by Jeff Sovern
Here, in The News-Press. Debt buyers use small claims courts to get judgments to enforce debts even though it is not clear how often those debt buyers can prove the facts pertaining to the debt. Excerpt:
Of more than 1,800 small claims cases filed in Lee County over the first five months of 2017, more than 45 percent involved collection of consumer debt by companies that bought the debt from original lenders, or in some cases, from another debt buyer.
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Nearly all of those who do show up in court appear without an attorney and end up in mediation, lacking knowledge of the system to mount a defense, and lacking the ability to force the debt buyer to show, by the civil trial standard of a preponderance of the evidence, that the debt is real and the amount is correct.
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Trials are presented to defendants as an unappealing alternative to coming to a settlement. In urging settlement, judges tell the litigation-averse debtors to expect to be treated the same as lawyers in the courtroom, with no help from the judge on points of law or on proper procedure. The message is clear that the mediation session is a chance to discuss how the debt will be paid off, rather than an opportunity to demand proof of the amount of the debt.
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In 76 cases involving the four most active debt buying companies in Lee County small claims court during May, settlements were reached in 29 of the cases. All but two of the settlements were for the full amount claimed by the debt buyers and the two that settled were by agreements filed in advance of the pretrial conference.
By contrast, in only seven of the 76 cases reviewed did a debtor opt for a trial at which the amount of the debt would need to be proved. In 27 cases, the debtor did not show up and was found in default without a payment plan.
Rubber Stamp Justice
https://www.hrw.org/report/2016/01/20/rubber-stamp-justice/us-courts-debt-buying-corporations-and-poor
“Many debt buyer lawsuits rest on a foundation of highly questionable information and evidence. Debt buyers do not always receive meaningful evidence in support of their claims when they purchase a debt, and in some cases the sellers explicitly refuse to warrant that any of the information they passed on is accurate or even that the debts are legally enforceable. Enormous accumulations of interest—often in excess of 25 percent compounded over periods of several years—are added to many alleged debts based entirely on the debt buyers’ own calculations. The lawsuits themselves are then often generated largely by automated process without meaningful scrutiny by any human.”
“The predictable result of all this is that debt buyer lawsuits are sometimes riddled with fundamental errors. Debt buyers have sued the wrong people, sued debtors for the wrong amounts, or sued to collect debts that had already been paid. In other cases they have filed lawsuits that were barred by the applicable statutes of limitations or were otherwise legally deficient. There have been multiple allegations, some which have led to successful legal cases, that some debt buyer attorneys fail to serve defendants notice of the suits against them in order to obtain large volumes of uncontested judgments. While industry representatives and their critics differ over the prevalence of these problems, their existence is not in serious dispute. Leading debt buyers have settled numerous lawsuits and enforcement actions alleging errors and legal flaws, and the settlement agreements have forced them to throw out tens of thousands of unfounded judgments they had won against consumers.”
I’m in [different state]. We have this here in my area of [state]. It appears that there are a few basic possibilities for small claims credit card cases.
1. Do not show up at all. Def loses by default.
2. Show up, sign stipulation or consent. People who sign stipulations generally make 1 or 2 payments. Then ptf files its affidavit, and the stip ripens into judgement. Either way, def loses.
3. Show up with lawyer. Plaintiff generally seeks a walk-away. Def wins, but you pay your atty. That is much cheaper than losing.
4. Show up with lawyer, but bank wants to fight. There is a fee-shifting provision, so the bank probably pays for def’s lawyer.
The bank, and even more the third-party debt buyers, are playing the numbers. They generally have at least half #1 (no show), and the bulk of those showing up choose option #2.
This kind of information should be shared with the Consumer Fraud division of the Attorney General’s office and the judicial rules committee for the state of Virginia.