Faced with a debt collection lawsuit? The company that has sued you is likely a debt buyer: Midland Funding, LLC, Portfolio Recovery Associates, LLC, Cavalry SPV I, LLC, Discover Bank, Capital One Bank, LVNV Funding, LLC, CACH, LLC, or Americredit Finance, Inc. These companies are not banks that issue consumer credit cards or lend money.
There are multi-billion dollar national banks that back stores like Walmart, Lowes, Target, Sears, etc. The most common issuers of consumer credit are G.E. Bank and Synchrony Bank. Although your credit card agreement may have listed “Walmart” or “Target” in bold, the fine print will spell out which bank you have made an agreement with.
The law states that all credit card agreements must be evidenced by certain writings, which reflects the applicable terms and conditions, and all debits and credits to the account. It is common for a consumer credit account to contain hundreds or even thousands of transactions. Since the advent of computerized document storage systems, it has become relatively easy for banks to keep track of all of these records. The paper trail is very important when it comes to proving a valid debt in court of law.
The Banks And The Debt Buyers
These banks issue credit to people knowing that they will spend money, the account will accrue interest and fees. Rather than spend their time and money trying to collect on these accounts, the banks have learned that it is economical for them to ‘charge off’ the accounts, write off the loss, and package thousands of similar accounts together as a Collateralized Debt Obligation (CDO).
A CDO is a ‘stock’ or ‘security’. In plain language, the banks can sell the rights to collect on the account to institutional investors like Midland Funding, LLC, Portfolio Recovery Associates, LLC, Cavalry SPV I, LLC, Discover Bank, Capital One Bank, LVNV Funding, LLC, CACH, LLC, or Americredit Finance, Inc. The debt buyer is speculating that they can collect the full face value of all the debts that they bought. However, the debt buyer wants to purchase the pool of accounts for as cheaply as possible. These debt buyers purchase these accounts for pennies on the dollar. So, if a particular account includes $800.00 in expenditures, and $1,200.00 in interest, fees and penalties, the debt buyer probably paid the bank about $100.00 for the rights to collect on the account.
The bank—the original lender—is very happy to take that little bit of money and be done with the whole transaction. In the world of finance, money now is always better than money later.
Why File A Debt Collection Lawsuit Against Me?
The debt buyer has a plan in mind—they have figured out that they make more money buy immediately filing a debt collection lawsuit against a large percentage of the people who’s accounts they purchased. There are many reasons for this, but the primary reason is that lawsuits scare people. The individual usually has fears like:
- What will happen to my credit score?
- Can I get in trouble?
- Can they take my money or property?
- If I don’t pay, will I be able to get credit, buy a house, buy a car, or rent an apartment?
- What are they going to do at the court during my debt collection lawsuit?
- What if I don’t appear for my debt collection lawsuit?
People are afraid, and they think, I better just call them up and make payment arrangements. The other large percentage of people simply do nothing. They ignore the lawsuit and the debt buyer gets a default judgment. At that point, there is nothing you can do to dispute that balance until it is paid in full. Unfortunately, a judgment accrues six percent annual interest, and may include additional attorney fees, so in a few years thousands can be added on to the balance claimed. At that point, the debt buyer can sell the judgment—which is a better investment—to law firms and debt collectors for 100 times what they paid for it. Judgments are more valuable because there is no defense, and the judgment holder has the right to take your bank accounts and property. Here is what people don’t know—there is a major chink in the big bully’s armor. But you have to catch them right as they are trying to sue you at the local magistrate, district court, or in arbitration division of the court of common pleas in your county.
Do Not Be Afraid – That Is What They Want– The ‘Big Bully’ Has An Eeven Bigger Weakness During A Debt Collection Lawsuit
In order to purchase these debts cheaply and maximize profits, the debt buyers have cut corners. There are Federal and State banking regulations that any company must comply with if they want to WIN a lawsuit. They can always file a lawsuit without the ability to win, because remember 90% of people will ignore the suit or pay voluntarily. Compliance is expensive for the debt buyer. They would have to pay the original bank for certain information and support throughout a lawsuit. Also, in order to prove their claim in court—which we will force them to do—the debt buyer has to pay representatives from the original lender to attend multiple hearings and testify. How can a debt buyer make any money if they spend more to prove the claim than they can ever collect? Based on these two principles, our attorneys are able to have these lawsuits dismissed routinely. That’s right. You pay nothing to the debt buyer, and you don’t pay ANY legal fees unless we win. That’s our money back guarantee.
It is important that you do not delay. If you do not respond to the lawsuit 20 days after you have been served with the complaint, the debt buyer automatically gets a ‘default judgment’ and you will have lost your ability do dispute the case forever.
The debt buyer’s business model only works if you behave like they want you to. If you call them up out of fear and pay them, or you do nothing, they win. But, if you call our law firm and stand up for your rights, we will save you thousands and protect your credit score. You never have to leave your home or spend a day in court. We have successfully defended cases at the magisterial district courts in Allegheny, Westmoreland, Butler, Armstrong, Fayette, Beaver and Lawrence County. We defend cases in the the Court of Common Please, Arbitration Division, for all of the aforementioned counties. Give us a call, the initial advice is always free.
What Should I Do Now That I Have Been Served With A Debt Collection Lawsuit?
It is always best to seek legal counsel in a time like this. You can, of course, defend yourself in court. This, however, is not advisable. It would be best to get a consultation from an attorney who deals with matters like this. A debt collection defense attorney knows what needs to be brought to court, what questions to ask and how to attack the suit against you. To learn more, speak with a skilled attorney from The Law Firm of Fenters Ward in Pittsburgh. Consultations are always free.