Star Tribune story on debt buyer lawsuits
June 30, 2010 by Todd Murray · Leave a Comment
The Star Tribune just ran an in-depth story about the surge in debt buyer collection lawsuits. The article does a great job of highlighting the major problem with debt buyers’ lawsuits: their lack of information and evidence to prove that the consumer actually owes the debt. As the story explains, the problems created by this lack of information are magnified when combined with debt buyers’ aggressive litigation practices and the guilty-until-proven-innocent attitude that they treat consumers with.
To me, the important thing for people to take from this story is to understand that the debt buyer industry is built on the premise that consumers will not answer their lawsuits, which results in thousands of default judgments for them. By obtaining the overwhelming majority of their judgments by default, debt buyers can get away with not having sufficient–or any–evidence that the consumer owes the money. But as the story shows, if the consumer fights back, many debt buyers will either walk away from the case or get roundly defeated in court.
If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.
Phantom debts, real anguish | Star Tribune | June 30, 2010
New report on debt buyer lawsuits
June 14, 2010 by Todd Murray · Leave a Comment
Last month, a team of organizations that provide legal help to low-income people issued a report on debt buyer lawsuits in New York City. The study draws on a sample of debt buyer lawsuits brought by 26 different debt buyers from 2006 to 2008. The study refers to this as the “Court Sample”. The study also draws some data from a sample of callers to New York City’s Neighborhood Economic Development Advocacy Project. The study refers to this as the “Client Sample”. Here are some of the study’s key findings:
- Debt buyers won more than 90% of the lawsuits they filed, most of them by default judgment.
- Not a single person in the Court Sample was represented by a lawyer. Overall, only 1% of people sued by debt buyers were represented by an attorney.
- Only 10% of the people sued by debt buyers answered the lawsuit.
- At least 71% of the people in the Client Sample were either not served with the lawsuit or were served improperly.
The first three findings don’t surprise me in the least. It’s long been known that debt buyers have a difficult time obtaining evidence for their case from the original creditor. They get away with filing so many lawsuits only because most of the people that the debt buyers sue can’t afford to hire a lawyer and don’t know enough to answer the lawsuit. So they win the case by default, not because they have strong evidence. And while I suspected that there were frequent issues with bad service in debt buyer cases, I’m a little shocked by how high the rate in this study actually is.
Based on its findings, the study makes the following recommendations:
- Prohibit debt buyers from filing suits without evidence.
- Ensure judicial review of default judgments
- Increase legal representation for people sued by debt buyers.
- Aggressively monitor and regulate process servers.
These are all excellent suggestions. Here in Minnesota, the state legislature is currently working on a bill that would require debt buyers to provide certain documents proving their claim before the court grants them a default judgment. But because of state budget shortfalls, it’s unlikely that Minnesota will see judicial review of default judgments or increased state funding for legal representation for low-income people any time soon. I strongly believe that someone needs to introduce a bill that calls for greater oversight and tougher regulations for Minnesota process servers. One of the fundamental tenets of our judicial system is proper notice to all of the parties, and based on the findings in this study, many people that are sued by debt buyers don’t received proper notice. It remains to be seen whether this is deliberate or sloppy, but I have my suspicions.
Debt Deception: How Debt Buyers Abuse the Legal System to Prey on Low-Income New Yorkers (PDF) | May 2010
If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.
MN Supreme Court amends summons language
May 5, 2010 by Todd Murray · Leave a Comment
The Minnesota Supreme Court just approved changes to Minnesota’s summons, which go into effect on July 1, 2010. The summons, of course, is the notice that comes with a lawsuit that notifies defendants that they’ve been sued. I’ve been critical of the old summons language because it’s confusing and filled with incomprehensible legalese.
I’m happy to report that the new summons is written in plain, clear English. It has 6 bold-faced notices, each followed by a brief explanation. It very clearly explains that: (1) you’ve been sued; (2) you must reply within 20 days; (3) you must respond to every allegation in the lawsuit; (4) you will lose your case if you don’t respond to each allegation within 20 days; and (5) you should talk to a lawyer if you don’t understand how to help. The new summons is much clearer and should allow consumers to better understand what they need to do to protect their rights.
You can read the new summons in its entirety here.
If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.
New York Times story highlights the importance of answering a debt collection lawsuit
April 12, 2010 by Todd Murray · Leave a Comment
The New York Times recently published a story about the increase in wage garnishments due to the sour economy. The story tells the story of two struggling consumers who’ve had their wages garnished to pay back their debts. One man, who owed just over $4,000, actually had over $10,000 taken from his paycheck due to accrued interest and fees. But the lesson here–at least in my mind–is that in many cases, these garnishments can be prevented:
Most consumers never offer a defense, and creditors win their lawsuits without having to offer proof of the debts, much less justify to a judge the huge interest charges and penalties they often tack on …. In the rare event that a consumer battles back, creditors frequently lack the documentation to prove their claim, and cases are dropped. That is because many past-due debts are owned not by the banks that issued them, but by debt collectors who bought, for cents on the dollar, a list of names and amounts due …. “If the consumers were armed with more education about how to defend against these debts, they’d be successful,” said Jeffrey Lipman, a civil magistrate in Des Moines.
I’ve written extensively about the importance of answering a collection lawsuit, but I’ll repeat the message again: if you’ve been served with a collection lawsuit in Minnesota, you MUST answer the lawsuit within 20 days or the creditor will win the case without a judge ever seeing it. In most cases, the creditor’s next step is either a bank or wage garnishment. Even if you believe that you owe the debt, you’re entitled to answer the lawsuit and force the creditor to prove their case.
If you live in Minnesota and want help answering a debt collection lawsuit, feel free to contact me by using the contact form in the upper right corner of this page. I offer a number of flexible representation options, so even if you can only afford to pay a few hundred dollars, I might be able to help you.
Pay Garnishments Rise as Debtors Fall Behind | New York Times | April 1, 2010
What is a summary judgment motion?
April 5, 2010 by Todd Murray · Leave a Comment
A summary judgment is a final decision by the court without having a trial. Debt collection cases rarely go to trial and most are decided on a motion for summary judgment.
The purpose of a trial is to resolve the facts that are disputed. In other words, the jury (or judge in a court trial) listens to all the witnesses’ testimony, reviews any exhibits, and decides whose story is more believable. When someone brings a summary judgment motion, they’re arguing that all the important facts are undisputed–so there’s no need for a jury to hear testimony–and that the judge should just apply the law and make a decision. In debt collection cases, it’s the creditor that usually brings the summary judgment motion.
So what should you do if the creditor’s lawyer brings a summary judgment motion in your case? First, you need to figure out if there are any facts that are disputed. If there are, the judge must deny the summary judgment motion and schedule the case for trial to resolve those disputed facts. If you come up with some, you’ll need to put them in your response to the creditor’s motion. In Minnesota, a response to a summary judgment motion must be filed with the court–and sent to the creditor’s attorney–at least 12 days before the hearing. If you don’t file a written response, you’ll probably lose your case and the judge might not allow you to make any oral arguments at the hearing.
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