Debt Articles Debt Collection

Debt Collector Credigy Receivables Has to Pay Woman $26,000.

This case comes out of North Carolina and fell against a collection company called Credigy Receivables. What makes this a story worth reading is the extent at which Credigy Receivables really screwed up on properly collecting on the debt of a woman named Blanche Whittington. It might take a few minutes to get through all of this but by the end you’ll be shaking your head and wondering what was Credigy Receivables thinking. Here’s the story from the appeal published.

The interesting underlying issue here is that Credigy Receivables purchased a bad debt that was the result of identity theft and they attempt to collect on it anyway from the victim without really looking into the matter or connecting the debt with the real Blanche Whittington at all.

In 2008, Credigy Receivables, Inc. (“Credigy”) purchased and became the assignee of a default judgment against “Blanche Whittington” of 107 Courtland Place, Goldsboro, Wayne County, North Carolina. The assignment granted Credigy the right to collect on the judgment, which concerned a delinquent credit card account opened in the name “Blanche Whittington.” After the purchase, Credigy initiated proceedings to collect the debt against 82-year- old Ms. Blanche Whittington of 2114 Michelle Drive, Kinston, Lenoir County, North Carolina.

The real Ms. Whittington, residing in Kinston, did not incur the debt underlying the judgment, but instead was the victim of identity theft by a Ms. Mary E. Atkinson. Ms. Atkinson appropriated Ms. Whittington’s social security number in perpetrating a number of similar frauds on other creditors during the time the credit card debt was incurred.

Upon receiving a notice to claim exemptions from Credigy, Ms. Whittington retained counsel, who immediately notified Credigy’s counsel of the error. Subsequently, Ms. Whittington’s counsel filed a Rule 60 motion, including a motion for attorneys’ fees, to set aside the judgment. The matter proceeded to hearing, and the judgment was eventually set aside as to the true Ms. Whittington by consent of the parties.

Despite this agreement, the trial court awarded Ms. Whittington $26,101.75 in attorneys’ fees accumulated while defending against Credigy’s enforcement efforts under N.C. Gen. Stat. § 6-21.5 (2009). Credigy appeals the attorneys’ fees award and argues: (1) that it pursued a justiciable claim against Ms. Whittington in the preliminary stages of enforcement of the judgment, and (2) that the attorneys’ fees were not reasonably incurred, since its enforcement efforts were suspended during an investigation of whether Ms. Whittington was, in fact, the debtor. For reasons stated herein, we affirm the trial court’s award.

Background

At some point prior to 10 May 1999, Ms. Atkinson, posing as “Blanche Whittington,” applied for a credit card account with Fleet Bank. On the application, Ms. Atkinson represented to Fleet Bank
that: (1) her name was “Blanche Whittington”; (2) her social security number ended in 1234 and (3) she lived at 107 Courtland Place, Goldsboro, Wayne County, North Carolina. The credit account became delinquent as of 10 May 1999, and Fleet Bank transferred the account to First Select Corporation (“First Select”). On 28 July 1999, First Select filed suit against Ms. Atkinson for nonpayment of the outstanding balance plus interest, $6,319.72. First Select used the name “Blanche Whittington” in the complaint heading.

On 21 August 2001, default judgment was entered in favor of First Select against a “Blanche Whittington” residing at “107 Courtland Place[,] Goldsboro, North Carolina,” and the judgment was registered in Wayne County, North Carolina. The judgment award included the principal sum of $6,205.47 with 8% interest per annum, $947.96 in attorneys’ fees, and the costs of the action. The Clerk of Superior Court of Wayne County entered default judgment in favor of First Select upon a showing by its attorney that service of the summons and complaint was obtained by certified mail on 20 July 2001. The mail summons was delivered to the residence of 107 Courtland Place, and someone at the residence signed their name as “Blanche Whittington” to receive service. Prior to completing service by mail, First Select’s counsel had six summons and complaints returned without service, because the Wayne County Sheriff’s office could not locate any person by the name “Blanche Whittington” at 107 Courtland Place in Goldsboro.

READ  My Mother Opened Credit in My Name While I Was in a Coma

In October 2001, First Select attempted to serve a Notice of Right to Have Exemptions Designated on “Blanche Whittington[,] 107 Courtland Place[,] Goldsboro, North Carolina.” The deputy sheriff returned the notice unserved on 23 October 2001, and stated that the “Blanche Whittington” purportedly residing at 107 Courtland Place was not able to be located and that no forwarding address was available.

On 26 March 2003, First Select assigned the default judgment to Credigy for $10.00, and the assignment was registered in Wayne County. On 16 April 2003, Credigy’s counsel mailed a notice of the assignment to “Blanche Whittington” at 107 Courtland Place in Goldsboro.

Credigy obtained a Notice of Right to Have Exemptions Designated for “Blanche Whittington[,] 107 Courtland Place[,] Goldsboro, North Carolina[,]” on 25 May 2007. The notice was returned by the Wayne County Sheriff’s Office on 1 July 2007 with the notation: “Does not live at given address[.] Lives out of state[.]” Credigy’s counsel thereafter conducted a “skip trace” search through Lexis using the social security number listed in the credit application. A “skip trace” search is a tool provided by several online search companies to help debt buyers locate missing debtors. By entering only Ms. Whittington’s social security number into the appropriate Lexis search data field, Credigy’s counsel acquired a new address for “Blanche Whittington”: 2114 Michelle
Drive, Kinston, North Carolina.

On 18 February 2008, counsel for Credigy sent a letter to Blanche Whittington of 2114 Michelle Drive, Kinston, North Carolina.2 The letter offered Ms. Whittington the opportunity to settle the outstanding debt of $11,620.36 for a 20% discount.

Ms. Whittington immediately informed her counsel, who sent a letter by first class mail on 22 February 2008 to notify Credigy’s counsel that an identity theft had occurred, and that Ms. Whittington did not owe the debt underlying the default judgment. The letter was properly addressed and was not returned. In a sworn statement at trial, Credigy’s counsel stated that neither Credigy nor its counsel had any record of receiving the 22 February 2008 letter.

On 1 April 2008, the Sheriff of Lenoir County, North Carolina, served a Notice of Right to Have Exemptions Designated on Ms. Whittington. Ms. Whittington again informed her counsel, who sent another letter by certified mail and facsimile on 3 April 2008, denying Ms. Whittington’s liability on the judgment. On 16 April 2008, Ms. Whittington sought relief from Credigy’s judgment by motion under Rules 6 and 60 of the North Carolina Rules of Civil Procedure. As grounds for relief from judgment, Ms. Whittington’s counsel stated that Ms. Whittington had never resided at the 107 Courtland Place address, and that Ms. Whittington had never been served with process with respect to the default judgment. The motion was accompanied by an affidavit from Ms. Whittington, where Ms. Whittington provided: (1) she had never resided outside Lenoir County, and she had resided at her Michelle Drive address since 1964; and (2) Ms. Atkinson had stolen her identity several years prior, and Ms. Whittington had spent years dealing with Ms. Atkinson’s creditors. In her motion, Ms. Whittington asked the trial court for attorneys’ fees.

Shortly after receiving service of Ms. Whittington’s motion on 16 April 2008, one of Credigy’s counsel called counsel for Ms. Whittington, and left Ms. Whittington’s counsel a voicemail stating that “a mistake had been made and that the mistake should be corrected.” Later that afternoon, Ms. Whittington’s counsel received a call from another attorney for Credigy. The second caller also indicated that a mistake had been made, and that the Rule 60 motion to set aside the judgment should be allowed. Ms. Whittington’s counsel asked Credigy’s counsel to discontinue Credigy’s collection efforts. Though counsel for Credigy concurred that the Notice of Right to Have Exemptions Designated and all collection efforts should be stopped, he declined to make a binding agreement to do so unless Ms. Whittington withdrew her motion for attorneys’ fees. The dispute continued.

READ  I'm Being Sued for a Capital One Account My Wife Opened in My Name. - Gerald

On 21 April 2008, a preliminary hearing was held on Ms. Whittington’s motion to set aside the judgment. At the hearing, counsel for Credigy said that all collection efforts would be suspended as to Ms. Whittington; however, he did not withdraw the Notice of Right to Have Exemptions Designated. Instead, Credigy’s counsel asked for an extension of time in order to give his client an opportunity to investigate the facts contained in Ms. Whittington’s affidavit. Another hearing was scheduled for 30 June 2008.

On 16 June 2008, Ms. Whittington’s counsel filed a motion for attorneys’ fees under N.C.G.S. § 6-21.5. In the motion, Ms. Whittington claimed that Credigy had pursued a non-justiciable claim against Ms. Whittington, because Ms. Whittington had never been served with process with respect to the default judgment in issue. Ms. Whittington argued that the judgment was void and unenforceable against her. The motion was thereafter accompanied by two affidavits detailing the times and hours calculating the attorneys’ fees sought. Ms. Whittington’s initial counsel filed one affidavit, and the other was filed by an attorney associated with initial counsel. Up until the filing of the affidavits on 30 June 2008, the total hours accrued between both counsel was 89.4 hours.

On 30 June 2008, Credigy filed a motion in opposition to Ms. Whittington’s motion for relief from judgment, where Credigy moved the trial court to deny Ms. Whittington’s motion for attorneys’ fees. In the brief, Credigy contended that attorneys’ fees were not proper, because it had no notice of a potential identity theft until 3 April 2008, and Ms. Whittington had refused to fill out an industry standard Fraud/Identity Theft Affidavit. Credigy stated that, without the affidavit, it lacked “sufficient justification” to suspend post-judgment collection efforts, and that it lacked
“sufficient documentation” of “an act of fraud or identity theft.” Credigy also noted that it had purchased the judgment “without prior knowledge or notice of any disputes involving the subject account, and as such, is a bona fide purchaser for value.”

On 30 June 2008, the trial court conducted a hearing on Ms. Whittington’s motions. Credigy’s counsel informed the trial court that Credigy had concluded, after “investigation,” that Ms. Whittington did not commit the acts described in the default judgment.

On 16 July 2008, Credigy filed a motion in opposition to Ms. Whittington’s motion for attorneys’ fees under N.C.G.S. § 6- 21.5. In the motion, Credigy contended again that it did not have notice of any deficiency in the judgment until 3 April 2008, and that Ms. Whittington had refused to fill out a Fraud/Identity Theft Affidavit in accordance with industry standards. Credigy averred in particular that Ms. Whittington “knew or with the exercise of due care should have known through the course of her efforts to correct her credit report of the existence of the judgment involving the subject account prior to her receipt of [Credigy’s] [d]emand [l]etter dated February 18, 2008.”

On 4 September 2008, the trial court filed an order granting Ms. Whittington’s motions to set aside the judgment and to award attorneys’ fees.

Source

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.





About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

Leave a Comment

Scroll to Top