Disputed bill or debt: Who bears the burden of proof?

Factual Questions
1

Okay, I’ve wondered about this for a while.

This OP inspired by this nearby thread by Nonsuch, regarding a disputed bill from a car rental company.

If I trip over a crack in the sidewalk (say, on private property) and break my nose, and I want the owner to pay my bills, do I have to sue him (probably in Small Claims Court)? Or can I simply send him a bill, and if he refuses to pay, send it to “collections”?

Does “sending it to collections” simply mean selling the (alleged) debt to a third party collection agency for pennies on the dollar? If I sell the (alleged) debt thusly, am I now fully out of the picture? Is the dispute now completely between the property owner and the collection agency?

What if the owner refuses to pay that? Does the “collections agency” post a nasty report the credit bureaus? If it was never taken to Court in the first place, can the agency then take the owner to Court? (Would any reputable agency ever buy such an “alleged” debt in the first place? What about a disreputable agency?)

Now, shift gears and take the property owner’s point of view:

Somebody demands payment for a broken nose or something and threatens to send the bill to “collections.” You dispute that and refuse to pay. What actions can the broken-nose guy, and/or the collections agency do to collect the claim, short of taking you to Court? And if you dispute it, what actions can/must you do to get them off your case?

Can/must you sue the broken-nose guy or the agency to get them to drop it? If so, who has the burden of proof? Are you the plaintiff now? Is it up to YOU now to PROVE that you DON’T owe anything?

For a specific example, consider the case of the rental car. Guy rents car. Returns car. Rental company claims car damages, sends customer a bill. Customer disputes that, refuses to pay. Rental company threatens to send bill to collections. (That’s where the case stands as of today’s postings.)

Does rental company have to sue the customer for payment of alleged damages? Or does the CUSTOMER have to sue the rental company (or collections agency) to dismiss the alleged debt? If collections agency jerks the customer’s credit record with the bureaus, what recourse does the customer have? In particular, WHO has to PROVE WHAT to WHOM? Is the burden of proof on the rental company to prove the car was damaged? Or if the customer has to sue to dismiss the debt, is the burden of proof now on the customer to prove that the car was not damaged (or that he, the customer, didn’t do it)?

2

The Plaintiff has the burden of proof in a civil suit by a preponderance of the evidence. In this situation, the rental company could be sued for a declaratory judgment, or if they ding your credit, for a tort.

3

In the case of a rental car, I suspect that this issue is covered, in extensive detail, in the contract signed by the renter.

4

So in either case, we have the rental company making a claim against the customer which the customer disputes. And the customer, to get the rental company off his case, has to initiate a lawsuit? So the burden of proof shifts from the rental company to the customer?

Can any party A demand money from any party B for any alleged reason, and shift the burden of proof like this? Instead of A having to prove that B owes the money, B has to prove that he doesn’t?

How bass-ackward is that?

5

The Fair Debt Collection Practices Act requires the collection agency to provide verification of the debt or cease collection activity, but the debtee must request debt validation.

6

Validation, not verification. The difference is slight.

And what the jerks will do is send you a copy of the car rental agreement or any other BS document they can get their hands on even if it does not directly address the debt. Sometimes something that essentially just says “yup, it’s you”. Then they proceed to ding your credit all up and we’re back to the original question.

Been there. A few times. Short of suing the guys I don’t know what else one can do.

7

That’s not shifting the burden of proof; that’s a different burden of proof to establish a different thing.

The rental car company or the collection agency always has the burden of proof to establish that money was owed, and ultimately the only way they can make the customer pay is to go to court. The customer never has to file suit to establish that he doesn’t owe the money; if he wants to avoid paying the money, he simply doesn’t pay the money and ignores the phone calls and letters. (Until the company files suit, at which point he has to defend himself, but the burden is still not on him).

If the customer thinks that the contacts from the company have gone past what the law allows and now amount to harassment or defamation, then yes, he ultimately does have to file suit (or possibly some other proceeding, like a complaint to a state attorney general), and the burden of proof would be on the customer to show harassment. That’s a different claim, though, and even then the customer still would not have the burden of showing that he doesn’t owe the underlying bill.

If the customer doesn’t think there’s a harassment case, but he wants to be left alone from the calls and the letters, the law doesn’t have great options. The very fact that laws on debt collection practices exist essentially implies that society is willing to tolerate (or at lest not willing to prohibit) collection practices that don’t violate those laws. The customer can go to court to get a declaratory judgment, and may have to bear some burden of proof in doing so, but even in connection with a declaratory judgment, I’m not sure that a court would order that there be no further calls or letters.

8

This is a bad analogy because there’s nothing to collect. There’s no bill owed or contract signed or anything to prove that person 1 owes person 2 anything. You can send it to “collections” but pretty much every agency out there (reputible, or not) will refuse it because there’s simply no debt to collect and no fake proof you could even offer as private person that there’s a debt to collect. Heck, as the person who smashed your nose, it may be the CITY, not the property owner, you want to go after anyway.

So that doesn’t relate to a car rental because the very nature of a car rental was that a contract was signed which brings the two parties together. Now you guys are just quibbling over the details of that contract.

9

Well, okay, maybe it wasn’t such a good analogy. The case of the car rental, or anything similar to that, is more like what I had in mind, I suppose. Or at least what I had in mind for this thread, which was inspired by that other car rental thread.

10

Fair enough. In the case outlines in the OP, what you have is a contract that’s signed by both parties outlining certain things each party’s responsible for. If the contract states that the renter is responsible for damage done to the vehicle while renting, and the driver damages the car and refuses to pay, he’s in breach of the contract. He likely owes money.

So the rental place can ask the driver to pay it back. It can negotiate a settement itself, too. Or it could sell it to a collection agency who tries to negotiate out a settlement. Maybe that will work, maybe it won’t.

But the proper legal procedure for getting money is through civil court. Proper notice to the defendant, court date, hopefully default judgment when the defendant doesn’t show, or trial when he does, and then a judgment. After that, you have to take them to court a second time to get a judgment to garnish wages, or secure property or whatever you want to do to secure the debt owed.
It’s long and expensive and just makes more sense to try to negotiate something out.
It’s also why lots and lots of contracts have binding arbitration written into them these days.

11

It works somewhat differently, but it’s not necessarily a bad analogy, if you consider that collection agency is to contract claim as contingency-fee lawyer is to tort (accident) claim. With a collection agency, what a company is doing is signing away to the collector all rights to any recovery, in exchange for receiving part of the debt upfront. With a contingency-fee lawyer, the person with the claim does not get anything upfront, but signs away part of any future recovery to the lawyer.

12

This is not correct. If it’s a collection agency, a simple cease & desist letter will eliminate the phone calls and letters if that’s what you really want.

For a legit debt, normally you’d never want to resort to this because it leaves them no option but a lawsuit. You want to leave written communication open so you can resolve it in the future. And a C+D obviously doesn’t prevent them from tagging your credit for the next 7 years at least.

13

The burden of proof is always on the party that wants the money. But as noted above, these things turn into debt collections, and the collectors have a minimal standard of proof to begin the process. Then if you dispute the debt, the burden of proof is on you to stop the collections process and the resulting effect on your credit and peace of mind. Best thing to do when a dispute occurs is to inform the company demanding payment, in writing, that you don’t owe the money. They are less likely to turn it over to collections if you are providing evidence of the challenge. It used to dissuade debt collectors from taking it on, but I don’t know if they care at all anymore.

14

This sounds like a question I would ask. It concerns a technicality of law that isn’t really obvious until you probe underneath “common sense” and the way things work in the real world.

Here’s an old thread of mine where I asked about reporting someone to credit bureaus outside of the established big bank/big business world.

It does seem, at first glance, that one could make money by fabricating “debts” (either based on an idiosyncratic interpretation of law that you know a court would be very unlikely to accept or else drawn from whole cloth) owed to you by various people and then selling them for pennies on the dollar. E.g. claim (without sufficient justification) that Mary Jones of Hackensack, NJ owes you $100,000 and “sell” the right to collect that to Sucker Collection Agency for 5 cents to the dollar, giving you a nice $5,000. Of course, Sucker Collection Agency is unlikely to collect, leaving them holding the bag. Do this a few times a year and you’re living a middle class life. It makes me wonder what type of legal penalties someone who did that might face. I could possibly see Fraud charges if the debt “seller” lied about the origin of the debt.

15

I would think an agency shelling out $5000 who has been in the collections and debt business for a while would see through BS paperwork. Of course, if you totally fabricated the whole lot (i.e. fraud) then it would work for a while until people started catching on that someone was working the system.

There were cases in the 90’s in Canada (esp. Ontario) of mortgage fraud. People would come in, claim to be Joe Smith who owned a paid-off house, and take out a mortgage on it. Disappear with a huge sum, then the real Joe Smith would start getting notices a few months later when no payments were made. That stopped when (a) the laws were clarified to make the banks eat the cost and (b) everyone demands serious identification proof before such transactions now.

16

I wasn’t aware that debt collectors pay up front to ‘buy a debt’. The ones I know of only pay out based on what they collect. Usually 50%. This is the same deal you get from the ‘leg breakers’.