Noting that Midland buys old debt it knows is not legally recoverable because of various state laws preventing collection after a number of years, Sotomayor asked, “Apparently, you collect on millions of dollars of these debts. So is that what you do?”
Yes. Yes it is.
This is a conversation every consumer lawyer has had many times with clients. No, you don’t owe the debt any more. Yes, they can still collect it. Yes, that’s fucked up. Apparently the Supreme Court just learned about zombie debt, and a few of the justices, at least, seem to agree that it’s pretty fucked up.
The decision in Midland Funding, LLC v. Johnson should be out in June.
Minnesota consumer lawyer Randall Ryder got a $22,000+ Midland Funding debt collection lawsuit dismissed for a client who had been disputing the debt for years, but couldn’t make it go away. Says Ryder “Bringing the proverbial bazooka to a gunfight, we produced a 5 page affidavit with 70 pages of exhibits to prove the client was not liable.”
North Carolina bankruptcy lawyers Duncan Law says that, in some cases, consumers in foreclosure may be able to stay in their home for a year or more while the process plods along. This can be a good thing, especially if it allows families to save for an emergency fund or security deposit.
Some debt buyers take more extreme measures. Thomas Labeaux, owner of Debt Equities, apparently trapped a consumer in her driveway, pretending he was a sheriff and threatening to take her newborn into protective custody if she did not pay a debt.
On Tuesday, the FTC will hold a free roundtable in San Francisco, open to the public, on debt collection litigation and arbitration. The FTC is seeking public comments in advance of the event, and some of the existing public comments are, well, interesting.
Debt buyers Midland Credit Management, Asset Acceptance, and Portfolio Recovery Associates whine that they are subjected to a higher standard in litigation. I thought their public comments very funny, and very misleading.