properly defended.
The Truth About Debt Buyers and Debt Buyer Lawsuits
The largest and most successful debt buyers have purchased hundreds of bad debt portfolios containing millions of charged off accounts. If they have sued you, then you are merely a number to them. They run high volume operations, employ lots of collectors and debt collection law firms, and file lots of lawsuits. Typically, the less a debt buyer pays for a portfolio of charged off debt, the less documentation and support from the original creditor they receive. This works to your advantage if you are represented by a diligent lawyer intent on holding the debt buyer to its evidentiary burden under the law. It also means that it is financially advantageous for the debt buyer to buy cheaper portfolios and then concentrate on a quick and aggressive attempt to collect after serving you with the lawsuit versus a litigation strategy designed to go to trial. The more people they sick their aggressive debt collectors and debt collector lawyers on, the more money they make.
However, there is hope. It has been our experience that once the layers of the onion are peeled back during the discovery period of the lawsuit and the debt buyer’s evidence is examined closely, very few debt buyer lawsuits have admissible evidence capable of proving their case at trial. Rather, the debt buyer Plaintiffs have adopted a systematic and routine practice of producing and attaching documents to their lawsuits that look official, but have nothing to do with the consumer. By way of example, we have seen debt buyer lawsuits with credit card account agreements attached that are from the wrong bank. We have seen multiple “Account Statements” that were manufactured by the debt buyer itself, which is troubling since debt buyers do not lend money or open or maintain credit accounts with consumers. The simple truth of the matter is that debt buyers often times lack the ability to produce the records needed to succeed at trial; or for that matter, the records simply do not exist.
Consumers who get sued and do not hire a lawyer to defend them are often unaware of these facts. This may lead to the consumer being tricked into even greater financial distress at the hands of the debt buyer. Do not become one of them.
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