Let’s say a southern California man was experiencing some rather harsh debt collection tactics from a credit card company. Along with harassing phone calls, he was being threatened with wage garnishment. Without any options left, he hired a Chapter 7 bankruptcy attorney in Los Angeles or Orange County. The debt was discharged and he began rebuilding his credit.
Unfortunately, a growing trend threatens the recovery of our southern California man and others like him. Consumer advocates and legal scholars such as Peter A. Holland are working to educate all of us about junk debt buyers. Californians, including judges and bankruptcy attorneys in Los Angeles and Orange County, need to be aware of their abuse of the state’s legal system.
Junk debt buyers purchase old debts from creditors, such as credit card companies. And they are eager to do so. The creditor has given up its collection efforts for one of a few reasons. The debt may have been filed improperly. It may be the result of identity theft. It may have been discharged already in bankruptcy.
After a Chapter 7 bankruptcy attorney here in Los Angeles or Orange County helps with excessive debt, all unsecured debt is discharged. This can include credit card debt. But a credit card companies like to recover at least some of their losses. They can bundle discharged debts with old but outstanding debts and sell them to junk debt buyers. The contract is buyer beware, but debt buyers are willing to bet they can get at least a few consumers to pay up.
Their strategy is to file a lawsuit. These companies can file literally hundreds of lawsuits in a day. Clearly, they don’t have the staff to prosecute each case. But they expect some defendants will ignore the summons. When you fail to appear, the plaintiff can paint you as a ‘deadbeat’ to the judge. The debt buyer will likely win a discharge judgment against you. The amount awarded could include illegitimate interest claims and court costs. Any competent lawyer in Los Angeles or Orange County, bankruptcy attorney or not, would have had the case thrown out for a number of reasons.
If the debt was old enough for the original creditor to sell for pennies on the dollar, there’s a good chance that the paperwork pertaining to the account is missing. The debt buyer may lack documentation proving the chain of assignment. Without this, ownership of the original debt cannot be proven.
The plaintiff must also have the terms and conditions agreed upon by the consumer and the original creditor. Having all relevant documentation, and no partial, illegible, robo-signed or post-dated pages is a tall order for a debt bought in a fire sale. And if the debt was first bought by a wholesaler before being sold, its even less likely.
Documents in the affidavit may contain misleading statements or omissions concerning collectability, statute of limitations or validity. There may be inappropriate redactions. And any forged signatures, white outs or black outs could result in a dismissal.
The debt may also be too old to collect. This may be why it was sold in the first place. The statute of limitations for credit card debt in California is four years. It is unlawful to attempt to collect any debt after the statute of limitations has expired.
It is also a violation of California’s Fair Debt Collection Statutes to try to collect for any amount that was not outlined by the consumer and the original creditor. It must be documented and signed by both parties. This means a debt buyer cannot sue for additional interest, services fees, attorney fees or collection charges.
A bankruptcy attorney in Los Angeles or Orange County, such as Oak Tree Law, can prove that your debt was discharged. Or perhaps you are being sued for debt you paid. They may be able to cast doubt that you ever owed anything at all to the original creditor. Or perhaps they can prove that the law of another state governs the contract. Often, a simple phone call will alert the debt buyer that you have a knowledgeable ally on your side.
Junk debt buying is a profitable business. But the success of this parasitic industry is based on consumers’ lack of understanding. Like any lawyer, your Los Angeles or Orange County bankruptcy attorney’s job is to ensure due process. Remember, the burden of proof in debt collection cases is always on the plaintiff.
Never ignore a summons from a debt collector or what you suspect is a junk debt buyer. That may be exactly what they’re hoping for. Oak Tree Law can help.