Credit & Debt
Evidence of Assignment: Why Debt Buyers Have Proof Problems
Assignment is the foundation of the debt-buying industry, and the industry is built on sand. Or a swamp. Because assignment is also the industry’s weak spot, and the reason why most—if not all—debt-buyer lawsuits should fail.
Debt buyers must prove they have the right to collect a debt. To do this, it must show an unbroken, valid chain of assignment back to the original creditor. Most debt buyers cannot do this.
Served By a Debt Collector? What To Do Next
Getting served with a debt collection lawsuit is one of the more upsetting things that can happen to you. When a process server hands a summons and complaint to you (or to someone you live with who can accept service), it means a debt collector is dragging you into the legal system.
And while getting served with a debt collection lawsuit is not fun, it is not the end of the world. In fact, that summons and complaint—legal process—provides rights to both parties to the case. Which means as a defendant in a debt collection lawsuit, you now have access to tools to defend yourself.
Let’s take a look at the first few parts of a lawsuit to try to dispel the fear and misunderstanding.
Current Balance vs. Payoff Amount
Payoff amount and current balance are related but not equivalent terms.
Current balance means the amount you owe according to your statement. The next day, you will owe more. In other words, if you are trying to pay off a credit card and the statement says your balance is $514, you may not be able to bring your balance to zero and satisfy the debt by writing a check for $514. Instead, you would need to contact your lender to find out your payoff amount.
Payoff amount is how much you would have to pay to satisfy the debt. It is not the same amount as the current balance on your statement—at least not for long.
The difference between the current balance according to your statement and the payoff amount is crucial when you are ready to pay off your debt.
How Not to Defend a Debt Collection Lawsuit
This article is a list of defenses that do not work. If you would rather find out what you should do, click over to “Served By a Debt Collector? What To Do Next.”
Most debt collection lawsuits are handled by overworked and unsympathetic debt collection attorneys. With that in mind, focus on your best defenses to the lawsuit. Here are some of the weaker defenses, which you should avoid.
John Oliver Forgives $15 Million of Medical Debt
And does a pretty great job going down the list of what’s wrong with one of the slimiest industries there is.
[youtube https://youtu.be/hxUAntt1z2c]
About the US Marshals and Paul Aker’s Student Loan Debt
So this happened:
Seven armed U.S. marshals arrived at [Paul Aker’s] door in Houston last Thursday, arrested him on the spot, and took him to jail. He owed all of $1,500, outstanding since 1987. Aker told Fox 26 that without any warning, his 29-year-old debt was forcibly being collected; the marshals took him to federal court and made him sign a payment plan.
Along with many who saw the story, I was convinced there had to be more to it. Well, there sure is.
FTC Launches “Operation Collection Protection”
The FTC is going after debt collectors in a big way:
The cases announced today bring to 115 the total number of actions taken so far this year by the more than 70 law enforcement partners in the Operation Collection Protection initiative.
The FTC is mainly targeting debt collectors trying to collect debts the consumers don’t actually owe.
Debt collectors targeted by the FTC and various state law-enforcement agencies include BAM Financial, Delaware Solutions, K.I.P., and National Check Registry.
Austin, Texas, Sued for Operating a Debtors Prison
The class-action complaint (pdf) alleges the city of Austin routinely jails people too poor to pay traffic tickets and other fines. This is only the most recent in a series of similar lawsuits. Earlier this month, the ACLU sued a Georgia county. Other lawsuits include Benton County, WA, Biloxi, MS, and New Orleans. [BuzzFeed]
“Wasted” on Facebook? Your Credit Score Might Suffer.
Credit scores are, in theory, a measure of how likely it is that you will pay your debts instead of defaulting or declaring bankruptcy. They are extremely flawed, but it’s all the banks have got. In a search for ways to refine credit scores, FICO (the company that developed the most popular credit score) is considering using social media in its equation.
Fico [is] increasingly looking at data on a spectrum: with credit card repayment history at one end – the most reliable guide to creditworthiness – and at the other, information volunteered on social media platforms such as Facebook.
In short, posting dumb things to your public social media profiles may soon make your life more expensive.
Featured image by sanberdoo / CC BY 2.0.
Student Loan Servicers Make a Bad System Worse
This article is mostly about why student-loan servicers are terrible, but the reality is they just make a bad system worse. [New York Times]