Debt collector tells debt buyers not to sue

Debt collection attorney Gary Nitzkin in Michigan says “[m]y best advice to debt buyers . . . DON’T DO IT.” Don’t sue, in other words. Why? Pretty much for the reasons I have addressed here, plus a few more:

  • Debt buyers don’t have the documentation they need to prove their case;
  • Other collection agencies already failed to collect, so subsequent debt buyers should expect to fail to collect, as well;
  • Debt buyers risk violating the FDCPA and getting sued themselves;
  • Debt buyers risk violating the FCRA (PDF link) and getting sued themselves; and
  • When collecting on medical debts, debt buyers risk violating HIPPA and getting fined by the government for up to $50,000.

All of these are true, and yet debt collectors sue hundreds of consumers every day. Why? Because most never bother to call an attorney or even attempt to defend themselves. Debt collection law firms are “default mills.” In other words, they count on this, getting rich by filing lawsuits they know they are unlikely to win and then obtaining default judgments when the consumer fails to fight the lawsuit. On the rare occasions when consumers do stand up for their rights, the collectors usually dismiss the lawsuit and get away with their abuse of the legal system.

  • Nick Slade

    Karen,

    I would add to Sam’s answer that yes they can sue and get a judgment, but it may not be collectable. If your mother truly has no real assets, like a house, and her only source of income is social security, which is exempt from garnishment for anything other than debts owed to the federal government, then she is essentially judgment proof. I would strongly recommend that you find a consumer lawyer to talk with.

  • Sam Glover

    Anyone can sue anyone for anything. The question I think you meant to ask is can a debt collector win a case against an 82-year old woman with no assets to collect.

    Yes.

    And if she does not assert her rights, they can collect what she does have (not legally, perhaps, but she is the one who must assert those right; the courts will not do it for her).

    Make an appointment with a consumer lawyer in your state right away.

  • karen

    Can debt collectors sue my 82 year old mother living on social security with no assets or resources? She got herself into a mess and has been paying years and years but her debts get worse?

    Can they really sue an 82 year old woman with no assets; no husband, no guardian, etc.? What would they sue her for?

  • bopeep

    Rectilinear — actually, mortgages are bought and sold all the time. Do you own a house? If so, then surely you’ve received several notices telling you that your mortgage has been sold to a different bank. In the last 6-7 years, my mortgage has been sold at least 3 times, and it’s a pain to keep up with, always making sure they haven’t tacked on charges or depleted the escrow.

    The law permits what is called “commercial paper” – which includes checks, bank notes, and accounts receivable — to be bought, sold, or put up as collateral. These things have value — mostly future value — that can be given a current price. The law of “assignment” allows anyone purchasing commercial paper to “stand in the shoes” of the original creditor — in other words, they are able to purchase the creditor’s rights.

    So the scenario you described is not only legal, but happens every day.

  • Grant

    I am in a situation where MBNA says they sold my debt to a buyer. The debt buyer has sued me in civil court as an assignee of MBNA. According to them they got their money. How then can the buyer have rights to my debt if MBNA has been satisfied. The buyer went to arbitration and got an award without my knowledge until I got the summons last year for the lawsuit. Very confusing but I have been fighting it so far in hopes they will dismiss. Just waiting to see a judge if that ever happens anymore. Its just been a back and forth in court with filing papers.

  • http://caveatemptorblog.com/find-consumer-bankruptcy-attorney/ Sam Glover

    Jimmy the debt collector doesn’t pay off the debt, he buys the right to collect the debt, and NoName, the creditor, gives up the right to collect the debt. It is, perhaps, a fine point, but it is a legally significant one. It is also fraught with problems.

  • Rectilinear Propagation

    I don’t know if I’m missing something obvious but I don’t understand how debt collection works legally at all.

    Let’s say I owe Company NoName $500. For whatever reason I’m unable to pay them on time. Jimmy the Debt Collector decides to pay my debt to Company NoName. Jimmy now claims I owe him $500.

    How does Jimmy’s claim stand up legally? I never had any business with Jimmy. I never asked Jimmy to pay my debt. I bet if I went into a bank and paid off someone’s mortgage for them that I wouldn’t be able to demand money from them afterwards. So why is it any different for Jimmy? Why should I pay Jimmy instead of Company NoName when it’s NoName I incurred the debt with?

  • B. Crow

    Nicely put.