Here is a great research paper worth reading. It certainly helps to focus the robo-signing issues we’ve all heard about with mortgages to a problem that debt relief providers will need to deal with.
For a while we’ve talked about the issue of a debt relief provider that either sets up a payment plan or assists a consumer to settle an invalid debt. Is the debt relief provider liable at all for doing that?
It’s a question we’ve not yet answered.
Here is the abstract from the paper by Peter Holland at the University of Maryland Carey School of Law.
Recent years have seen the rise of a new industry which has clogged the dockets of small claims courts throughout the country. It is known as the “debt buyer” industry. Members of this $100 billion per year industry exist for no reason other than to purchase consumer debt which others have already deemed uncollectable, and then try to succeed in collecting where others have failed. Debt buyers pay pennies on the dollar for this charged off debt, and then seek to collect, through hundreds of thousands of lawsuits, the full face value of the debt. The emergence and vitality of this industry presents several legal, ethical and economic issues which merit exploration, study and scholarly debate.
This article focuses on the problem of robo-signing and the lack of proof in debt buyer cases. Although this problem has received limited attention from the media and from regulators, there is a paucity of legal scholarship about debt buyers in general, and this problem in particular. This article demonstrates that robo-signing and fraud are rampant in this industry, and that the debt buyers who pursue these claims often lack proof necessary to show that they own the debt, and often lack proof even that a debt was ever owed in the first place. The fact that this lack of proof has led to consumers being sued twice on the same debt demonstrates the due process concerns which are implicated when courts enter judgments against consumers based on robo-signing and insufficient proof.
This article calls on courts to hold plaintiffs in debt buyer cases to the same standards required of other litigants. Courts must require a demonstration of personal knowledge of the matter at issue before any affidavit is accepted, before any person testifies, and before any documents are admitted into evidence.
If you’d like to download and read the full paper you can do so right here.
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This is an excellent paper. The biggest problem I have defending collection lawsuits is not opposing counsel, but the judge. They simply do not hold creditors to the standards required to admit evidence. It amazes me every time. There is a built in bias against debtors that even our most learned legal professionals can’t seem to overcome. Although the paper is directed to debt buyers, the same is true of the original issuers.
This is an excellent paper. The biggest problem I have defending collection lawsuits is not opposing counsel, but the judge. They simply do not hold creditors to the standards required to admit evidence. It amazes me every time. There is a built in bias against debtors that even our most learned legal professionals can’t seem to overcome. Although the paper is directed to debt buyers, the same is true of the original issuers.