Why you must answer a debt collection lawsuit

August 27, 2009 by Todd Murray · Leave a Comment 

So you’ve been served with a debt collection lawsuit and don’t know what to do? The first step is to answer the lawsuit in a timely manner. In Minnesota, for example, you must answer the lawsuit within 20 days of being served. Other states may have different deadlines. Check with a consumer lawyer in your area if you are unsure. This post will walk you through the process of answering the lawsuit.

If you don’t answer the lawsuit within the required time, it is likely that a default judgment will be entered against you. In most states, including Minnesota, this means that the court will enter a final judgment against you based on your failure to answer the complaint, not the merits of the debt collector’s case. You will not get a chance to be heard at a hearing and in most cases a judge won’t even review your case.

Even if you believe you owe the debt, you are entitled to answer the lawsuit and force the creditor to prove its case. Remember, the creditor has the burden of proof and must prove that you agreed to be liable for the account and that you owe the precise amount of money they are seeking. This is even more important when the creditor in your case is a debt buyer.

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 must rely on 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. Even though they often have insufficient evidence to prove their case, debt buyers still sue out thousands of cases every month because they know that most people won’t respond to the lawsuit. Somewhere in the neighborhood of 90% of collection lawsuits proceed by default and result in judgments being entered against consumers without the creditor 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.

S0 if you are served with a collection lawsuit, you need to answer it in a timely manner. This will force the creditor to prove its case. Sometimes they can’t, particularly if the creditor is a debt buyer.

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.

Unifund CCR Partners agrees to settle Nebraska class action lawsuit

August 14, 2009 by Todd Murray · Leave a Comment 

One of the country’s largest buyers of delinquent debt, Unifund CCR Partners, has agreed to settle a class action lawsuit in Nebraska that questioned its debt collection practices. The lawsuit alleged that Unifund filed numerous lawsuits after the statute of limitations had passed and sought to collect attorneys’ fees it wasn’t entitled to.

The parties agreed to a settlement amount of nearly $150,000. Members of the class that already paid their alleged debts to Unifund will receive between $50 and $65. Class members that haven’t paid their alleged debts to Unifund will get a debt reduction of approximately $125. The two lead class members will each receive $5,500 for their increased roles in the case.

While the award for each class member is minimal, $150,000 is nothing to sneeze at. Hopefully writing a check for such a substantial sum of money will deter Unifund from continuing play fast and loose with its debt collection lawsuits. 

Omaha World Herald: Unifund agrees to deal in Neb. collection case

Who are Asset Acceptance, Unifund CCR Partners, and LVNV Funding?

August 12, 2009 by Todd Murray · Leave a Comment 

Asset Acceptance, Unifund CCR Partners, and LVNV Funding are three of the biggest debt buyers in the collection industry. Other debt buyers include Midland Funding, Cavalry Portfolio, Crown Asset Management, and Palisades. A debt buyer is a company that purchases delinquent consumer accounts from original creditors such as Capital One, HSBC, Discover, and Wells Fargo. The debt buyer purchases the accounts for a tiny fraction of the balance and then attempts to collect the entire balance from the consumer. Debt buyers file thousands of lawsuits and obtain thousands of default judgments each month. They are then free to garnish people’s bank accounts and wages, and as a result, collect millions of dollars. This leads to huge profits, even in the current economy.

But debt buyers have a dirty little secret: they can almost never prove their case in court. Because they didn’t originate the debt, they are at the mercy of the original creditor to provide them with the documents, such as credit applications and billing statements, to prove their case. Sometimes the original creditor refuses or is unable to provide the debt buyer with these critical documents. Debt buyers also have a difficult time providing thorough documentation of their purchase of the debt. Because of this, most debt buyer lawsuits can be successfully challenged. But because the majority of people don’t respond to debt buyer lawsuits, the debt buyers obtain thousands of judgments by default. In most states, this means that debt buyers obtain the judgments without having to provide any proof.

If you have been sued by a debt buyer, you should answer the lawsuit and force the debt buyer to prove their case. If disputed properly, most debt buyer lawsuits can be defeated. Even if they can’t be defeated outright, challenging them can lead to good deals in the form of settlements.

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.

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

April 9, 2009 by Todd Murray · Leave a Comment 

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.

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.

(photo: maura)