Get Out of Debt Guy - Steve Rhode

Debt Buyer Gets Caught With Data Pants Down and Law Firm Loses Big Bucks to Consumer


A recent $311,000 judgment against a North Dakota law firm makes it apparent why the debt buyers have to be very careful when relying on the data supplied by the previous owners.

Back in the 1990s a Montana man had a Chase credit card with a $3,000 balance. He became disabled and unable to repay the debt. Chase charged the debt off and sold the account to a debt buyer, CACV of Colorado.

In 2006 CACV hired a local Montana law firm, Johnson, Rodenburg & Lauinger, in 2006 to pursue the debt. And here is where the lawfirm really got left holding the bag. Apparently Johnson, Rodenburg & Lauinger had entered into an agreement with CACV in which the law firm was “responsible to determine (its) legal and ethical ability to collect these accounts.”

The statute of limitations on the underlying debt had actually expired in 2005 but CACV screwed up and told the law firm the debt was still under the statute of limitations since they alleged the debtor had made a payment in 2004, which was not true.

In 2007 the law firm filed a lawsuit against the debtor for $3,816 plus $5,537 more in interest and fees and $600 in legal fees. This was the third time the debtor had attempted to have been sued for this debt that had expired under the Montana statute of limitations.

Subsequently CACV told the law firm that in fact the debtor had not made a payment and indeed the statute of limitations had expired. But by then it was too late.

After another few years of legal wrangling the case made it all the way to the Montana appellate court where the verdict in favor of the debtor was upheld and Johnson, Rodenburg & Lauinger were ordered to pay the full $311,000 jury award.

“I’m just so giddy it’s all over. We’re finally able to take a deep breath,” McCollough said Friday afternoon. “We knew we had a good case. But it just went on forever.”

McCollough said he hoped the case showed debt collectors that “people are going to know they don’t have to take the garbage. They can fight back.” – Source