Credit Card Lawsuit Defense – What Just Happened?
There’s a knock on the door and you see a uniformed man standing there with papers. He looks like a policeman or a sheriff… wait, I see it now, he is a deputy sheriff. Why is he here? Oh no, he is serving me papers for a lawsuit?!? They’re going to take my house? What just happened?
This scenario above happens every day, hundreds of times per day. A lawsuit is filed and the deputy comes and knocks on the door because he has papers to serve you for an old credit card debt. Scary? For sure. No one wants to be sued, that much is certain. So what do you do? You take a minute or so to actually read the papers. You are going to see a name, Midland Funding, or Portfolio Recovery Associates, or Calvary SPV, or Ability Recovery, or LVNV, or possibly any of a number of other companies that you have NEVER heard of. These companies are called Junk Debt Buyers and they are very large companies who file these lawsuits across Pennsylvania every single day.
What is a Junk Debt Buyer?
A junk debt buyer is a company that buys delinquent credit card accounts (sometimes other accounts as well, like repossessed vehicle accounts, student loans, other personal loans). They buy these accounts for pennies on the dollar. We have seen sale prices as high as 4-5 cents on the dollar, and as low as 1/4 of a penny per dollar. The buying and selling of debt is perfectly legal and it happens all the time. There are many junk debt buyers who make a very large profit. Some of these companies, like Portfolio Recovery, are so large that they are actually publicly traded on the New York Stock Exchange…buying debt is a very big business.
So what do you do when you are served with the credit card lawsuit papers? You contact a consumer attorney, and if you are reading this website, you are halfway there. Let a consumer attorney review the matter and give you some options. If you call our firm, great, we’ll be glad to offer a free review of your case. If you don’t call us, great as well, call someone else. Don’t risk thousands of dollars by trying to represent yourself or by putting your head in the sand and doing nothing. (it surprises me greatly as to how many people do nothing…. it makes no sense… pick up the phone, call an attorney, see what you can do, if anything).
These junk debt buyer cases are VERY defendable. When these characters buy these accounts, they are buying them very, very cheaply. Trust me when I tell you that they don’t get much for their money. They buy a list of accounts, often between 5,000 and 10,000 accounts at a time. The sale is made through an electronic transfer. The accounts are purchased AS IS (this means that the seller sells the accounts with all known and unknown defects and does not warrant that the information is accurate or correct). So that should be your first red flag…you are being sued on an old account where the information is not warrantied and likely is not accurate. Should you settle, or should you DEFEND? Most times, we are going with option 2, to defend.
We rarely recommend settling these types of cases. It’s extremely difficult for us to recommend that a client settle one of these cases when we expect that we are going to win in court. Think about it, why settle if you expect to win? There are circumstances where settling is the better option. If the lawsuit is very small, perhaps under $1000, then settling is an option. Another circumstance is where the client has several accounts and needs to clean his/her credit report in a relatively quick fashion. We don’t apply a “one size fits all” method to our practice of law, we listen to each client and then help them make the best decision.
How Do I Defend?
As mentioned earlier, DO NOT defend yourself. The person who represents themselves has a fool for a client and an even bigger fool for an attorney. The attorney who is representing the debt buyer handles collections claims just like yours all day every day. He/She went to law school, passed the bar, and likely has years of collections experience. You might be a smart cookie, but your chances of beating a collections pro are slim to none. You may not be aware of this, but if you represent yourself, then the collection attorney can cross examine you at trial and can use your testimony to prove his/her case against you. The other big reason that is in play here is that the initial written response to the lawsuit (if its filed in the Court of Common Pleas) is crucial. File the wrong response and you lose/waive many defenses. This isn’t a game, folks, its real. Hire a professional.
The way that the case is defended depends upon where the lawsuit is filed. There are two possibilities… the claim can be filed at your local District Justice/Magistrate or it can be filed in the Court of Common Pleas. For District Justice cases, there is no written response requirement (though the judge does need to know beforehand that you are going to defend the case. Let your attorney handle this). For cases that are filed in the Court of Common Pleas, the initial written response is almost always what are called Preliminary Objections. We file these objections because every single collections lawsuit that is filed is defective. That’s right, every single one of them. These objections are a statement to the court that says “judge, we think this lawsuit is defective, make them fix it”. (Obviously, we use legal language to get that point across). The judge then rules on the objections and in most cases, agrees with us. He will force the other side to produce more documentation/evidence. If they cannot produce it, you win, case over. This happens quite often. If they do produce the evidence (again, rare) then we move on and have a hearing on the merits of the case. They have to prove that they bought your specific account, they have to prove the terms and conditions of the account, they have to prove how much is due and owing. Its a large burden for them to prove all of this, especially when the documents that they are using are AS IS. Oh, by the way, there is very little chance that you personally will see the inside of a courtroom, so don’t fret about having to go to court.
Sued by a credit card company or collection agency? Call us at 412-823-8003 for a free, no obligation consultation. We can help.
Our Success Rate versus Debt Buyers
Our Success Rate versus Original Creditors
Your Estimated Success Rate if you do not hire a Consumer Attorney
What if I have an Original Creditor case?
There are instances where an Original Creditor will sue you. We see cases filed by Capital One, Citibank, Discover, FIA Card services (a subsidiary of Bank of America, we think). These cases are definitely treated differently. The big difference between junk debt buyer cases and original creditor cases is the quality and volume of the documents. Documents are what drive these credit card cases. Terms and Conditions, Contracts, Monthly Statements. The original creditor has a greater chance of producing these documents, and has a greater chance that the documents will be correct. (Believe it or not, we find MANY cases where the documents are not correct for these original creditor cases).
Just because you have an original creditor case doesn’t mean that you are going to lose. There are several factors that are in play in these cases. Which court is the lawsuit filed in? Which judge is involved? Which county is the lawsuit filed in? Which attorney/law firm is representing the creditor? All of these factors make a big difference as to how you should proceed. There are a few law firms that we beat every time, no matter the creditor. There are certain counties that are “consumer friendly” (counties where the judges really hold the collectors to the letter of the law). The point here is that original creditor cases take a lot of thought and perspective and experience to handle. We have the experience, we certainly can help you.
Call Morrow & Artim
If you have been served with a credit card lawsuit, whether its an original creditor claim or a junk debt buyer claim, call our office for a free consult. We’ve been there and done that…. we have the experience to guide you in this troubling time. We can help defend your case or we can arrange for a proper settlement, depending upon the circumstances that are unique to your case. The consult is free, and there is no obligation to hire us. Call today, 412-823-8003 or 1-888-536-6644.