Defenses to Debt Buyers in Collections Lawsuits
Sometimes a creditor will transfer their legal interest in a debt to a larger company known as a debt buyer. These companies handle collections for a huge number of debts. Sometimes they will sue a debtor, although often they will pursue them outside the legal process. If you face a lawsuit from a debt buyer rather than the original creditor, you may have certain types of defenses that are specific to this situation. For example, you may be able to argue that the debt buyer lacks standing to sue if it cannot produce evidence that the creditor sold or assigned your debt to the buyer. You also may be able to get the case dismissed if the debt buyer lacks evidence of your agreement with the original creditor. This might consist of a cardmember agreement in the case of credit card debts. A billing statement usually does not substitute adequately for a cardmember agreement.
Statute of Limitations Defenses
Another way to attack a debt buyer lawsuit involves arguing that the statute of limitations has expired. This is the time period in which a plaintiff can pursue a judgment on a debt. The statute of limitations will depend on the type of debt, the type of agreement giving rise to the debt, and the state law that governs the claim. In some cases, the statute may restart if the debtor acknowledges the debt or makes partial payments on it. However, if you have not made a payment on the account for a long time, you should look into whether this defense may apply. You may want to consult a lawyer who can explain the potential nuances to you. (A statute of limitations defense can be raised against an original creditor as well in some cases.)
Inadequate Evidence
An attorney can advise you on whether you may be able to raise evidentiary objections to the documents that the debt buyer plans to introduce. Depending on court rules, the records that it uses to prove the existence and amount of the debt may not be admissible evidence. This is because the debt buyer does not have a direct relationship with you, so it does not have its own contract to prove the existence of the debt. Creditors sell debts to debt buyers “as is,” which means that they may not have an incentive to assist with any further collections efforts.
Failure to Document Credit and Billing History
Sometimes a debt buyer may not be aware of the full payment history between the debtor and the original creditor. If the debtor made payments, but the creditor did not record them, this may be a defense to a debt buyer lawsuit. A debtor also may have a defense if the debt buyer did not receive documents from the original creditor indicating when the debt arose.
Invalid Debts
Since a debt buyer is handling a vast number of debts, it may mistakenly try to collect on a debt that is no longer legally valid. Perhaps you filed for bankruptcy and discharged the debt in bankruptcy, especially if it was a credit card debt. Or perhaps the debt actually belongs to someone else in your family.
