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Debt Collector Robo-Signers a Bigger Mess Than Foreclosures

The New York Times is reporting debt collection agencies have been robo-signing even more files than have mortgage companies for foreclosures. The robo-signing is a big deal because before a creditor moves against a consumer they are supposed to review the file and complete an affidavit the information they are stating is true and accurate. The courts depend on the accuracy of their statements. And if they aren’t accurate intentionally, well then, that’s just flat out lying.

The way the process is supposed to work is a representative of the company reviews the documentation and verified the records of the debtor. I can’t imagine doing that for a hundred files a day so how does one person review the facts and sign thousands of affidavits a day? They have to cut corners somewhere so I guess cutting corners with the truth is an expedient way to do it.

More often, essential background information simply is not acquired by debt buyers, in large part because that data adds to the price of each account. But court rules state that anyone submitting an affidavit to a court against a debtor must have proof of that claim — proper documentation of a debt’s origins, history and amount.

Without that information it is hard to imagine how any company could meet the legal standard of due diligence, particularly while churning out thousands and thousands of affidavits a week.

Analysts say that affidavit-signers at debt-buying companies appear to have little choice but to take at face value the few facts typically provided to them — often little more than basic account information on a computer screen.

That was made vividly clear during the deposition last year of Jay Mills, an employee of a subsidiary of SquareTwo Financial (then known as Collect America), a debt-buying company in Denver.

“So,” asked Dale Irwin, the plaintiff’s lawyer, using shorthand for Collect America, “if you see on the screen that the moon is made of green cheese, you trust that CACH has investigated that and has determined that in fact, the moon is made of green cheese?”

“Yes,” Mr. Mills replied.

Given the volume of affidavits, even perfunctory research seems impossible. Cherie Thomas, who works for Asta Funding, a debt buyer in Englewood Cliffs, N.J., said in a 2007 deposition that she had signed 2,000 affidavits a day. With a half-hour for lunch and two brief breaks, that’s roughly one affidavit every 13 seconds.

From what I know and have learned about the efforts of third-party collectors to factually collect on debt by suing, it certainly appears the entire system is broken and consumers could easily win cases by simply asking debt buyers to actually prove the debt buyer actually owes the debt. Push comes to shove, most can’t.

“I’ve lost four and I’ve taken about 5,000 cases,” said Jerry Jarzombek, a consumer lawyer in Fort Worth. “If the case goes to trial, I say to the judge, ‘Your honor, imagine if someone came in here to give eyewitness testimony in a traffic accident case and they didn’t actually see the crash. They just read about it somewhere. Well, this is the same thing.’ The debt buyers don’t know anything about the debt. They just read about it.” – Source


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About Steve Rhode

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.

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