Judge Sotomayor’s record in consumer interest cases

Consumer Law & Policy No Comments »

On the first day of the Sotomayor confirmation hearings, it seems appropriate to post this report on Judge Sotomayor’s record in consumer interest cases. The report contains discussion of Sotomayor’s rulings on debt collection, consumer arbitration, and unfair and deceptive trade practices, among other issues. Also, click here for a list of Judge Sotomayor’s consumer protection rulings.

(photo: Wikimedia Commons)

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The first step when you’ve been served with a debt buyer lawsuit

Debt Collection No Comments »

A debt buyer is a business that purchases delinquent accounts from the original creditor and then sues consumers to collect the debts. Because the debt buyer did not originate the debt, it is at the mercy of the original creditor to provide it with evidence to prove its case. In some cases, the original creditor doesn’t provide the debt buyer with any evidence of the debt. And when the original creditor does provide evidence, it often is just a single billing statement that was generated long after the account became delinquent.

Although it seems ridiculous for debt buyers to initiate lawsuits without knowing what, if any, evidence exists to prove their claims, debt buyers nonetheless initiate thousands of lawsuits each month. Why? 95% of collection lawsuits proceed by default and result in judgments being entered against consumers without the debt buyer having to prove its case.  This basic premise is why collecting purchased debt is a thriving sub-industry. Debt buyers know that they can obtain thousands of judgments without having to produce a single piece of evidence.

If you are sued by a debt buyer, the first step is answering the lawsuit in a timely manner. An answer is a legal document that responds to the allegations in the complaint. If you are unsure how to do this yourself, contact a consumer lawyer immediately to help you. Failure to answer the lawsuit within the required time will likely result in a default judgment being entered against you without having an opportunity to go to court and defend yourself. But if you respond to a debt buyer lawsuit properly and engage in the ensuing litigation process, you will force the debt buyer to prove its case in front of a judge. Often they can’t.

(photo: maura)

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Debt settlement companies: consumers beware

Debt Collection 3 Comments »

30556169_906ac1bfdeThey go by many different names: debt settlement companies, credit counseling agencies, debt negotiators, etc. Many consumers turn to them when their bills started piling up. They pay the company several thousand dollars as an up-front fee. The company promises to get them out of debt through a “secret program” that the credit card company doesn’t want them to know about.  

But what the debt settlement companies don’t tell consumers is that there really are no secret programs to get out of debt. I know this because I used to collect debts for some of the largest credit card companies in the world. And even though the credit counseling agency promises to settle your debt for pennies on the dollar, remember that it takes two parties to settle a debt, the consumer and the creditor. And creditors rarely settle debts for pennies on the dollar. So now the consumer is in the same position as they were before hiring the debt settlement company, only their wallet is noticeably lighter.

Consumers would be wise to avoid for-profit debt settlement companies. Many are outright scams that will pocket your money and then disappear.  And even the legitimate ones can’t do anything that you can’t do yourself for free. But if the thought of negotiating with your creditors makes you nervous, there are many non-profit programs that do fabulous work for no fee.

(photo: cowicide)

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