Judges and Credit Card Cases

by Jeff Sovern

Suppose you're a judge presiding over cases in which debt buyers--who have bought credit card debt from credit card companies or, often, other debt buyers--sue the credit card holders for the amounts due on the credit card.  You know that virtually no debt buyers can prove their cases (indeed, I'm told that often the contract under which the debt buyer purchased the debt does not oblige the credit card company to provide the underlying documentation needed to prove the debt, or obliges the credit card company to provide such documentation for only a limited number of the debts).  The debt buyers are like poker players bluffing with weak hands.  Consequently, if the cases go to trial, the debt buyer will lose.  You could insist that the cases go to trial.  But that would clog your court up with trials.  In addition, you believe that most of the consumers did incur debts on the credit cards on which they're now being sued, so that they would get a windfall if they win outright.  Moreover, if all judges insisted on trials in such circumstances, consumer debts would become worth even less, which means that credit card issuers would have an even harder time recouping their losses, and that might increase the cost of borrowing or reduce access to credit, or both.  Alternatively, debt buyers might insist on buying the documentation, and that the credit card companies supply the witnesses needed to prove their cases, which would again increase the cost to credit card companies.  So there are long run costs to that approach.  Many of these cases terminate in settlements.  So you could push the parties to settle.  But what kind of settlement is fair?  Often the final charges on the card exceed by a large margin the cost of the items that the consumer initially charged, because of the various penalty fees and charges.  And of course the debt buyers usually purchase the claims for considerably less than their face value, so a settlement at 100% of the amount owed would give the debt buyers a windfall.  So all in all, what's the appropriate role of the judge in these cases?  To do justice?  But what's just?

Comments

[Chris]

I am a paralegal at a law firm that defends a lot of these cases. I have been involved in over 75 in the last year.

1) As far as settlement, it always seems that no matter the value of the lawsuit, just before trial a settlement offer of less than 2 attorney billable hours is produced. So the debt buyer makes it just a little cheaper to settle than go into court. Clients usually take that option.

2) I think another issue that should be of concern is the number of cases one debt buyer attorney can file in a given time frame. I know of one attorney locally that files between 20-80 cases a week on behalf of debt buyers. Even with the best technology, it seems unlikely that an attorney could have knowledge of many of these cases. I applaud the judges that I have heard about admonishing attorneys that show up to court with almost no knowledge of the facts in the case.

[Mackenzie]

I have successfully fought Third Party Debt collectors in and before going to court.

The two most valuable resources are the Validation Letter, which I downloaded from http://www.edcombs.com/

And a PDF document by one of the attorneys at this same firm- Daniel A Edelman. The Title is The Fair Debt Collections Practices Act-2004 by Daniel A Edelman. It has an excellent section of laws pertaining to attorney debt collection- also court citations and opinions.

I have used quotes from this article in letters to Attorney debt collectors, after which I never heard from them again. The Validation letter also works well. Most third party debt collectors do not want to bother if they actually have to argue the case- in fact most count on winning by default when the defendant fails to show in court.

These days it is easy to search the laws on line. I have found that third party debt collectors don’t want to be bothered and count on the Ole Boy’s club in the courts to protect them. I have even had filings mysteriously disappear from dockets- but since I always get a court stamped copy of my filings I was able to prove that the documents had been filed. The court, however never investigated the disappearance of several filings from the court docket.

[Jessica]

I am a staff attorney to a common pleas judge. We get these types of cases all the time, and we always demand that the plaintiff produce proof of ownership of the account. I hate to sound harsh, but there is no room for a cost-benefit analysis when dispensing justice. All plaintiffs must establish standing to sue. If obtaining such proof increases the litigant's cost (and therefore raises costs for the litigant's consumers), so be it - it's just another cost of doing business. No one would suggest that an individual litigant's legal burden be reduced because it would be cheaper for the individual litigant to satisfy fewer legal burdens. If debt collectors want judgments, they must first meet all required legal elements.