Debt Buyer Lawsuit Legal Defense

The pretrial hearing is not the final hearing or a trial; the purpose of the pretrial hearing is to determine the real issues in the lawsuit. If you fail to attend the pretrial hearing, a default judgment may be entered against you if the debt buyer (debt buyer and collection attorney are used interchangeably) can show that the lawsuit was filed in the correct county and that you were properly served; a final judgment will be awarded if there�s sufficient evidence to support the statement of claim in the lawsuit.

What you don�t want to say at your pretrial small-claims hearing is that you owe all or part of the alleged debt. By admitting to the debt, one of two actions can happen. The first action could be a swift judgment entered against you; a judgment gives the debt buyer the right to garnish your wages, empty your bank accounts and even seize your automobiles. The second action is referring your case to mediation; during mediation a settlement might be offered or a payment plan might be agreed upon and the court may enter a stipulation spelling out the terms and conditions for settling the case.

Again, the purpose of the pretrial hearing is to determine the real issues in the lawsuit. Here�s what you may want to say at the pretrial hearing; what you say depends on the type of evidence provided by the debt buyer. If no original contract was provided by the debt buyer, then tell the judge: (1) that you deny the claim, (2) that you were under no contractual obligation with the debt buyer for the debt in question, (3) the attached transaction history document from the out-of-court witness is �hearsay evidence� (it�s considered hearsay evidence because the source of the evidence is not available to be cross-examined) and (4) ask the judge to set the case for final hearing in order to prove your innocence. Even if the debt buyer attached a copy of the original contract to the statement of claim and summons, I would still deny the claim, since the copy of the contract is �hearsay evidence�; you have a right to cross-examine the person(s) who created the document. Rarely, will a debt buyer have access to the original contract. If your case is referred to mediation, then bring up the argument that you truly don�t believe you�re under any contractual obligation with the debt buyer and you want to see an original contract, all invoices, statements and merchant receipts associated with the contract (no copies) before you considered any settlement options; however, if the lump sum settlement offer is too good to refuse or the payment plan is affordable, then by all means, consider a settlement.

If the debt buyer is trying to obtain a judgment on a time-barred debt or time-expired debt, then you may be required to raise the affirmative defense of statute of limitations when you file your answer or at the pretrial hearing. When the statute of limitations has expired, the debt buyer has lost the legal right to enforce the repayment of the debt. When dealing with a time-barred debt, I believe you�re best course of action is to send the debt buyer a cease-and-desist letter and wait a few more years for the debt to automatically fall off your credit report.

The debt buyer is hoping to T.K.O. you at the pretrial hearing. The knockout punch is delivered by either you failing to show up to the pretrial hearing or admitting to the debt. By having the lawsuit set for final hearing, you�ve avoided the judgment pitfall that traps hundreds of debtors every single week.

The final round with the debt buyer will be fought at the final hearing. Depending on your state, you may be entitled to discovery proceedings; you�ll have to check with your state statutes. For example, in the state of Florida, the small-claims court is governed by the Florida Small Claims Rules, �Fla. Sm. Cl. R.�. Discovery allows you to find out what type of evidence the debt buyer has to support their claim and to prevent any type of surprises at the trial. Fla. Sm. Cl. Rule 7.020(b) states that the debt buyer�s attorney is subject to discovery pursuant to Florida Rules of Civil Procedure 1.280-1.280; hence, you can request documents from the debt buyer such as original signed contract, statements, invoices and merchant receipts. Request the chain of title documents from the debt buyer back to the original creditor and names, addresses and phone numbers of the person(s) responsible for generating such documents. �Fla. Sm. Cl. R.� also state that if you initiated discovery, then the debt buyer may also use discovery. Hopefully, the debt buyer will file a notice of voluntary dismissal during the discovery proceedings; however, if no notice was filed, then the time between when discovery has ended and the final hearing date, you should file a motion to dismiss the case, if applicable, due to a lack of evidence provided by the debt buyer. The important point, educate yourself about the rules of the court; you�re going to have to read the relevant sections of the statutes that are pertinent to your case.

The above defense strategy may help steer the collection attorney away from you and help you win the case. If the debt buyer intends to fight the case, then most likely, the debt buyer is hoping that you fail to attend the final hearing; one last effort to win the case. On both court dates, the collection attorney may act as your friend, but remember, the collection attorney represents the debt buyer, not you; hence, don�t engage in small-talk with the collection attorney and don�t wear your expensive jewelry to court. Good luck on your defense strategy.

Debt buyer tidbits:

  • Some debt buyers convince debtors to pay-down debts even though the statute of limitations has expired. Transferring the debt whose statute of limitations has expired resets the statute of limitations clock back to zero. Depending on the state, verbal and/or written communication from the debtor about the debt may reset statute of limitations clock back to zero.
  • Many debt buyers pay only pennies on the dollar for your past due debt. Debt buyers rationalize that since their taking a huge risk by buying your past due debt, their entitled to make huge returns on their investment. Many debt buyers expect to make at least 100% profit.
  • You should write a letter to your state and federal representatives in congress to regulate the debt buying and collection industry. Your letter may be able to help a fellow American in the future.
  • Most debt buyers will make a profit by recovering 20 to 25 cents on the dollar and will be happy with the ROI. Don�t let the debt buyer trick you in thinking that 100% or even 50% of the debt must be recovered in order to stay in business.
  • The following variables determine the value (pennies on the dollar) of your debt and/or whether a lawsuit may be filed against you: your age, time to expiration of the statute of limitations, date of last payment, number of previous collection attempts by other collection agencies, social security number, current home address and phone number, current employer address and phone number, if you�re a home owner and credit score.
  • Most courts have held that a debt buyer is constrained by the federal Fair Debt Collection Practices Act and Fair Credit Reporting Act
  • The debt buyers business model is to collect past due debts; hence, most debt buyers are unsympathetic about your job loss, gambling problem, illness, divorce, jail sentence, drug habit or over-extended debt responsibilities.
  • A large percentage of debt buyers revenues are coming from lawsuits.

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