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

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.