Debt Buyer Lawsuits: Are you being sued by someone you never heard of?

If you have run into financial problems and are unable to pay credit card payments you probably expect to hear from the bank. What you don’t expect is to be sued by a company that you never heard of.  It is probably a debt buyer.  This is becoming  common.
Companies known as debt buyers routinely purchased accounts from major lenders and credit card companies. They buy these accounts at significant discounts and make substantial profits attempting to collect the full amount.
When they are unable to successfully collect through the use of collection agents they file lawsuits. Most of these lawsuits are not defended and a  default judgment is signed by the court.
This is where the real trouble starts. Once a judgment is entered creditors can garnish your paycheck.  Arizona law allows a creditor to garnish 25% of your take-home pay.
A recent article appearing on Credit Slips highlighted a common problem with these debt collection lawsuits. The credit industry has taken many shortcuts when they have sold or assigned these accounts. A major debt-buyer called LVNV Funding is a good example. In the case discussed on Credit Slips the account was originally owed to Sears. However, Sears had sold the account Citibank. Citibank turned around and sold the account to Sherman Financial Group.  But, the lawsuit was filed listing LVNV Funding as the plaintiff, the company attempting to collect.
The only evidence that LVNV Funding was able to produce was its own business records. They were unable to produce any evidence or testimony that the person they were suing ever owed any money to Sears or that the account had been properly transferred to LVNV Funding.  The Court ruled that LVNV Funding failed to prove that it had a right to collect and entered judgment in favor of the defendant.
The problem with the lack of proof shown in the LVNV Funding case is not unique. A recent decision by a New York state court commented that the practice of the debt-buyer industry unfairly affects consumers. It’s common for an account to be sold and then nothing to be done for several years. The interest rate on the credit card accounts is much higher than the creditor would be able to collect on a judgment. Also, the typical credit card agreement also allows late fees and penalties to be added. The judge in that case has set a deadline for the debt buyer to prove it has the legal right to collect in the Court’s pending cases. If it fails to do so, the judge has threatened to dismiss all 930 of its pending cases.
The debt-buyer industry is counting on the fact that most consumers do not know what to do if they are sued. Most of the collection lawsuits are not defended. When they are not defended the debt buyer is awarded a judgment by default. They are then allowed to use the legal process to garnish wages, freeze bank accounts, and seize personal property.
This isn’t a problem that just taking place in other states. Our office has successfully help several people faced with these debt buyer lawsuits. When you’re faced with financial problems bankruptcy is only one of the options. If your problems are being caused by an account that is now held by someone you never did business with, you probably have a valid defense.
We understand that most people have been through a tough few years. There is no shame in having financial problems that have gotten out of control. If you’re faced with problems such as these, please feel free to give us a call.  We can help.
Original article: Debt Buyer Lawsuits: Are you being sued by someone you never heard of?©2013 Arizona Bankruptcy Lawyer. All Rights Reserved.The post Debt Buyer Lawsuits: Are you being sued by someone you never heard of? appeared first on Arizona Bankruptcy Lawyer.