Four cents on the dollar is the typical amount paid by a debt buyer for a delinquent account. “Why is this debt sold for such a cheap price? Certainly part of the reason is the poor prospects of payment these creditors expect from the defaulting individuals given their past delinquent payment history, while another part is undoubtedly to avoid additional costs associated with debt collection. Further yet, is the simple fact that the proof required to obtain a judgment in the creditor’s favor is lacking, usually as a result of poor record keeping on the part of the creditor. . . .” MBNA America Bank, N.A. v. Nelson, 15 Misc. 3d 1148A; 841 N.Y.S.2d 826 (N.Y.Civ. Ct. 2007).
Just how bad is creditors’ record keeping? “In purchase and sale agreements obtained in the study, sellers generally disclaimed all representations and warranties with regard to the accuracy of the information they provided at the time of sale about individual debts.” The Structure and Practices of the Debt Buying Industry (Federal Trade Commission, 2013). In other words, the information about the debts that were being bought and sold was so bad that the seller of the debt refused to guarantee the accuracy of the information.
Is the information really that bad? Sometimes it’s really bad! In American Acceptance Co. v. Goldberg, No. 2:08-CV-9 JVB, 2008 U.S. Dist. LEXIS 39418 (N.D. Ind. May 14, 2008), a debt buyer sued the debt seller because the seller did not even own the debts it sold to the buyer. • In RMB Holdings, LLC v. Goldberg & Associates, LLC, No. 3:2007cv00406 (E.D. Tenn., 2007) the debt buyer accused the debt seller of selling 6,521 accounts totaling about $40 million face value which it did not own. The Court ruled in favor of the debt buyer.
And it gets even worse . . . In Associates Financial Services Co. v. Bowman, Heintz, Boscia & Vician, P.C., IP 99-1725-C-M/S, 2001 U.S. Dist. LEXIS 7874 (2001), it was claimed that a creditor had continued to collect accounts it had already sold to a debt buyer. • Sometimes, the record-keeping is so sloppy that debtors have been sued several times by several different debt buyers over the same alleged debt. Wood v. M&J Recovery LLC, No. CV 05-5564, 2007 U.S. Dist. LEXIS 24157 (E.D.N.Y. 2007). • In Capital Credit & Collection Service, Inc. v. Armani, 227 Ore. App. 574, 206 P.3d 1114 (2009), the debt collector was successfully sued because it settled a debt and then filed a lawsuit to collect it!
IN OTHER WORDS, NEVER ASSUME THAT JUST BECAUSE SOMEONE IS SUING YOU OVER A DEBT THAT THAT SOMEONE HAS THE RIGHT TO COLLECT THAT DEBT! MAKE ‘EM PROVE IT!
Being Sued By One of these Notorious Debt Buyers?*
- Arrow Financial Services
- Asset Acceptance
- Asta Funding
- Palisades (etc.)
- CACV/Collect America
- Cavalry (etc.)
- Erin Capital Management
- Hilco Receivables, LLC
- Hudson Keyse
- Crown Asset Management
- Midland Funding (etc.)
- Oliphant Financial Corporation
- Portfolio Recovery Associates
- Resurgence (etc.)
- RJM Acquisitions
- LVNV Funding
- Resurgent Capital Services
- World Credit Fund
*Some of these businesses have sister companies with similar names.