The secondary debt market—credit cards and mortgages included—has relied on made-up legal terms and suspect justifications for years in order to turn the usually slow-moving court system into a speedy tool of business. It worked, probably because few consumers put up a fight. But more people are fighting back now, which means debt buyers are scrambling for legal footing.
It isn’t working, at least not in Pennsylvania, where the state court of appeals recently said “we reject [the] ‘This is how the industry does it’ mantra.”
It seems impossible for a lawyer to actually examine each lawsuit, make sure it has merit and there is evidence to support it, and sign off on it. This means that the courts end up trying to sift through the cases the law firm has not really bothered to look at, so the courts become the debt collectors’ back room.
95% of those lawsuits probably go unanswered, so the debt collectors end up with a judgment for the debt plus interest (and possibly other—unlawful—charges) plus attorney fees and costs. Then, they find the debtors’ bank accounts and employers and start collecting by garnishing wages, seizing funds from bank accounts, and worse.
If you are a tenant, the system works roughly the same, although landlords do not usually have quite so many people to sue.
So what do you do if you find out someone is suing you?
Following up on this post (In the event of a lawsuit, please head for the nearest lawyer), I thought I would talk a little bit about what to do after you are sued and after you answer the debt collection complaint. (If none of that made sense to you, go ahead and find yourself a consumer attorney.
More on combating debt collection lawsuits after the jump.