In Michigan, the Plaintiff debt buyer seeking to collect a debt based upon an assignment has the burden of proof to show that the assignment is valid. See attached case, Palisades Collection, LLC v Taylor, Hudson & Keyse, LLC v Gregory, Consolidated Nos 08-684-CZ, 08-1012-CK-3 Saginaw County Circuit Court (2008), (holding that Assignee plaintiff must present competent, admissible evidence sufficient to convince a reasonable fact finder by a preponderance of the evidence; See also Weston v Card, 96 Mich 373, 377-378; 56 NW 26 (l893).
The Palisades case protects a financial obligor from being put in the position of having subsequent debt buyers come along and start the whole collection process over and over again. This is not a remote possibility and in fact has repeatedly happened and thus the law’s strict requirement to prove a valid assignment. The possibility that a debt buyer is suing on a debt which it does not own is also very real. An article that appeared in the trade press shortly before the 2007 extension of the Illinois Collection Agency Act to debt buyers stated:
More collection agencies are turning to the debt resale market as a place to pick up accounts to collect on. Too small to buy portfolios directly from major credit issuers, they look to the secondary market where portfolios are resold in smaller chunks that they can handle. But what they sometimes find in the secondary market are horror stories: The same portfolio is sold to multiple buyers; the seller doesn’t actually own the portfolio put up for sale; half the accounts are out of statute; accounts are rife with erroneous information; access to documentation is limited or nonexistent.
Debt Buyers should be required to produce the bill of sale, which shows that an actual transaction for valid consideration occurred. The Bill or contract of sale, if one exists, is a separate and distinct document from the assignment. Debt Buyers will intentionally keep it concealed from the court because it does not want the court to know how much it paid for debts like this one or the terms surrounding the acquisition. Often times, sellers specifically disclaim the validity of the debt and sell these accounts without recourse and specifically disclaim any knowledge as to whether the debt is still legally owed. Debt buyers are reluctant to disclose the actual bill of sale though a court interested in freeing up its docket and being instrumental in settling a case would certainly be interested in seeing it. Moreover, the contract of sale is an essential chain of title document necessary show proper ownership and documentation of the legal transfer of the alleged debt.
Collaborative Writing by Rex C. Anderson, Esquire and Contributing Research/Writing by Kellye S. Smith