You Can Beat Credit Card Debt Collectors
You just received a certified letter in the mail from a law firm, you have a sinking feeling as you sign for this unwanted piece of mail, and when you open the envelope, your fears are confirmed. You are being sued by a credit card company that has come to collect what you left off owing them. All is lost, your world goes into a tailspin, and images of lost wages, raids on your little bank account, and possibly losing everything flash through your mind. Hopeless! You just want to find a hole and drop in it. But, guess what, you are very wrong. You don’t have to lose a thing, and my article will explain why.
Debt collection is a big business always looking for growth opportunities. In January of 1990, credit card debt was at $214 billion, but by January of 2009, during the greatest recession in history, it grew to $964 billion. As the recession began, people were rapidly losing their jobs, and thus, their ability to keep up with the payments on that debt. Good people were being forced into default on their accounts.
So, what did the credit card companies do? They kept on lending, they kept on raking in profits, and they kept engaging in a relatively unknown practice of selling those defaulted debts to companies that had no connection to your original debt. This line alone should raise your eyebrows and cause you to say, “What?” Yes, the credit card company whose card you had been using sold your debt to someone else...and they, the credit card company, promptly washed their hands of your old debt. Stunning, isn’t it?
In 2008 alone, over $123 billion in charged-off debts were sold to companies that then pursued those debts as if they owned them. But they don’t...at least not until you make a fatal mistake and give them the right.
You see, when you signed the original agreement with your credit card company, you signed a contract with your original credit card company. Think about what I just said, because this is where winning your battle begins. Yes, you signed an agreement with your credit card company, but you did not sign one with the companies that bought your debt from the credit card company. Sound crazy? If they don’t have a right to your debt, then why are they coming after you? Because you don’t know your rights, they know this, and they collect billions of dollars every year at massive profits.
Say your original credit card had a final balance of $1,000. The credit card company sells that off to a collection company for $100. Say the collection company only manages to collect $500 from that debt. Not a bad profit. Understand why, then, they pursue these collections? And if I told you that these collection companies have no right to that debt, would that shock you? I mean, they all seem to be following legal procedures when they come after you, don’t they? Yes and no. Yes, they are following legal procedures to trap you in a debt you no longer owe, and no, they do not have any right to that debt...that is, they have no right to that debt until you give them that right. And, yes, millions of Americans make serious mistakes every year and end up owing a debt all over again, a debt that was written off long ago.
What to Do
So, let’s first look at what NOT to do. Do NOT ignore the certified letter. Do NOT miss the court date. You will win if you follow what I am going to outline here; however, the clock begins ticking the minute you sign for that certified letter. Sign it, then begin acting on your rights immediately.
Answer the Summons
Read the letter that comes from the court. It will state how many days you have to file an answer: that is, an answer saying that you plan to defend yourself in court. You must do this immediately.
If it is a magisterial court, you can defend yourself. If it is a higher court, then you need to retain a lawyer. If you opt to retain a lawyer, you do not need a high-priced one. After you have read my article, you can tell any lawyer exactly how to proceed, although he or she should already know this.
Once you have answered the court summons, and you have told them that you definitely intend to defend yourself, the court will set a date for the hearing. Mark that date on your calendar as the day you will walk out of court a winner. Above all, do not miss that court date! If you do not show up in court, you will lose by default, which means that the collection company that is coming after you now owns the debt that was otherwise written off and had become worthless. Miss the court date, lose by default, and you owe money to blood-suckers who will garnish your wages and attach your bank accounts. Attend that court date!
File a Request for Production
Next, and this is very important, you need to file a “Request For Production.” Use the form I have outlined below.
Note: once you have been sued, you cannot request verification of the debt. A request for verification of the debt can be sent immediately after you have been served notice by the collection company that they intend to collect on a debt that they allege you owe. This notice is sent before any suit can be filed, and if you are at this stage of the game, simply being notified and NOT being sued, then you want to send a letter requesting verification of the debt.
For more on the letter requesting verification of the debt, that is covered a little further on in this article.
The Request For Production
Mail a copy of this request to the lawyer who is representing the collection company. Make sure that you send the letter to the lawyer for the collection company via certified mail, return receipt requested. By sending this to the lawyer for the collection company, you are telling him several things. You are telling him that you may just know your rights, that he is going to have a battle on his hands, and most of all, that he may just want to let this one go, because he knows that until you make a mistake, he has no right to the money he is claiming. And, in most cases, when this request for documentation is filed with the plaintiff, they go away and give up. They would rather concentrate on the easy wins, the ones where the person does not respond to the certified letter and, especially, the ones who do not show up in court. By filing the request for documentation, you have already begun to win, and they know this. If you follow through, you will win.
Why You File a Request for Production
Now, let’s look at what you just requested. You have demanded that the lawyer representing the collection company produce the original agreement with your signature. (Note: in some areas, an original signed contract is not required. Also, a verbal agreement made over the phone will obviate this requirement, as well.) You have also requested that they produce all of the proofs for every transaction that you engaged in during the entire life of the use of that credit card. You have requested that they show what you purchased in each of those transactions, and you have requested that they produce your payment record. All of this is legal, and all of it is required in order for them to properly enter the court. Guess what? They do not have this documentation.
Why? Because the original credit card company does not keep this information, they do not sell it to the collection agency. Shocking information, isn’t it? All the collection company has is your name, last known address, the amount you “supposedly” owed when you made your last payment, and often, not even the complete account number. That’s it. So, without a signed agreement with your signature, how can they collect on that contract? They can’t...unless you let them, and if you do not know your rights, you will let them. When the collection company filed suit, they did not attach a copy of the original contract from your credit card company, and this is required by law. It is called the "attachment rule." The judge knows this, but he cannot act as your attorney, so he has to sit on the bench and watch you sink yourself, if you do not follow your legal rights. So, here they are.
What to Say on the Day of the Hearing
On the day of the court hearing, the first thing you want to have in front of you is this statement:
1. Defendant is without information or knowledge sufficient to form an opinion as to the truth or accuracy of Plaintiff’s claim, and based on that denies generally and specifically Plaintiff’s claim.
This statement tells the court that you cannot claim to know whether or not this is actually your debt, because no proof of that ownership has been provided by the collection company, Plaintiff. Read, or quote, this statement, and add nothing further to what it says.
Now, a trick here is used when a plaintiff does show up in court in an attempt to trip you up and win through trickery alone. They will call you to the witness stand, brandish a copy of the original contract issued by the credit card company, and ask you, under oath, if you are denying that you signed this agreement with the credit card company.
If you say that you are not denying that you signed the agreement, you lose. You simply state that you are without knowledge sufficient to form an opinion as to the accuracy of the Plaintiff’s claim, and add nothing more. You can repeat this as often as you need to until the judge loses his patience and orders the plaintiff to sit down. The plaintiff is waving a blank piece of paper in front of you. It does not contain your signature, and it is not the original signed agreement. It is worthless.
For your next step, you state the following:
2. Plaintiff has failed to state a claim upon which relief may be granted.
Either no statute was cited, or the complaint fails to state facts sufficient to constitute a cause of action against you, the defendant. Listing the facts of the case may be enough to file a claim, but the plaintiff merely says the defendant owes the money, and this is not enough.
You want to state this:
"Plaintiff’s claim demands monies for an alleged debt for which no proof of said debt, nor proof of ownership of said debt, has been verified and exhibited."
3. Defendant demands proof of Plaintiff’s ownership of alleged debt.
The law is very clear that the plaintiff has a legal duty to attach any necessary documentation to everything he has filed in court, including in the original certified letter that was sent to you. Did you see any documentation in that letter? No. Why? Because the plaintiff has none. He knows that, the court knows that, and now, you know that, too. Legally, the plaintiff lacks capacity to sue. At this point, you may read the following statement to the court:
“The plaintiff is required, by law, to trace in his statement of claim the derivation of his cause of action from his assignor so that the defendant may challenge the plaintiff’s claim that he is the present owner of the cause of action.”
What you just told the judge is that the plaintiff, in this case, the lawyer representing the collection company, has not presented proof that he, or his company, owns the debt. Why does he own it? Did you sign an agreement with him? Is he a credit card company? The answer is, no. You do not owe him, or his company, anything. He is required, by law, to show why you owe him, or his company. He will not be able to prove this...unless you have made one fatal mistake.
If you have been scared into making any payment arrangements and have already made payments to his company, then I would seek legal help in unraveling their tentacles. Cardinal rule: do not make payments, or agreements to make payments, to any company that is calling about a debt that you owed someone else. Doing so creates a contract that may be binding.
As in most credit card cases (depending on your state), when a claim is “based upon a written agreement, the pleading shall state specifically if the agreement is oral or written.” If the credit card claim is based upon a "writing," then the plaintiff must “attach a copy of the writing.” This means that, once again, the law requires that the plaintiff produce the original contract with the credit card company bearing your original signature. No blank contracts, no “supposed or forged” copies. The original, and only the original, will do.
Also, in most states, if the lawyer filing the claim for the collection company knowingly files a suit without having that original contract in hand, he is in violation of the law. He has to either have that contract, or he has to have someone with him coming to court who has personal knowledge of that signed contract, and he has neither. When he signed the suit papers, he stated that he had these proofs by his signature. A lawyer filing such a claim should be prosecuted, he deserves to be sued, and you can do so if you have a lawyer representing you.
Next, we come to:
4. Insufficient specificity in a pleading.
When the lawyer for the collection company seeks damages based on a contractual relationship, an agreement or contract, and these damages are ascertainable based on that contract or agreement, then the lawyer is required to plead those damages with specificity. What this means is that the court is going to require that lawyer to include facts concerning when you engaged in purchases that led to that debt, the amount of those purchases, and what those purchases were. You can cite the following in court:
Citing Marine Bank, 25 Pa. D. & C.3d at 267-69. A “defendant is entitled to know the dates on which individual transactions were made, the amounts therefore and the items purchased to be able to answer intelligently and determine what items he can admit and what items he can contest.”
Next on the list:
5. Defendant cites Failure of Consideration:
“Whereas no exchange of money or goods occurred between the plaintiff and the defendant, therefore, defendant cites Failure of Consideration.”
What you are saying here is that there was never any exchange of money or items of value between you and the collection company, between Plaintiff and Defendant. You tell the court that you never entered into any contractual or debtor/creditor arrangements with Plaintiff. Consideration is a necessary fact that the plaintiff is required to show in order to prove that you and the collection company had a valid, binding and enforceable agreement or contract. Consideration means that the collection company was giving you a service in exchange for your money. Were they a credit card company? Were they giving you credit? Not likely. Therefore, they were not giving you any “consideration,” and you, therefore, do not have a contract with them.
Furthermore, the collection company would be required to show the terms of that agreement in court. Where is their contract with you? There is none. Because they cannot produce any such agreement or contract, this is “failure of consideration.” They have no case, just one more reason they knew that they should not come to court, one more reason the judge is compelled to dismiss the case against you.
Next, we come to:
6. Repudiation. Plaintiff is not named in any alleged agreement that is purported to have been entered into between Defendant and Plaintiff.
Here, you state that the plaintiff has not produced any contract between Defendant and (your collection company), naming Plaintiff as a party to such contract. Defendant repudiates any claim to such a contract existing. As there was no “meeting of the minds,” a necessary element of a valid contract, no contract exists. The plaintiff is not an assignee for the purported agreement, and the plaintiff has not produced any evidence that supports any related claims or assumptions. The lawyer for the collection company has failed to produce any document that shows that your original credit card company has named him, or his collection company, as assignees, nor has he even shown that the original credit card company has any knowledge of his actions, or that the original credit card company has even given this lawyer, or collection company, all rights and control.
If a credit card company did sell the debt to a third party, the creditor would then lose his rights to collect later. This means that your credit card company probably took a tax credit, an insurance write-off, or some such action that makes the credit card company unable to collect the debt after that point. They destroyed their records, and they moved on. The collection company does not have the original agreement with your signature, and they know that they have no case against you...unless you make the mistake of making an agreement with the collection company and then making a payment on it. Since there was no “meeting of the minds” between you and the collection company, a necessary element required to create a legal and binding contract between the two of you, their claim is repudiated.
If your original credit card company had made an agreement with the collection company, you were not a party to those terms. Just because an assignment clause exists in a credit agreement does not mean that it is sufficient to create a new obligation with the collection company. The assignment clause merely takes away the rights of your original credit card company to collect if they decide to assign it to another credit card company. The collection company would have to be able to act as a credit lender, then have to offer you a new contract, you would have to agree to its terms, and you would finally have to sign this new contract. If you have not signed a contract with the collection company, you owe them nothing.
In court, if you had to argue this, you would simply state:
"Plaintiff is not an assignee for the purported agreement, and Plaintiff has not offered any evidence to the contrary. As there is no proof offered, assuming that it exists would create an unfair prejudice against the Defendant."
One note is important here. The original creditor could “assign” the debt to a collection company, in which case, the original creditor would have written the debt off the books to balance the ledger, but would pursue the debt and maintain ownership of that debt. In this case, the collection company would be working as an “assignee” of the original creditor. This would change things. However, in the majority of these cases, it is a junk debt buyer who purchased the debt, and the advice I gave still stands.
Now, we move to:
7. Defendant claims Lack of Privity as Defendant has never entered into any contractual or debtor/creditor arrangements with Plaintiff.
You can simply state,
“Whereas no relationship exists between Plaintiff and Defendant, and whereas Defendant never signed a contract or agreement with Plaintiff, Defendant cites Lack of Privity.”
Privity is the legal term for a close, mutual, or successive relationship to the same right of property, or the power to enforce a promise or warranty. No relationship exists between the collection agency (Plaintiff) and Defendant. Defendant never signed a contract or agreement with the collection agency. A collection company cannot collect any amount of money that is not permitted by law or by agreement.
"The Fair Debt Collection Practices Act states that the debt collector cannot collect any amount of money that is not authorized by the agreement creating the debt or permitted by law. Because there is no agreement between the collector and the alleged debtor, no collection can be sustained.”
Nearing the end of our list, we come to:
8. Plaintiff's complaint violates the Statute of Frauds.
Plaintiff claims to have a contract with you; thus, Plaintiff has to produce it, because such a contract falls within a class of contracts or agreements required to be in writing. The purported contract or agreement alleged in the complaint was not in writing and signed by Defendant or by some other person authorized by Defendant and who was to answer for the debt, default, or miscarriage of another person.
In order for the collection company to state that it had an agreement with you, it has to show how it was going to benefit you. For example, was the collection company going to issue you credit like a credit card company? Highly unlikely. Therefore, to say that it had a contract with you is fraudulent, because the collection company cannot provide the same services as the credit card company did. It would be like the credit card company selling your contract to another company that required you to sell your house to them at the end of one year. This new requirement would not be something that you agreed to in the original contract, and since there was no “meeting of the minds,” you did not come to any agreement with the collection company.
Here, then, you simply cite statute of frauds. Research your state’s case law to see how your state stands on this point. In any case, because the collection company cannot provide the same services as the original credit card company, adding this new requirement is breach of contract; thus, we invoke “statute of frauds.”
Lastly, we come to:
9. Scienti et volenti non fit injuria: “An injury is not done to one who knows and wills it.”
The laws in this country do not provide a remedy for a collection company that knowingly and voluntarily takes on a bad debt and then goes after the debtor in an attempt to collect that alleged debt. What the law says is that an entity cannot place itself in harm’s way and then sue for damages. Thus, “scienti et volenti non fit injuria.” That would be like you standing in front of a speeding car, then suing the driver for damages. You put yourself in harm’s way, you deserve no damages. The collection company bought a debt that was bad, then wanted it paid. Just cite "scienti et volenti non fit injuria," and the judge will know what you mean.
More Things You Should Know
Statute of Limitations
Most collection companies know not to go after debts that are past the statute of limitations, but, there are still those who do. But, note this very important point: once the debt has passed the statute of limitations, they cannot take you to court. They can contact you and ask you to pay the outdated debt, but they cannot take you to court. However, if you agree to make any payments to them, or acknowledge to them that you owe the debt, you may reset the clock, so to speak. This is called "re-aging the debt." Be very careful with regard to this factor. So you should know that most States will not allow claims on debts that are more than three years old, though in other states that statute of limitations is four years. There are also a few States that go out even further. You want to research this so that you know what your State allows, because the collection company pursuing you may have waited too long, and you may have a right to have the suit thrown out on this technicality alone.
Is the Debt Satisfied?
As I stated earlier, quite often, the credit card company has made an insurance claim, as when a cardholder has taken out involuntary unemployment credit card insurance, or IUCC Insurance as it is called, or the credit card company has taken a tax deduction, and this is known as “accord and satisfaction.” This renders the debt satisfied, and, legally, no one should be able to attempt any further to collect this debt. Your collection company knows this, yet they are still trying to take you to court, because they know that if you do not show up, the law then reverses everything, and you end up owing them. So, go to court. Just the fact that you file an intent to defend yourself lets them know that you are aware of your rights, that their best bet is to call off the bluff, and that they should go find some other person to try to fool into entering a contract with them for a debt that is otherwise uncollectible.
Debt Collectors Need To Validate the Debt
Remember that the Fair Debt Collection Practices Act requires all debt collectors to validate the collection upon request of the purported debtor. If you are being sued, you are past this initial stage, but, keep in mind that, when a debt collector first makes contact with you, the collector has to send you a written “validation notice” within five days of first contacting you. The notice has to say:
* how much money you owe
* the name of the creditor you owe it to
* what to do if you don't think it's your debt
You must respond within thirty days of this notice requesting verification of the debt. Miss this deadline, and the debt collector can then go to the next level, which is to file suit. Nevertheless, even after filing suit, the debt collector must still validate the accounting and other items related to this debt, and unless the debt collector is an assignee, the collection company will not be able to, so, stand your ground with everything that I have written in this article. They deserve to lose, because they know they are acting illegally, yet they use all kinds of trickery and deceit to win. You can fight back by simply using the law and your legal rights.
Here is a very valuable article to read: https://www.nolo.com/legal-encyclopedia/debt-collection-defense-requiring-that-the-collector-document-the-debt.html
The Attachment Rule
When a junk debt buyer sues you, most State rules require, as per the Attachment Rule, that the debt collector must attach a copy of the account or written contract, and if they cannot do this, then they must state why the document is not attached. If the collector fails to do this, then you can file a motion with the court requesting that the court require them to produce the missing documents. Without these documents, you may petition the court to dismiss.
The Amount For Which You Can Be Sued In Small Claims Court
There are limits to the amount a collector can sue for in Small Claims Court. This will vary from State to State, so research your locality to see what they are.
Check Every Rule, and Good Luck
Make sure that you check every rule that I have quoted to make sure that there are not any deviations in your state. State laws will vary, and State laws vary from Federal laws, so do your homework. I am not a lawyer, but I used everything I have written herein to defend myself against a collection company, and you can already guess what happened. They did not show up in court, and the judge dismissed the case against me. It worked for me, it will work for you. And just in case you are not comfortable arguing in a court of law, if you can afford it, obtain the services of an attorney who is not too expensive.
The Federal Trade Commission explains your rights on its website: https://www.consumer.ftc.gov/articles/0149-debt-collection.
You have a right to win. Good luck to you.
Additional Materials For Your Help
This article from the Loyola Consumer Law Review describes how creditors file improper collection complaints.
In the end, this article contends that plaintiff-creditors file improper complaints as part of a pecuniary calculus in the collection industry:
1) Original and secondary creditors file objectionable complaints (and cannot amend those complaints when challenged) since original creditors do not maintain the credit card debtor’s account documents at the outset of the creditor-debtor relationship (which means that secondary creditors cannot receive account records as part of an assignment); and
2) necessary account records are not retained because it is more economically efficient to file many unsupported claims than it is to expend resources in document retention and to file fewer substantiated claims.
The article describes how Pennsylvania courts require specific pleadings, and debtors can challenge pleadings that aren't specific enough.
Unlike federal courts, which require notice pleading, Pennsylvania courts demand fact specific pleading from both plaintiffs and defendants. At the outset, a pleading must set forth the “material facts” of the cause of action in a “concise and summary form.”
As in most credit card cases, when a claim is “based upon a written agreement, the pleading shall state specifically if the agreement is oral or written.”
If the credit card claim is based upon a writing, then the plaintiff must “attach a copy of the writing.”
Finally, “[a]verments of time, place, and items of special damage,” such as credit card charges, must be “specifically stated.”
Illegal Collection Efforts in the News
Federal Government Orders Firm to Stop Unsupported Collection Lawsuits
Pressler & Pressler, a New Jersey firm, was ordered in 2016 by the Federal Consumer Protection Bureau, which called it a "lawsuit mill," to stop filing unfair collection lawsuits. NJ.com reported that FCPB's order said that "before threatening litigation, agents must have original account-level information with the consumer's name, the last four digits of the account, the claimed amount, a chronological list of all the prior owners of the debt, a copy of the bill of sale and other records, the orders say."
Fraudulent Debt Collection is Big Business
Six people in North Carolina agreed to plead guilty to a $6 million fraudulent debt collection conspiracy that operated from 2011 to 2015, according to the Charlotte Observer.
In an article written by Joe Marusak and published in the December 14, 2016 edition of the Charlotte Observer, six people in North Carolina agreed to plead guilty to a $6 million fraudulent debt collection conspiracy that operated from 2011 to 2015. The operation targeted thousands of victims nationwide. The collection company, a Mecklenburg County entity that conducted business under the name of Capital solutions Agency, Berkeley Hughes and Associates and Vortex Group, ran its scheme from November 2011 through May 2015. This agency threatened people with civil and criminal charges and harassed their family members to collect money. The six people were charged with fraudulent debt collection and conspiracy to commit mail and wire fraud.
U.S. Attorney Jill Rose said, “...just because the collector has personal information about you, it does not mean the claim is legitimate. If you do not recognize the debt or the company, be careful and verify the information before you decide to pay.”
This is possibly the best one yet: https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-the-two-largest-debt-buyers-for-using-deceptive-tactics-to-collect-bad-debts/
Information From NOLO on Debt Verification
I am often asked where one can find a good attorney, and I highly recommend going to www.nolo.com and chatting with one of their attorneys. I consider them the best resource for this.
Nolo.com summarizes the principle of "debt verification" with advice similar to what I've given here that applies to many states. NOLO says:
If a debt collector sues you, most state and local procedural rules put even heavier documentation requirements on both the debt collector and creditor. In many states, a creditor or debt collector that is suing for collection of an account must:
- attach to the complaint a copy of the account or written contract or agreement, or
- state in the complaint why the account or document is not attached.
This is often referred to as the “attachment rule.”
If the creditor or debt collector doesn’t do this, you may be able to get the lawsuit dismissed. Or, you can ask the court to require the creditor or debt collector to provide the missing documentation and information. This is often called “requesting a more definite statement.” In either case, you’ll have to prepare and file a formal motion with the court.
What Documentation Must the Creditor Provide?
But what must the creditor provide by way of documentation? At a minimum, it must produce:
- A copy of the original written agreement between the parties, such as the loan note or credit card agreement, preferably signed by you.
- If the account has been sold to another creditor, then that creditor must prove that it has the right to sue to collect the debt. This usually means producing proof that the debt was assigned to it. Often such proof will be a bill of sale, an “assignment”, or a receipt between the last creditor holding the debt and the entity suing you.
What If the Collector Cannot Produce the Assignment?
If the creditor or collector suing you fails to produce proof of the assignment, then you can ask the court to dismiss the lawsuit. Again, you’ll have to prepare and file a formal motion with the court.
Counterclaims if the Collector Did Not Previously Verify the Debt
If the debt collector suing you previously did not verify the debt after you timely requested debt verification, you may file a counterclaim against that debt collector within the same lawsuit, requesting your own damages. Some states also allow you to countersue for damages against the creditor itself for failure to verify the debt.
An Important Article To Read From The New York Times
This is an eye-opening article written by Jake Halpern for the New York Times about the practice of junk debt buyers. I highly recommend reading this so that you can see what is going on behind the scenes with regard to charged off debts. This is a huge money making business, with junk debt buyers raking in billions.
Here is a quote:
“...buying up the right to collect unpaid credit-card bills. When debtors stop paying those bills, the banks regard the balances as assets for 180 days. After that, they are of questionable worth. So banks “charge off” the accounts, taking a loss, and other creditors act similarly.
The scale is breathtaking. From 2006 to 2009, for example, the nation’s top nine debt buyers purchased almost 90 million consumer accounts with more than $140 billion in 'face value.' And they bought at a steep discount. On average, they paid just 4.5 cents on the dollar. These debt buyers collect what they can and then sell the remaining accounts to other buyers, and so on. Those who trade in such debt call it 'paper.'"
From New York Times article by Jake Halpern
More from this article:
"Siegel quickly discovered that when he bought the right kind of paper, the profits were astronomical. He obtained one portfolio for $28,527, collected more than $90,000 on it in just six weeks and then sold the remaining uncollected accounts for $31,000. Siegel bought another portfolio of debt for $33,388, collected more than $147,000 on it in four months and sold the remaining accounts for $33,124. Even to a seasoned Wall Street man, the margins were jaw-dropping."
Another thing Halpern pointed out was that original creditors do not care what happens to the debt after they have sold it off to junk debt buyers. Here is another very enlightening quote:
"According to American Banker, in a series of transactions in 2009 and 2010, Bank of America sold millions of dollars of charged-off debt to a company in Denver called CACH. In the sales agreement, Bank of America said it would not make 'any representations, warranties, promises, covenants, agreements or guarantees of any kind or character whatsoever' about the accuracy of the account information it was selling."
More from Halpern's article:
"In 2009, the F.T.C. said in a report: 'When accounts are transferred to debt collectors, the accompanying information often is so deficient that the collectors seek payment from the wrong consumer or demand the wrong amount from the correct consumer.'”
Here is one more reason from Jake Halpern's excellent about article why you should be questioning the legal right of the entity claiming to own your debt:
"The notion that a portfolio of debt could be stolen may seem improbable, but plenty of debt brokers are all too willing to sell 'bad paper.' Such brokers sometimes 'double sell' or 'triple sell' the same file to multiple unsuspecting buyers. Other times, a broker may sell paper that he does not own and obtained by nefarious means."
Letter Requesting Validation of Debt
Before you are notified that you are being sued by the plaintiff, but once the junk debt buyer notifies you that they are intending to collect the alleged debt, send them this letter requesting validation of the debt, and give them 30 days to comply. Save proof that you mailed this letter. Here is the letter:
I am sending this letter to you in response to a notice I received from you on (here, cite the date of the letter you received). Be advised that this is a notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested. This is NOT a request for “validation” or proof of my mailing address, but a request for Validation made pursuant to the above named Title and Section. I am hereby requesting that your office provide me with competent evidence that I have any legal obligation to pay you. Please immediately provide me with the following:
*What the money you say I owe is for;
*Explain how you calculated what you say I owe:
*Provide me with copies of any papers that show I agreed to pay what you say I owe;
*Provide a verification or copy of any judgment if applicable;
*Identify the original creditor;
*Prove the Statute of Limitations has not expired on this account;
*Show me that you are licensed to collect in my State; and
*Provide me with your license numbers and Registered Agent.
If your offices have reported invalidated information to any of the three major Credit Bureaus (Equifax, Experian or TransUnion), said action may constitute fraud under both Federal and State laws. Due to this fact, if any negative mark is found on any of my credit reports by your company, or the company that your represent, I will pursue legal action against you for the following:
*Violation of the Fair Credit Reporting Act
*Violation of the Fair Debt Collection Practices Act
*Defamation of Character
If your offices are able to provide the proper documentation as requested, I will require at least 30 days to investigate this information, and during such time, all collection activity must cease and desist. Also, during this validation period, if any action is taken which could be considered detrimental to any of my credit reports, I will consult with my legal counsel. This includes any information to a credit reporting repository that could be inaccurate or invalidated, or verifying an account as accurate when, in fact, there is no provided proof that it is.
If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file, and a copy of such deletion request shall be sent to me immediately.
Further, no telephone contact shall be made by your offices to my home, or to my place of employment. If your offices attempt telephone communications with me, including, but not limited to, computer generated calls or correspondence send to any third parties, it will be considered harassment, and I will pursue legal action. All future communications with me MUST be done in writing and sent to the address noted in this letter.
Initiating Any Debt Collection Lawsuit
I have seen discussions by people who are unaware of what is legally required of debt collectors before they can file a lawsuit. I know of no better source for the answer to this than two paragraphs from a consent decree that was filed by the Consumer Financial Protection Bureau against one of the largest junk debt buyers in the United States. Note, "Respondent" refers to the junk debt buyer who was the defendant in this case. I present these two very informative paragraphs here for you:
119. Initiating any Debt Collection Lawsuit unless in possession of the following:
a. Original Account-Level Documentation reflecting, at a minimum, the Consumer's name, the last four digits of the account number associated with the Debt at the time of Charge-off, the claimed amount excluding any post Charge-off payments (unless the claimed amount is higher than the Charge-off Balance or judgement balance, in which case Respondent must possess (i) Original Account-Level Documentation reflecting the Charge-off Balance and (ii) an explanation of how the claimed amount was calculated and why such increase is authorized by the agreement creating the Debt or permitted by law), and, if Respondent is suing under a breach of contract theory, the contractual terms and conditions applicable to the Debt;
b. A chronological listing of the names of all prior owners of the Debt and the date of each transfer of ownership of the Debt, beginning with the name of the Creditor at the time of Charge-off;
c. A certified or other properly authenticated copy of each bill of sale or other document evidencing the transfer of ownership of the Debt at the time of Charge-off to each successive Owner, including Respondent. Each of the bills of sale or other documents evidencing the transfer of Ownership of the Debt must include a specific reference to the particular Debt being collected upon, which can be done by referencing an exhibit attached to each bill of sale or other document transferring ownership of the Debt that is represented or warranted by a Seller to be a list all Debts acquired in that Portfolio; and
d. Any one of the following: i. A document signed by the Consumer evidencing the opening of the account forming the basis for the Debt; or ii. Original Account-Level Documentation reflecting a purchase, payment, or other actual use of account by the Consumer.
120. Engaging in any Legal Collection without providing the Consumer with certain information about the Debt, unless previously provided, including but not limited to, the following information:
a. the name of the Creditor at the time of Charge-off, including the name under which that Creditor did business with the Consumer;
b. the last four digits of the account number associated with the Debt at the time of Consumer's last monthly account statement, or if not available, at the time of Charge-off;
c. the Charge-off Balance;
d. Respondent's method of calculating any amount claimed in excess of the Charge-off Balance; and
e. a statement that the Consumer may request, in writing, copies of the documentation referenced in Paragraph 119 and Respondent or Respondent's agent will, within 30 days of such request, provide the documentation at no cost.
What Is Subrogation?
I often advise people to request that the junk debt buyer show their right to subrogation of the debt, and I ask them to also request that the junk debt buyer show how much they paid for the debt. I do this partly to embarrass the junk debt buyer, because we all know that he paid pennies on the dollar for whatever debts he bought. How, then, does he come after you and claim that he has a right to collect $1,000 for a debt he bought for only $5? To fully understand this invaluable defense, one first has to understand what subrogation is.
But, before I go through this chapter, keep these two things in mind:
How does the junk debt buyer have rights of subrogation of your debt?
How does he justify paying $5 for your bad debt, then charging you $1,000?
According to Black’s Law Dictionary 1427 (6th ed.1990), subrogation is “...the substitution of one person in the place of another with reference to a lawful claim . . . so that he who is substituted succeeds to the rights of the other in relation to the . . . claim, and its rights, remedies, or securities.” I wonder if there is a legal term more debated and misunderstood than this one, yet the legal rulings regarding subrogation have been around since Emperor Hadrian of ancient Rome. Modified and further defined over the centuries, the idea still persists and is codified in today’s law. The rules of subrogation revolve around the relationships of those involved in the changing relationship of a debt. The terms for those involved in this debt relationship are “subrogee” and “subrogor.” The person who discharges the obligation is called the “subrogee,” and the party who is compensated is call the “subrogor.” In court papers, one often hears the explanation given that “the subrogee stands in the shoes of the subrogor,” the subrogee having acquired the subrogor’s rights to the debt.
To make this a bit more clear, here is an example: your car is hit by someone, so your insurance company pays you for your damages, then goes after the person who hit your car. The insurer, by right of subrogation, goes after the person who hit your car with all of the rights that you had, if you had gone after them yourself. Keep in mind that, once the insurance company pays you for the damages, you waive all rights and claims against the person who hit your car. Thus, the insurer is now standing in your shoes with all of your former rights to sue for damages. You are the subrogor, and the insurer is the subrogee. You got paid, the subrogee is now going after that sum from the person who hit your car.
Here is where it gets fun, and you have to pay close attention. Legal subrogation is not available to volunteers. What this means is that the party claiming a right of subrogation must establish that he is not a volunteer, but instead is under compulsion to satisfy the debt.
73 American Jurisprudence 2nd Edition section 93 subrogation
“Subrogation will not be allowed to a third person who without any obligation to do so pays an indebtedness and this rule is fully applicable to payments of an indebtedness secured by a mortgage.”
So, the first thing that stands out is this fact: legal or equitable subrogation is not available to volunteers. Keep that in mind.
Equitable subrogation is a device created to compel the ultimate discharge of a debt by the person who should morally be the one due to pay it.
Home Owners’ Loan Corp. v. Parker, 181 Okla. 234, 235 (Okla. 1937).
What this means is best explained thusly. You borrowed your mother’s car, and you wrecked it. Your uncle steps in and buys your mother a new car, so that she can get to work. Then, he sets up a payment plan with you to pay him back, because you owe for the car. Your mother becomes the subrogor, and your uncle, by replacing the car you owe her, becomes the subrogee. Now, he comes after you, because, morally, you really are the one who owes for the car. So, this is the initial philosophy behind equitable subrogation. But, here is where it goes off the rails. Your uncle gives your mother a bicycle, then turns around and charges you for a car. That is not equitable subrogation! Yet, and here is where the lightbulb should go off in your head, a junk debt buyer purchases a bad debt for $5, then turns around and charges you $1,000! How is that equitable subrogation of the debt? And how did he become the legal subrogee with all rights to the debt? Doesn’t he have to pay dollar for dollar? In other words, doesn’t he have to pay $1,000 to the subrogor, if he is going to demand $1,000 from you? Car… bicycle... remember?
Legal subrogation is not available until the subrogor is fully compensated.
Legal subrogation is based on equitable considerations.
When a person pays the debt of another without any assignment or agreement of subrogation, s/he can be considered such a “volunteer”.
Hulen v. Hamilton, 2008 Tex. App. LEXIS 1672 (Tex. App. Fort Worth Feb. 28, 2008).
Here comes the junk debt buyer, and he claims that he is equitably subrogated to the rights of your original creditor. Well, if that is the case, he has to have satisfied this list of prerequisites:
- Payment must be made by the subrogee to protect his own interest;
- The subrogee must not have acted as a volunteer;
- The debt paid must be one for which the subrogee was not primarily liable;
- The entire debt must have been paid; and
- Subrogation must not work any injustice to the rights of others.
Morgan Creek Residential v. Kemp, 153 Cal. App. 4th 675, 690 (Cal. App. 3d Dist. 2007).
I want you to really focus on that line… “The entire debt must have been paid.” How much did the junk debt buyer pay for your debt? The entire amount? No! And this immoral scam has grown into such a lucrative business with lawyers raking in huge profits, that our justice system has become its rubber stamp of approval. Total corruption! You are being charged for a car, but they paid for a bicycle. This is one of the reasons I call them blood suckers. The other reason is that the vast majority of people who have defaulted on their credit cards are basically good people. They did not default because they were deadbeats, but because the bottom fell out of their worlds and left them in dire circumstances. And it is while these good people are at their lowest ebb that these blood suckers come along to take the bread off their tables. So, yes, I like to help these good people turn the tables and win. It gives them a chance to get back on their feet and start over.
More About Subrogation
Traditionally, credit card companies attempted to collect their own debts. If this initial process was ineffective, then the credit card company assigned the accounts to collection companies. If the first collection company failed to collect, then the credit card company would re-assign the account to another collection company. Eventually, the credit card companies deemed this process too time-consuming and unproductive to be of financial value. They soon hit on a new idea—sell the debt. They got rid of their collection departments and went into a new business venture for selling off bad debt.
Around 1999, the credit card industry began to analyze the value of purchasing subrogation rights. It sounded like a great idea at first, but the credit card industry decided against it, because there would be legal problems once a case got into the courts and some smart lawyer decided to challenge the plaintiff with “First Dollar,” the term that refers to dealing with the insured’s (the credit card company) deductible. If one studies case law, various States require that the insured (the credit card company) be made whole before the insurance carrier can reap the benefit of subrogation. Under this statute, the credit card company has to get paid “first dollar” until the original creditor has been “made whole.” If the claim is purchased from the insurance company, what benefit is there for the insurance company to go to court on behalf of a junk debt buyer? Further, if the insurance company goes to court, how would it look for them to have their attorney subpoena the credit card company? So, the collection companies found an easier way around this difficulty.
They found that they could sue the debtors in court, the debtors would know that they owed the money, the debtors would run and hide, and therefore, once the case got to court, and the debtor did not show up, a default judgment would be issued, the debtor would now be indebted to the collection company, and a new and enforceable contract would now exist between the collection company and the debtor. And here is the Achilles heel of this: when a defendant answers, and a trial is scheduled, the insured and the claim representative are absolutely necessary in court in order for the plaintiff to prevail!
So, here are some things to keep in mind: Do not discuss the debt on the phone with collection companies, as they are recording your call and will use your admissions in court. Do NOT sign any promissory notes, as this is entering into a new and binding contract to pay the collection company the amount they are requesting. Answer the summons when you are sued, and tell the court that you will appear. Then, prepare your defense wisely, and go to court ready to win.
Can a Junk Debt Buyer Report You to a Credit Reporting Agency?
The answer is, "NO!" Why not? Because, the junk debt buyer was never a party to the original contract between you and your original creditor. For proof of this application, go to the US law encyclopedia, American Jurisprudence, 73 Am Jur 2d. Sections 90-93, and there, you will find that it states that the right of subrogation does not exist for a stranger to the transaction. In other words, a junk debt buyer, who is a "stranger to your original contract," cannot subrogate onto your original contract. They were not party to your original contract, nor did they have any interest to protect, so they cannot then try to claim that they have the status of successor in rights and interests. Thus, if they place your debt with a credit reporting agency, and they have not won ownership by presenting and winning their case against you in court, they have broken the law. Here just one of the reasons why:
Section 604 of the Fair Credit reporting Act specifically does not permit third-party collectors to "inquire" on your credit reports. It's called Permissible Purpose, which is what they would need in order to add or subtract anything with regard to your credit report.
You can read the entire section by going here:
What you will find is that nowhere does the law give a third party the right to your credit report. You will especially enjoy these words found therein:
§ 604. Permissible purposes of consumer report
a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:
What follows is a description of your protections, and it clearly gives the junk debt buyer notice that, as a third party, a stranger to your original contract, they may not touch your credit report. They are a third party, a stranger to your original contract, and they cannot subrogate themselves onto that original contract. In order for them to affect your credit report, they have to enter into a contact with you, the consumer.
Transferring Your Account
All credit card companies can place a clause in your original credit card agreement which will read something like this: "We may transfer your Account and our rights under this Agreement to another person or company. That person or company will take our place in this Agreement. You must pay that person or company the amount you owe us on your Account (instead of paying us) if you are asked to do so." For this, I go back to one of the earlier points in my article: Defendant claims Lack of Privity as Defendant has never entered into any contractual or debtor/creditor arrangements with Plaintiff.
The collection agency does not have any signed agreement with you, and chances are that they probably do not even have a contract with the original creditor showing legal right of subrogation of the debt. The clause in the original credit card agreement is read to mean that the credit card company can transfer your account to another credit card company. While this point may be debated by some, I would argue in favor of the defendant and against the plaintiff on this one.
The Order of Transition in Credit Card Debt
Once the Account Becomes Delinquent - At 180 days from the last point of payment activity on an account, the company will usually designate that account as uncollectible. However, some companies may do this sooner, or wait a little longer, and that is their prerogative. When the company decides on this action, it will “write off” the account and list that debt against its earning for accounting purposes. This allows the company to reduce the amount it owes on taxes. The debt is now listed as “charged off.”
Charged off debts are still owing -The credit card company still owns the debt, and you still owe them the final balance. At this point, the credit card company can decide to pursue the debt themselves, or they can sell it to a junk debt buyer. If the bank sells the debt, they will adjust their accounting accordingly once the debt has been sold.
Forgiven Debt - The credit card company has the option of forgiving the debt, which means that they no longer expect you to pay. This, thus, makes the debt an income for you that must reported to the IRS, if it is over $600.00 , and you will then be issued a form 1099-C. This also means that no one should be coming to collect from you. The debt was forgiven.
Credit Report - Until the debt is paid in full, it will remain showing as unpaid on your credit report.
Why You Should Fight It In Court
In a 2015 Consent Order against Portfolio Recovery Associates by the Consumer Financial Protection Bureau, these two items should drive home the point that you simply do not want to run away and hide, like so many people do. You want to get your case together, organize your defense, and appear in court. I have highlighted several key elements in this excerpt that should show what is common practice with debt collectors. In this excerpt from that consent order, "PRA" stands for Portfolio Recovery Associates.
27. "Prior to PRA purchasing a Debt Portfolio, PRA typically receives an electronic file ("Sale File"), from the Seller that includes information about the Consumers and the Debts, including, but not limited to, name, address, social security number, as well as the current balance, contract interest rate, and dates of origination, last payment, and charge-off.
28. PRA is aware that significant inaccuracies may exist in the Sale Files it purchases, including that some Debts' balances were not reduced by a consumer's subsequent payments. For instance, when a PRA senior manager raised a concern about the poor quality of sellers' balance information and asked how PRA can know actual balances owed if it does not receive information on post charge-off payments, PRA's Vice President for Collections responded, "We don't. 90% of our cases are default judgments. We show the judge the math and if no one disputes we get our judgment. Debtor has the right to defend and prove us wrong. If they show payments we've missed we amend the complaint."
"90% of our cases are default judgments." That means that these debt collectors did not even have to put up a fight. Consider the fact that Portfolio Recovery Associates purchased more 4.7 billion dollars in debts in 2013 alone,and you can see why they keep on doing this to people.
I also repeatedly advise people to demand an accounting to show how the debt collector arrived at the alleged total that they are demanding. Here, from that same consent order, is an example of why I repeatedly advise this:
"For example, a 2009 purchase agreement with one large bank explicitly stated that account balances are "approximate" and "may not reflect credits for payments made by or on behalf of the [consumer] prior to the cut-off date."
Read These Two Very Important Consent Orders
I cannot emphasize how important it is to thoroughly study these two consent orders that were ordered against two of the largest junk debt buyers by the Consumer Financial Protection Bureau:
The Encore consent order can be found at:http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf
The Portfolio Recovery Associates consent order can be found at:http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf
A Deceptive Collection Practice
Junk debt buyers often want you to think that they are the original credit card company coming after you. For them to state this, when it is not fact, is fraudulent and illegal. But that does not stop them from trying to make you think that they are representing the original credit card company by using clever wording that skirts close to the edge of illegal. Here is an example of one letter from a collection company.
"Dear (Your Name Here),
The above referenced account has been referred to our office for collection of the balance in full. Previous attempts have been made by our client to resolve this debt voluntarily. As of this date, those attempts have not been successful. (Name of the collection company here) has been authorized by our client to provide the necessary effort to collect this debt. We recommend that you take advantage of this opportunity to pay the balance in full to prevent further collection activity."
Below this paragraph was the obligatory notification that you had 30 days to dispute the validity of this debt, but what most people tend to do is this; they read this first paragraph, think their original creditor is coming after them, they panic, and their brain fogs over. What are they missing? Lots!
First of all, in this particular case, this was a letter from a junk debt buyer, not the original creditor. So who, you may ask, is "their client?" Good question! Because it most certainly was NOT the original creditor. Why? Because this account had been closed and charged off due to a bankruptcy taken by the person who held the original credit card. That account was written off in 2003, and here was this junk debt buyer posing as representing the original creditor...in 2009! This account was closed and now was time barred by statute of limitations, yet here was this junk debt buyer insinuating that they had a "client" relationship with the original creditor. A good lawyer could get this junk debt buyer in a lot of trouble.
Consider this as well, the junk debt buyer is warning the recipient that they should pay the "full balance" so as to "prevent further collection activity." First of all, this junk debt buyer bought this bad debt for about one cent per dollar, so, for their investment of $50, they were trying to collect $1500. It reads: "Please detach the upper portion of this notice and return with your payment in the enclosed envelope." Nice try, blood suckers.
One of My Readers Shared This Exceptional Material
This exceptional material that I have placed here for my readers was shared with permission from Rodney Miner. Kudos to Rodney for sharing this, and kudos to him for his great win! May this material help others in the battle.
Kellogg, Idaho 83837
IN THE DISTRICT COURT FOR THE FIRST JUDICIAL DISTRICT FOR THE STATE OF IDAHO, IN AND FOR THE COUNTY OF SHOSHONE
Cavalry SPV I, LLC,
Case No.: CV-2017-586
RESPONSE TO MOTION FOR SUMMARY JUDGMENT
Rule 56 states that a court should only grant summary judgment if the moving party shows that there is no genuine issue of material fact. Defendant Rodney Miner, pro se, does hereby submit his Response to Plaintiff’s Motion for Summary Judgment. Defense shows that none of the evidence submitted in PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT is admissible, therefore, Cavalry SPV I, LLC failed to demonstrate that it is the owner of the account in question. Defendant asks the court to deny the PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT.
MEMORANDUM OF POINTS AND AUTHORITIES
Cavalry SPV I, LLC Has Failed to Provide Any Admissible Evidence to the court.
The supporting affidavits and the documents attached to them lack evidentiary underpinnings.
There is not sufficient demonstration of the competency of the affiants to testify, there is not sufficient foundation for the documentary evidence, and there is no evidence of the necessary linkage between the bulk account sale and the individual account of the defendant. The entirety of the documents submitted for motion for summary judgment by Plaintiff consist of two affidavits, Bill of Sale, Notification File, four credit card statements and a copy of the cardholder agreement.
The affidavits would be admissible under the Idaho rules which state that business records are admissible given a statement from a custodian of business records which are created in the normal course of business. This rule has long been held to a high degree of veracity. Christensen v. Rice, 763 P.2d 302, 114 Idaho 929, 934, 763 P.2d 302, 307 (Ct.App. 1088).
Idaho rule 803(6) Hearsay Exceptions; Availability of Declarant Immaterial outlines what are not excluded by the hearsay rule for records of regularly conducted activity.
Idaho Rule of Evidence 902(11) provides for the self-authentication of certified records of regularly conducted activity.
The two affidavits submitted with the request for summary judgment must meet the stipulation of these two Idaho Rules.
The Affidavit by Shannon Wiltgen, the only one offered by an employee of Synchrony Bank, states that she is a Documentation Specialist and that her bank sold a pool of chart-off accounts to
Cavalry SPVI, LLC on 3/23/2017. Wiltgen states, “As part of the sale of the Accounts, electronic records and other records were transferred on individual Accounts to the debt buyer.” Wiltgen also states, “These records were kept in the ordinary course of business of Synchrony Bank.” Wiltgen, as employee of Synchrony Bank working with the ordinary business records of Synchrony Bank falls under the exception to the hearsay rule.
The Synchrony Bank records would have been ordinary records until the account data files were were culled, separated, reorganized and restructured into a separate electronic file. This process of creating the new electronic data file was not the mere daily data entry of ordinary record keeping. Nor was it ordinary record handling to transfer this reorganized file to another business. Wiltgen states, “The Creditor has a process to detect and correct errors,”. Though Wiltgen is a Documentation Specialist there is no evidence of the algorithms or criteria used for the selection of accounts or error free process. If this file were to be used in evidence, substantially more foundational information would have to be provided, probably by an expert witness who has substantially more background knowledge than demonstrated by Shannon Wiltgen’s Affidavit. The affidavit does not provide the foundation to testify that this file was accurate, or complete, or reliable for later use by Cavalry SPV I, LLC. The reorganization of the ordinary data into a culled data file to be transferred to another company created non-ordinary business data that falls outside of the rules of I.R.E 902(11) and I.R.E. 803(6), making Shannon Wiltgen’s Affidavit inadmissible. MIDLAND FUNDING, LLC,. CV- 1 4- 8 3 O-C. Plaintiff/Respondent, vs. MEMORANDUM DECISION. BARRY STIMPSON.
In the second affidavit Sheila Pinckney states she is employed by Cavalry Portfolio Services, LLC (CPS), but “preforms collection services for Cavalry SPV I, LLC”. Under her signature line is says, “Legal Administrator”. Pinckney states, “I am familiar with the manner and method by which CPS and Plaintiff maintain computerized account records and documents for account holders.” It is unclear how these two companies share computer information. Pinckney goes on to state, “CPS and Plaintiff maintain such records in the ordinary and routine course of business and it is their regular business practice to accurately record any business act, condition or event onto the computer record maintained for the accounts, with the entries made at or very near the time of any such occurrence.” In effect, Pinckney as Legal Administrator of Cavalry SPV I, LLC, is testifying that Cavalry SPV I, LLC by Pinckney has authorized CPS, acting through Pinckney as its legal specialist, to prepare the identified documents. Therefore, the same person is authorizing the action and carrying out the action. It is a stretch to put all of these evidentiary steps onto a single witness. The real problem is a different one. Though we don’t know which company holds the business data or how they share it, we do know the relevant information is the electronic data file that was transferred to Cavalry SPV I, LLC from Synchrony Bank. The relevant data is the existence of the separate account for the Defendant, the identifiers of that account, the transaction history of that individual account while it was active, and the balance due upon its transfer to Cavalry SPV I, LLC. None of this data was created or sourced into the computer records while they were maintained by Cavalry SPV I, LLC or CPS; all of it would have been created or sourced by the bank.
Sheila Pinckney may be qualified to explain what CPS did or Cavalry SPV I, LLC, with respect to its own records or data created during its time, but she cannot establish a foundation for the bank data — she has no personal knowledge, she was not a custodian of the bank’s records while they were with Synchrony Bank, and the records in the Plaintiff’s possession do not qualify as ordinary business records. Because the electronic file transferred to Cavalry SPV I, LLC did not come to the Plaintiff as ordinary business records of Synchrony Bank, it cannot be said that the data in this file became routine business records of Cavalry SPV I, LLC or CPS, maintained in the ordinary course of business. Therefore, the documents created by Pinckney from Cavalry SPV I, LLC’s or CPS’s copy of the electronic file from the transferred accounts could not be said to be routine records maintained in the ordinary course of Cavalry SPV I, LLC business. This means that Sheila Pinckney’s Affidavit is inadmissible and Pinckney did not have a foundation to be a witness to identify the source documents, the monthly statements or the cardholder agreement. Furthermore, she avers that she is an employee of Portfolio Services, LLC. This means she is not an employee of the bank or Cavalry SPV I, LLC, and therefore has no cognizable standing as either a custodian or qualified person to establish the nature of file data as a business entity, without first establishing an adequate foundation of the witness as a person with actual knowledge, and then establishing how she obtained any of the knowledge to which she testifies.
Without a witness from Synchrony Bank with knowledge and expertise to walk the court through the steps of culling the necessary data pertaining to the accounts which were to be transferred from the regular business records of the bank, then getting the data into particular computer files for transfer from one system to another, and finally in actually getting the data files transferred and up and running with Cavalry SPV I, LLC, there is no one to testify on behalf of the Plaintiff. Therefore the Plaintiff has no way to prove he owns an account for which he seeks payment and reimbursement of costs.
Finally, the transferred data files were not regularly conducted business activity and therefore are not admissible Hearsay exceptions as defined by Idaho Rules of Evidence Rule 803.
Next, we address The BILL of SALE. The bill of sale is signed by Ken Wojcik, SVP Collections & Recovery for Synchrony Bank. The BILL of SALE states that the Seller hereby transfers, sells, conveys, grants, and delivers to Buyer, its successors and assigns, without recourse except as set forth in the Agreement, to the extent of its ownership, the Accounts as set forth in the Notification File. There were no representations or warranties provided in the attached bill of sale. He would be competent to testify from personal knowledge that the electronic file was the mechanism used to transfer the accounts to Cavalry SPV I, LLC. He does not have the foundation to testify that the file transferred was accurate, or complete, or reliable for later use by Cavalry SPV I, LLC in managing collection efforts.
Further, Plaintiff does not include in Exhibits a copy of its contract with Synchrony Bank. It is therefore not shown whether Synchrony Bank has expressly disclaimed all representations as to the accuracy of information or the accuracy of the current balance or interest on the accounts it has sold to Cavalry SPV I, LLC. The Federal Trade Commission has stated that sellers disclaiming the accuracy of the information they sell to debt buyers is common and recurrent (FTC DEBT BUYER REPORT, supra note 2, at iii, 25). The Restatement (Second) of Torts describes a fraudulent misrepresentation as being when the maker “does not have the confidence in the accuracy of his representation that he states or implies” or “knows that he does not have the basis for his representation that he states or implies.” Without a copy of the underlying contract, Defendant has no objective way to assess the veracity of Plaintiff’s claim. The FDCPA is a strict liability statute intended to be “liberally construed to protect consumers” (Owen v. I.C. Sys., Inc., 629 F.3d 1263, 1271 (11th Cir 2011). Scienter is not an element of proving an FDCPA violation. Misleading or deceptive representations made as a result of carelessness or negligence are actionable under the FDCPA. All a court needs to find for an FDCPA violation is that the communications from the debt buyer to the consumer would have been misleading to the least sophisticated consumer (Weston v. Northampton Personal Care, Inc., 62 A.3d 947, 1019 (Pa. Super. 2013)).
In Plaintiff’s submitted documents and brief there are two contradictory Balances which Plaintiff claims Defendant owes, in Exhibit 1 for $4,078.57 and in Exhibit 2 for $4,116.57, demonstrating thereby a lack of sufficient indicia of trustworthiness for accounting in this instance to be considered reliable (Thanongsinh v. Board of Education, 462 F.3d 762, 778 (7th Cir. 2006)).
Defendant is entitled to recover its costs.
There is a genuine issue of material fact that Cavalry SPV I, LLC cannot show ownership of the alleged Synchrony Bank credit card debt. Defendant respectfully asks that Summary Judgment be denied.
DATED this fourth day of January, 2018
Defendant Pro Se
COPY of the foregoing sent via U.S. mail this fourth day of January, 2018to:
John H. Wilkinson ISB #8597
Machol & Johannes, LLC
1412 W. Idaho Street, Set 238
Boise, ID 83702
Attorney for Plaintiff
Sent by: Rodney Miner
More Great Material Shared By Rodney Miner
Go to this link and study it well. Some really great material is in this case that was fought and won by one of our readers, Rodney Miner. He put up a great fight and won. Read this to see how he did it. Great job!
Order To Dismiss Without Prejudice Provided By Rodney Miner
Here is the Timeline for Rodney Miner's Case
Here is the Rodney Miner suit Timeline.
11/07/17 Served SUMMONS
11/22/17 ANSWER TO COMPLAINT AND COUNTER CLAIM paid $136 to file
11/28/17 Received from the court NOTICE OF HEARING:
Pretrial Conference: Monday, January 8, 2018
Status: Monday, February 12, 2018
Court Trial: Wednesday, February 28, 2018
12/04/17 Arrived in the mail and a big heavy envelope full of legal documents — PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT, MEMORANDIUM IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT, PLAINTIFF’S STATEMENT OF COSTS AND DISBURSEMENTS, NOTICE OF HEARING schedule for 01/22/18 (schedule by attorney for summary judgment)
01/04/2018 Rodney filed, RESPONSE TO MOTION FOR SUMMARY JUDGMENT
01/08/17 Went to Pretrial Conference, reschedule motion for summary judgment hearing till 01/31/18.
01/22/18 Received in the mail from attorney STIPULATION FOR ENTRY OF JUDGMENT offering a reduced settlement.
01/31/18 Went to summary judgment hearing where case was dismissed.
If You Are Being Sued by Johnson, Riddle & Mark, Read This
I had a person write to me about a company that is taking him to court, and this company even claimed to be hired directly by Capital One. Everyone should remember this important fact: any collection company that states that they are directly hired by an original creditor must be able to prove that such a relationship exists, otherwise, this is a criminal offense, and you can sue them. I have often said that these blood suckers like to skate very close to the edge when making their harassing claims. So, do your homework, research them when they come after you making scary claims of representing your original creditor. Here is some very interesting material on Johnson, Riddle and Mark:
Another Very Interesting and Educational Link
Defending Junk-Debt-Buyer Lawsuits by Peter A. Holland
I found this extremely well-written and priceless gem of an article, and I give it my highest marks. You would do well to read it, make copies of it, and study it until you know it by heart. What an excellent resource! The article is titled:
Defending Junk-Debt-Buyer Lawsuits by Peter A. Holland
You can find it here:
Three cheers for Peter A. Holland for the best article I have ever read on this subject.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Questions & Answers
I no longer reside in the county where the bank is trying to sue me. They are trying to serve it at a mail drop box address. The suit is filed in FL - I am currently in NJ. Which state is best to fight this in? Bankruptcy is NOT an option.
Your best option is always to fight in the venue closest to your current address.Helpful 1
I am being sued locally by Calvary who purchased my Citibank (home depot) debt. My question is this: when I respond, do I respond differently, since they are not the original creditor? Is it okay to ask for additional information, since their Exhibit One sales information is marked through and unreadable? I know that is because they bought multiple accounts, but I am trying to figure out the best approach. Any guidance is greatly appreciated.
The typical response is outlined in my article and the accompanying materials that I have posted. Answer the summons indicating that you will appear in court, and do so before the expiration of the time limits. Send the plaintiff a request for production, even though they may choose not to comply. You can use that as leverage later in court, but it basically lets the plaintiff know that you are not going to run away. Instead, you are going to put up a fierce fight, and you want them to know that.
Yes, you may ask them for additional material, which is why I say to send them a request for production. And you are right, they bought thousands of accounts and have insufficient documentation to win their cases if you do your homework.Helpful 3
Why would a plaintiff file in district court rather than magisterial?
It depends on the amount of money they are pursuing. Amounts under $12,000 can go before a magisterial court, amounts over that must go to the higher courts. If the amount they are pursuing you for is under that amount, then check with a local attorney to see if there is some rule in your county jurisdiction that allows lower amount suits to be pursued at the district court level. However, there are locales where the magisterial court is the district court, so check to see what it is that you are dealing with. In one, you can argue your own case, in the other, you most definitely cannot.Helpful 2
I asked for production and they sent six months of credit card statements, is that adequate on their part? They did not send the original contract, signed transactions etc.
What are those six months? Are they actual proof of the last six months that this card was active, or are they a random six months? Where is their accounting for any payments that were made to this account? Where is their copy of the original signed agreement between you and the original creditor, and where is their proof of any modification to your original contract, which modification would permit them to service the account? How are they capable of servicing that account, if they are not a credit lending company?
Also, where is their proof of legal right of subrogation of the debt? How much did they pay for this account? How do they justify how much they are trying to charge for it? For example, if they claim that you owe them $ 1,000, they probably paid about $5 for it, so how do they justify the amount they are charging you in the suit? How are they damaged to that amount? Research "scienti et volenti non fit injuria," and know what it means.
And remember, the legal right of subrogation of the debt means that the junk debt buyer should be reimbursing the original creditor for the total amount that they are claiming. Are they?Helpful 9