People Finding Success in Fighting Back Against Credit Card Lawsuits

“All debt collection is under the microscope,” said Chris DeRitis, Ph.D., a consumer credit expert at Moody’s Analytics, a West Chester economic research and consulting firm. “A lot of this debt gets traded three, four or five times. It’s a messy business.”

The issue has similarities to abuses in the foreclosure process that led to the 2010 “robo-signing” scandal, in which banks seized thousands of homes without adequate proof of documentation. Five major banks in February agreed to pay $26 billion to settle the matter.

Allegheny County Judge R. Stanton Wettick has presided over hundreds of cases in which banks sold delinquent credit-card accounts to debt buyers who filed litigation to recover the money.

“There is a fair amount of chaos in all this,” Judge Wettick said. “Once the paper has moved on, you really don’t have anyone who knows much about the transaction. You don’t know if, in fact, they are the owner of the debt.”

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In the local case, Ms. Zavada argued that Velocity’s complaint against Mr. Kahanic lacked dates of credit-card transactions, amounts charged or descriptions of items purchased. Velocity argued it needed only to provide the 2010 billing statement in order to collect.

Mr. Kahanic, 51, who could not be reached for comment, never contested the alleged amount of the obligation.

The company withdrew the suit after Judge Nealon in May demanded copies of the original credit-card agreement, its terms and conditions, and the assignment or sale of Mr. Kahanic’s account to Velocity.

“The judge asked us to produce a document that no longer exists,” James Mastriani, Velocity’s president, said of the demand for the original agreement. “What we had, we felt and still feel was sufficient.”

Mr. Mastriani said the company bought the account in December 2010 from a debt-trading concern that had acquired it from HSBC.

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