“In 89.3% of the cases we reviewed, debt collection litigation was initiated not by the original creditor but by a third-party debt buyer who had purchased the debt in question.

Third-party debt buyers typically purchase debt for pennies on the dollar.

In one recent sale, for example, Asta Funding, Palisades Collection, LLP’s parent company, purchased a debt portfolio of approximately $6.9 billion for $300 million, or 4.35 cents on the dollar.

After purchasing the debt, the third party may attempt to collect the full amount of the alleged debt by contacting the debtor or by bringing a lawsuit as an assignee of the original creditor.

Just twelve of the thirty-nine debt buyer plaintiffs who initiated lawsuits reviewed in this study are licensed by the New York City Department of Consumer Affairs.

The twenty-seven unlicensed debt buyers brought 257, or 42.8%, of the 600 lawsuits reviewed.”

“Debt Weight: The Consumer Credit Crisis in New York City and its Impact on the Working Poor” a report by the Community Development Project, November 2007

“Our study reveals that in 99.0% of applicable cases reviewed, debt buyers submitted facially invalid evidence in support of applications for default judgments. 

As a result, it is impossible to tell how many of the 320,000 debt collection lawsuits filed annually have merit. We can only speculate as to the extent to which debt buyers are using the courts as an avenue to engage in unscrupulous, and unlawful, debt collection practices.

Nevertheless, the debt buyers’ consistent failure to provide relevant evidence in support of their claims suggests that they do not possess such evidence.

Furthermore, anecdotal evidence suggests that where defendants appear and, using the discovery process, demand that plaintiffs produce evidence of their claims, plaintiffs often voluntarily discontinue an action. In essence, debt buyers initiate litigation on the presumption that they will prevail as a result of the defendant’s default.

Given the incredibly high default rate, such an assessment is, far more often than not, correct. Where the defendant appears and the plaintiff is forced to prove its case, it often chooses not to and instead discontinues the action.

If it is assumed that plaintiffs could not, if forced to do so, substantiate their claims in just 50% of the cases where a plaintiff failed to proffer admissible evidence in support of an application for a default judgment, it would call into serious question the underlying legitimacy of a significant percentage of all consumer credit cases filed in the Civil Court.”

“Debt Weight: The Consumer Credit Crisis in New York City and its Impact on the Working Poor” a report by the Community Development Project, November 2007

I am having a problem with Asset Acceptance LLC.They have taken over a debt I had with Wellsfargo which will come off my report in March,2008.I have been paying themm 100.00 a month since 2003.

They said I owed 10,000.00 original amount but we would settle for 4500.00.They have held out 100.00 a month since 2003.

October,2007 they did not hold out any so I assumed the loan was finally paid.

In November,2007 I received a letter stateing that I owed 10,670.91 but they would settle for 5335.46.Then December 21,2007 I received a letter stateing I owed 10,821.39.What can I do?

I asked for validation a few months back and they only sent me the original amount.

Their was a call this week on my caller id from Harrison Law firm in Tupelo,Ms.I am from Mississippi.I’m scared they have turned it over to them.What should I do?

Thank so much for this sight.

Pat (more…)

Are JDB like LVVNV funding considered 3 rd party collectors and must cease communication if sent CD letter

James (more…)

Well, the debt collector’s worst nightmare would have to be the Broken Credit Blog, but the next worst is uncovered in the November 2007 issue of “Collection Advisor”.  Yes, I’ve been reading the other teams secret playbook of creepy tricks and strategies again.  Hey, somebody’s got to do it for the sake of the Broken Credit Bloggers, even though it really does give me the creeps. 

Now for the money quote from Toni Nuernberg, COO of ACA International [page 37]:

“As I talk with collection agency owners and managers around the country, I ask, “What is the number one thing that keeps you awake at night?”  Unequivocally, they tell me it is staying abreast of the state laws and regulatory requirements, and being sued for non-compliance of a law or regulation they weren’t aware of is their worst nightmare, and, quite frankly, a poor defense.”

OK, there you have it; the boogeyman has been released from the debt collector’s closet. 

Next Step: Check to see if boogeyman is properly licensed and registered.

A Texas-based debt collection company will pay more than $1.3 million to settle Federal Trade Commission charges that it misled, threatened, and harassed consumers in violation of federal law.

“Debt collectors who get complaints from consumers should not only take notice, but also take action,” said Lydia B. Parnes, Director of the FTC’s Bureau of Consumer Protection. “The message from this case is clear: Either comply with the law or face stiff penalties.”

According to an FTC complaint, in many instances, collectors for LTD Financial Services, L.P., which collects on about 1.25 million consumer accounts per year, violated the FTC Act and the Fair Debt Collection Practices Act by falsely threatening or implying that LTD would garnish consumers’ wages, seize or attach their property, or initiate lawsuits or criminal actions against them if they failed to pay. (more…)

hello – you could title this as “Written Contract or Open Account” — having difficulty figuring out the SOL here in GA for credit cards.

According to many internet sites credit cards are considered open accounts and therefore the SOL for that state would apply. However i am being sued by a JDB here in Georgia and would like to know if I have an absolute defense or not – they are claiming breach of contract and state the debt is based on a ‘written contract’ [the credit card account]. GA SOL for open accounts is 4yrs, for written contracts 6yrs.

Are credit cards open accounts or written contracts in Georgia? Any ideas?

thanks! Many Regards,
GA Mom

[BTW-have learned some new ideas from your site on how to get my score cleaned up-thanks!] (more…)

Can a debt collector run your credit report?  This question has been asked many times here on the Broken Credit Blog and it has generally been posited that ‘debt collection’ is a permissible purpose under the FCRA.  A recent filing in Pintos v. Pacific Creditors Association, Case no 04-17485 (September 21, 2007, Ninth Circuit) changes things a wee bit in favor of the consumers of the world.  And oh yes, debt collectors [I know you read my blog too so pay attention] this is your warning!  Be afraid; be very afraid… (more…)

i am very glad to find this website. I found it very educational. thanks in advance. anyway,i received a summon to appear for an unpaid credit card. according to my creidt report, this card went on 180 days deliquent on may 2003 followed by followed by the month of june then octber- march 2004 until it reached the charged off date of october 2007. the statute of limitation in NV is 4 years for open account. does the statute of limitation runned out? the lawyer suing me also included a settlement notice. should i settle eventhough the statute of limitation runned out? what’s going to happen if this case id dismissed by the court because of the statute of limitation? can they sue me again? what should I do? please help

CJ (more…)

I have been reading blogs on this site and it is has answered a lot of my questions. I still have a couple of more. My ? is what can be done about old collections{11 YRS OLD} that show up on your report with 2007 dates?Sold to new companies.And accounts that are showing 2,3 times on report.Also accounts that are paid but old should that have an impact on my score?My score is at 517 at the big E. After reading the blogs I believe time will be on my side. All help is needed. Thank You, Marilyn (more…)