Another credit card question

Factual Questions
1

I know that none of you are my lawyers, etc., but in a lawsuit for an unpaid cc debt, or any other civil debt, doesn’t a collection agency have to prove that I contracted with them somehow?

I wouldn’t think that a statement from the original creditor saying “Yes, he owes us money” would suffice. It is would, what would stop me from suing the SDMB for $10,000 and when Cecil asked for proof, I could just show a letter from my brother saying “Yes, ole Cecil owes me that money!”

It seems as if that can’t be true.

Yep, YONML, etc.

2

Why would they have to do that? You owe the debt, what does it matter to you who does the legwork of collecting the debt? :smack:

From a legal remedy standpoint, should legal action be necessary, the plaintifff in the suit against you for damages for your non-performance of the contract would be the orignal credit card company, or any company which has purchased from them the contrct and its potential cause of action for breach. Sometimes, when a collection agency is after you, they have purchased the debt from the original company. Often, they are simply acting as the agent for the credit company.

3

The collection agency needs to get proof of the alledged debt from the original creditor. The proof needs to be on the letterhead of the original creditor and not the collection agency.

May I suggest visiting creditboards.com for advise.

4

If they pursue a legal action against me, don’t they have to offer some evidence that they are actually working for the original creditor? Otherwise, any scam artist could claim to be collecting a debt. They should have to prove they have standing to collect a legal debt.

5

In court they would have to prove the existence of the debt by a preponderance of the evidence. That would include proof of the original debt and any subsequent transfer of rights.

6

Let me rephrase. Shouldn’t the collection agency have to prove that I contracted with the original creditor, rather than just having a statement from that original creditor saying that I owe them money?

That seems to be almost no level of proof that a contract existed.

7

You can certainly ask for that. Usually, the request for payment comes with a statement as to what the original debt is, who the original creditor is, and what the account number is. You can always ask for more detail.

The bottom line, though is simple: either you owe the debt, or you don’t. If you do, trying to squirm out of it on the basis that the collection agency isn’t the original debt holder is kind of silly. It doesn’t mean you don’t owe the debt. At best, it protects you from being “scammed,” but this is relatively easily avoided.

At trial, of course, the original debt holder, or its assignee, would have to establish the existence of the original debt, and any assignation, as sailor notes. This would be done by putting into evidence the original debt contract you signed, or a facsimile thereof, the assignation, and if you required, evidence of each and every one of the approved transactions.

8

Do you, or don’t you, owe the debt?

If you do owe it, then what do you care about what “proof” the collection agency has? The issue of evidence would be relevant only if you are taken to court to force payment. Otherwise, outside of court, say talking to their “counselor” over the phone, you are simply dealing with an agent of the original debt holder, legally no different for this purpose than talking to one of the employees of the original debt holder.

If you don’t owe it, then obviously you tell them to go suck eggs. :stuck_out_tongue:

9

The short answer is, yes, if they have to sue you to collect, they have to prove the debt. They’ll do that in the same way as the original creditor would have done, had it sued you; evidence of the orginal agreement - probably a contract you signed - plus evidence of the transactions on foot of the agreement - probably a statement of account. If they have bought the debt from the original creditor and are collecting it on their own account, they’ll need to prove that transaction also - a copy of the contract of assignment will do the trick. And the terms on which they bought the debt will usually provide for the orginal creditor to assist them in proving the debt if the need arises.

10

Well, yeah that’s why we’re in court, to see if the collection agency can prove that I owe the debt. If they cannot, then that is the reality; I don’t owe the debt.

11

Owing the debt isn’t the only relevant fact. The action might be past the statute of limitations–something that happens with surprising frequency in these cases. Or the debtor may ultimately be judgment-proof (e.g. only income is social security checks). There are any number of other reasons why, even if someone thought they owed the debt, they may want to first force the collector to prove they actually own the debt just to potentially avoid the cost of hiring a lawyer to figure out whether some other fact means they don’t have to or shouldn’t pay.

In NYC, you’re lucky if debt collectors actually serve you before collecting on a default judgment. Sure, you can go to court and get the judgment tossed out for improper service, but only about 1% of debtors are gonna do that. It’s a nice racket dominated by the kind of lawyers that give the profession a bad name.

12

It’s the only relevant fact when it comes to the issue of whether or not the agency has a valid agency relationship. As I’ve made clear, without going into the multiple possible alternative situations, once they’ve established an agency relationship, or an ownership relationship (as assignee), then you can always raise other issues. But if you are saying to the agency, “prove you are truly the agent/assignee in this matter,” then unless all you are trying to do is baffle them with bullshit, what’s the point? :smack:

13

You asked, “If you do owe it, then what do you care about what ‘proof’ the collection agency has?” And the answer is what I said. You may as well make them jump through the hoop before putting in the effort to find out whether you should pay them or let them take you to court. If it turns out that they can’t prove the debt, which is not especially uncommon, then you won’t have wasted time looking up the statute of limitations or talking to a consumer debt lawyer, etc.

14

Yes, you can make them jump through the hoop, but to what end? The chances that they will be unable to jump through the hoop, or find it too much bother, are not very high.

Ask yourself this question: if the lending bank were suing you, would you make them jump through this hoop in the hope that you would escape the debt? There’s no reason why it would be any more difficult for the collection agency to jump through the hoop than it would for the lending bank.

15

The odds aren’t high in an absolute sense, but they’re high enough to make it worthwhile. It is not especially uncommon for collectors to be unable to show proper proof of the debt. From my experience, I’d estimate that a collector cannot produce proper proof in around 1/20 debt actions. I don’t know if that anecdotal data is reflective, but absent other data it’s enough to convince me.

Creditors failing to produce the debt instrument has become common enough in foreclosure actions that it has become something of a pop phenomenon. Of course, mortgages are a bit different with all the traunching, but the same general principle applies. It simply costs more to keep perfect track of every piece of paper than it does to lose the rare case when someone defaults and you can’t collect because you can’t prove the debt.

16

If a debt collector comes to you saying you owe them $X for a debt, there’s nothing wrong with making them prove it. Otherwise, you could end up paying a debt collector $X when in fact you don’t owe $X to that party (but you may owe it to someone else).

Check your local laws, this is not legal advice, you are not my client, etc., anyone feel free to chime in with different ideas or thoughts, etc., but off the top of my head, speaking very generally and not as to your specific case at all, here’s what I think a debt collector may have to prove to win in court, generally speaking:

  1. Proof that the original creditor had an agreement or account with the debtor. Here, I suppose a witness may have to appear from the office of the original creditor and testify with personal knowledge of establishing and maintaining an account with the debtor.

  2. Proof that the debtor used the account with the original creditor to run up a balance from $0 to the amount demanded. I suppose the custodian of records from the original creditor may have to authenticate statements of account and testify as to their accuracy.

  3. Proof that the debtor defaulted on the account with the original creditor on a date certain. This may probably be done with a witness from the original creditor. I suppose this person from the original creditor may have to establish the terms of the account to prove the default, such as a cardholder agreement and proof that the debtor was bound by its terms during the period of account.

  4. Proof that the original creditor charged off the debt on a date certain, where the charge off date post-dates the date on the cardholder agreement. Again, a witness from the original creditor may be needed to establish this.

  5. Proof that the original creditor assigned the right to collect the specific debt at issue to a debt collector. Again, they may need someone from the original creditor to testify that they assigned the debt to so-and-so debt collector, can authenticate the assignment documentation, and testify as to which person from the original creditor authorized the assignment and in what capacity or by what authority within the company.

  6. If the debt has been assigned multiple times, proof of each assignment between each party to each assignment, establishing a full “chain of custody” of the account from the original creditor to the debt collector plaintiff and proof of the terms of the assignment establishing the right to collect by the debt collector plaintiff. They may need documentation of each assignment and a witness from each debt collector to authenticate the assignment documents based upon personal knowledge through the entire chain of custody.

  7. Proof that the plaintiff brought the lawsuit within the applicable statute of limitation, which, in some cases, may be altered by the cardholder agreement (e.g., a cardholder agreement with a “choice of law provision” that adopts the law of a different state is valid in some states and not others, etc.)

  8. If claimed, proof of proper application and calculation of pre-judgment interest, fees, costs, and attorney fees. Again, look to the cardholder agreement and local law.

It’s late and I can’t think of anything else right now, but, as you can see, the more an account is assigned, I would think the greater the odds of a failure of evidence due to a break in the chain.

If a debtor is sued by the original creditor, well, that seems like it would be much easier to prove against the debtor since there is no assignment to prove up and the original creditor is more likely to have all the account statements handy as well as any necessary witnesses.

If a debt collector tries to prove up things that occurred pre-assignment with a witness from its own office instead of a witness form the original creditor, then it seems like a hearsay objection might be available and the account statements and assignment documents may get thrown out of court. The witness may need to have personal knowledge of things that happened, and the debt collector person may have no personal knowledge of what happened on the account before it was assigned to the debt collector for collection. The debt collector may need to get a witness from the original creditor to prove the account statements and assignment are valid business records and should not be thrown out as hearsay.

Don’t rely on any of this. None of it may apply to your case or in your jurisdiction, and I can’t help you with that. Seek an attorney in your jurisdiction about your specific case and applicable law.

I don’t really know, but I hear that information sometimes gets lost or becomes unavailable as evidence in court with each assignment, FWIW.

Another practical thing to consider is if the debt collector is successful in proving things up after you make them jump through the hoops, then this might make your balance go up fast in the event they can recover their attorney fees from you if they win.

17

Okay, but in a civil case you have to answer questions. Couldn’t the plaintiff say “Do you owe this debt?” and then you must answer “Yes” to be truthful, correct?

18

So, in other words, you recommend the amoral position of refusing to pay a debt you know you owe, if there are technical issues with proving that you owe it. :dubious:

Wanting to be sure that the payment you are making will be sure to clear the debt is one thing. Making people jump through unnecessary procedural hoops in the hope of avoiding what you know you owe simply drives the cost of credit up.

I’m assuming that jtgain is interested in the former, not the latter.

19

No, that’s a poor and unnecessarily hostile reading of my posts. There are a dozen good and moral reasons not to pay a debt one owes (exempt funds, multiple agents collecting same debt, etc.).

20

This is the normal case. People are often sued by some third party debt collector years after the alleged default. They can’t remember the account, the balance supposedly due, the date of default (which may be very important for statute of limitation issues), etc.

They often don’t know the details of the cardholder agreement (which may also be relevant for determining the statute of limitation, the amount of interest to be charged, whether attorney fees may be charged, etc. The debt collector often comes to a debtor years later and the alleged balance due has perhaps risen dramatically from the approximate balance the debtor might recall. How did the debt collector come up with that amount to demand? That’s a legitimate question.

A debtor may also not recall an account number. The debtor should be sure there is a proper link between the debtor and the account being enforced, and that the debt collector is not coming after the wrong person with the same name.

Also, as mentioned, if the account has been assigned, the debtor should know who has the right to collect it. This is especially true in multiple assignment accounts. If the debt was assigned to debt collector A, then to B, then to C, the debtor does not want to pay debt collector B anything.

If you borrowed $100 from a friend, named Tom, with interest, then some stranger, named Dick, sues you some time later, when your memory has faded, and says you must pay Dick $350 based on your original loan from Tom, would you just accept it and pay Dick $350 or would you ask for some kind of proof before shelling out $350 to some stranger and hoping it takes care of your original deal with Tom? How do you know that Tom won’t come after you for the original $100 after you pay Dick? Wouldn’t you ask Tom to verify that he, in fact, assigned the debt to Dick?

Other times, the debt is fresh and the original creditor comes after them, and people say, “That’s my debt, the balance due is roughly correct, and I stopped paying perhaps a year ago, so the statute of limitation has probably not expired … so I want to make a payment deal and get it taken care of without a lot of fuss.”