As the Courts are well aware, from the multitude of collection cases which they see filed each and every week, debt buying is a fast-growing business of which this court plays a critical part in the debt buyer’s business model. According to an industry group, the Debt Buyers Association: “The face value of all such debt sold in 1993 was $1.3 billion. By 1997, that number had grown to $15 billion and sales reached approximately $25 billion in 2000.” By 2007 the amount had risen to $110 billion per year. (Eileen Ambrose, “Zombie Debt; Debt Can Come Back to Haunt You Years Later,” The Baltimore Sun, May 6, 2007 pg. 1C.)

In 2011, the midst of the greatest financial crisis since the Great Depression, 14.6 percent of the U.S. population has lost their jobs and the unemployment rate remains at a staggering 9.6 percent. While there is some indication of economic recovery, at least one industry-debt collection, has not only survived, but has continued to thrive through recession. From 1990 to 2007, employment in the third-party debt collection industry has more than doubled. In 2007, the debt industry posted annual revenue of $557.9 billion.

By 2009, outstanding consumer loans exceeded $2.5 trillion, of which debt from credit cards and other revolving credit debt was nearly $1 trillion at its peak, with subprime credit cards constituting more than a quarter of the credit card market. In short, loans that were initially easy to obtain eventually became impossible to pay back.
 
Buying debt became a lucrative industry very quickly, ranking among the fastest-growing sectors of all financial services over the past decade. By 2005, debt buyers were purchasing more than $110 billion in debt annually, with charged-off credit card debt accounting for 91% of this amount. The net income at four major debt buying firms increased by more than 700% from 2001 to 2006." By the debt buyer industry's own estimate, sales of charged-off consumer debt will have exceeded $86 billion by 2010.

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If you have had a wrongful garnishment by the collection law firm Meyer and Njus out of Minnesota, then contact Rex Anderson PC. We have accumulated evidence that Meyer and Njus have wrongfully garnished tax refunds after already being paid in full by judgment debtors. We also have evidence that they have attempted wage garnishments after being paid in full by judgment debtors. We have found that Meyer and Njus have wrongfully reported paid off debts as still owing to Experian, Transunion and Equifax, thus wrongfully ruining innocent peoples’ credit.  These can be violations of the Fair Credit Reporting Act (FCRA). Meyer and Njus have also made misrepresentations in open court claiming that they did not get paid by the Michigan Department of Treasury (MDOT) when, in fact, they did. It is very important that you object to these wrongful garnishments, otherwise you lose your rights to get your money back and to sue them in federal court for these wrongful actions. This is not much different than stealing. This violates Michigan state laws, Michigan Rules of Professional Responsibility and the Fair Debt Collection Practices Act. If this has happened to you, you can collect actual and statutory damages.

Call Rex Anderson at 810-653-3300 for a free consultation today.

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In Chase Bank USA, N.A. v Cardello, 896 N.Y.S.2d 856 (N.Y. Civ. Ct., March 4, 2010), the Court had this to say,
 
On a regular basis this court encounters defendants being sued on the same debt by more than one creditor alleging they are the assignee of the original credit card obligation. Often the consumers have already entered into stipulations to pay off the outstanding balance due the credit card issuer and find themselves filing an order to show cause to vacate a default judgment from an unknown debt purchaser for the same obligation.

Where the documents, as in this case were prepared elsewhere and merely received and held in a file but were not made in the ordinary course of the Plaintiff's business, such documents are inadmissible and not within a business record exception to the hearsay rule.

The court did not find the testimony reliable or credible because the affiant "did not explain how he was so familiar with Chase's business practices, whether he had ever worked at Chase, whether he has ever sat down with Chase to watch how they entered the data, whether he had ever checked the reliability of the entries, and so forth. The court concluded: "something more is required than merely by saying “we got it from them, so it must be true.” There must be some assurance that the under lying records were reliable to begin with." (No. S1295-08, 2010 WL 2259136 (Vt. Super. Ct. May 5, 2010), involving debt purchaser’s credit card debt collection action based on original creditor's electronic data, spreadsheets).

A debt buyer is not qualified to testify to its assignor’s methods of document creation or practices of record maintenance because he was never in a position to know (unless he was employed by the assignor lender in that department).

As the mere recipient of documents, a debt buyer acquires no personal knowledge of the business records of any other entity."' Additionally, "the mere filing of papers received from other entities, even if they are retained in the regular course of business, is insufficient to qualify the documents as business records. Indeed, one authoritative treatise has described the law as follows: "la] debt buyer's affidavit has no probative value when the affiant's claimed familiarity with the assignor's business records is derived solely from the affiant’s review of those records after they came into the debt buyer's possession.

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Are you upside down on your house mortgage? Has the bank refused to modify the principle balance owed on your home to what the fair market value actually is? Well then … join the crowd.

It’s pretty much common knowledge at this point that the banking and mortgage industry were majorly responsible for the housing market crash. It was Wall Street greed and corruption that led to securitizing hundreds of thousands of mortgages and essentially pulling money out of thin air by selling these security interests in Mortgage trusts to overseas investors.

Fox News would like to blame all the irresponsible borrowers for being self deluded and so easily misguided and convinced by the mortgage broker salesmen  into believing they could afford their dream homes.

Mortgage companies and banks were complicit in over valuing these same residential properties with the appraisers they bought and hired. Now they refuse to modify the principle debt owing on these home loans. The banks and mortgage companies have refused to share in the risk of the real estate market or shoulder any responsibility of these toxic loans which they made. In other words, banks act as though they were entitled to all the upside gain of these risky investments.  But after the crash they refuse to work with home owners by reducing the principle debt still owed when it was the banks’ risky loans and securitization which in large part created the housing market crash.

Its seems that the banks would rather foreclose on homes and force people into bankruptcy and allow the devaluation of the rest of the neighborhood by not properly maintaining and securing  these homes from vandalism and grass growing 6 feet tall. 

If you find you find yourself in this dilemma, you owe it to yourself and your family to start thinking about your future, your credit and your retirement NOW! If you don’t, you may find yourself wishing that you had, when 20 years into the future you’re still paying on a house not worth what you still owe.

At least talk to a lawyer about what your options are, before you find ten – twenty years have gone by and that in retrospect you made a poor financial decision in doing what you thought was the honorable thing. People should pay their debts when they can. But banks should also work with you so that you are not paying them double of what the banks’ appraisers told you that your house was worth. It may be time to give your house back to the bank and snap up one of the many great housing deals that are flooding the market.

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In order to prove a proper chain of title, an underlying contract, or the amount of damages owed, the purchaser of charged-off debt needs to consult documents and records that were generated by the original creditor and by each intermediary debt buyer. In order to prove their case, debt buyers usually attempt to introduce these hearsay documents with little or no foundation as to personal knowledge.

In order to prove a valid case, the debt buyer needs to convince the court that there was an underlying debt (typically based on an underlying contract), that there was a default, that there was an amount certain due and owing, and that there is a complete chain of assignment from the original creditor to the current debt buyer. Because each of these elements is hearsay (assuming the rules of evidence apply), the debt buyer attempts to authenticate all documents and the statements made in those documents as if they were the debt buyer's own business records; as if the debt buyer itself had generated the documents. Frequently, the debt buyer will attempt to offer this hearsay through the Rule 803(b)(6) "Business Records Exception, arguing "when we bought the account, we bought the paperwork to prove the account, and they are all a part of our records now, and we know that the information is reliable and accurate.

However, a debt buyer’s lawsuit is not different from any other lawsuit and it is not exempt from the Michigan rules of evidence.  Testimony offered under oath in a court of law, central to laying a foundation for the business records exception still requires personal knowledge.

And like witness testimony in general, business records should be excluded "if the source of information or the method or circumstances of the preparation of the record indicate that the information in the record lacks trustworthiness."

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Not surprisingly, the quality of information that debt buyers obtain is often extremely poor. “Collecting Consumer Debts: The Challenges of Change: A Federal Trade Commission Workshop Report (February 2009),” pp. iii-iv, states:

“The FTC believes that there are currently two major problems in the flow of information in the debt collection system. The first major problem is that debt collectors have inadequate information when they seek to collect from consumers. This increases the likelihood that collectors will reach the incorrect consumer, try to collect the wrong amount, or both. . . . A related information problem is that the limited information debt collectors obtain in verifying debts is unlikely to dissuade them from continuing their attempts to collect from the wrong consumer or the wrong amount. If a consumer disputes a debt, the collector is required to obtain verification of the debt and provide it to the consumer before renewing its collection efforts. Many collectors currently do little more to verify debts than confirm that their information accurately reflects what they received from the creditor. This is not likely to reveal whether collectors are trying to collect from the wrong consumer or collect the wrong amount. The FTC therefore concludes that collectors need to do more to increase the likelihood that the information they acquire during the verification process will correct errors. . .”

Based on problems such as the documentation and multiple lawsuit issues above, the federal government describes the current debt collection system as "broken." In 2010, the federal government stated:

Based on its extensive analysis, the Federal Trade Commission ("FTC" or " Commission "), the nation's consumer protection agency, concludes that neither litigation nor arbitration currently provides adequate protection for consumers. The system for resolving disputes about consumer debts is broken … because consumers are not adequately protected in either debt collection litigation or arbitration.

This writer concurs with the conclusion reached by the Federal Trade Commission that "the current system is broken" and that substantial reforms are needed.

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1) Document ALL communications you have with any debt collector, whether by letter, by phone or by voice message.

• Answer or return all calls and find out who is calling you!
• Google the caller ID number and use “1800Notes.com” and “whocalledus.com”
• Ask the debt collector “What are you calling about?”
• Request collector to mail "written verification" of who the original creditor is, when the debt was incurred and for how much.
• If true, tell the collector, “I’m sorry. I can’t afford to pay you.” Repeat this identical response back to the debt collector, even if he asks you 100 questions.
• Do not answer any other questions. Simply repeat the above statement to every Debt Collector question.
• Then, write down what the collector says and speak to a lawyer to determine whether a violation occurred.

2) Save all voice mails, answering machine messages, collection letters, and notes.

• Do not throw anything away, including the envelopes that the collection letters come in, or anything included with the collection letter. 
• If collectors/creditors are calling you on your cell phone, then call our office IMMEDIATELY. You may be entitled to $500.00 per call for ALL robo-dialed calls and artificial messages. If you told the creditor or collector to stop calling your cell phone and they persist, these robo-dialed/artificial messages are penalized at $1500 per call after consent to call your cell phone is revoked.
• Remember that in order to secure monetary damages for a violation of the law your attorney must have proof of the violation.
• Obtain and keep your telephone and cell records!
• Take digital photos of your Caller ID, showing date and time of incoming calls.

3) Keep a separate notebook next to your phone, and take notes of all your conversations with creditors & collectors. Please include the following information:

• Date and time of call,
• How many minutes did call last?
• Caller’s name
• Collection agency name and phone number
• What did they say (be specific). 
• Do not write the information on envelopes, receipts, or other loose paper as these notes can be easily lost.

4) Use the example of the format below to document the calls that you receive: 
 Call log Example:

 Calls Received:
1. March 21, 2007 at 1:03 pm
2. March 22, 2007 at 2:15 pm
3. April 10, 2007 at 8:05 am
4. April 11, 2007 at 9:11 pm 
Call log Example:

Call #1:  Called me at 1:03 pm on March 21, 2007 by this new collection agency. Caller identified herself as Ms. Green from Merchant’s Credit Guide Co. located at 223 W. Jackson Blvd., Ste. 900, Chicago, IL 60606. Asked me to call Ken Hughes at (888) 249-4134 and provide the following information:
Merchants Credit Guide file: #15-489831
Client: Palisades Collection, LLC
Client Account: #9834685 

Call #2: Called me again on March 22, 2007 at 2:15 pm by Merchants Credit     Guide Co. Caller (female voice) left the following message on my answering machine.
Message: This is a message for _____. If you are not ______ please hang up or    disconnect.  (Dictate the entire message)…

5) Continue to keep detailed records of all calls and messages that you receive. Before you bring your documentation to Rex Anderson, P.C. for the attorney to review, please type your handwritten notes to a computer file and email monthly updates to our office. Try to document your collection harassment in digital form as soon as you can and while the details are still fresh in your memory. BE SURE TO KEEP YOUR ORIGINAL HAND WRITTEN CALL LOG!

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Diana Mey, a woman from Wheeling, West Virginia, has recently won the largest judgment against an abusive debt collection company in history – over $10 million. The company, Reliant Financial Associates, started hounding Mey for payment on debts she did not owe. After making several empty threats to seize her home, Ms. Mey sent a cease and desist letter, demanding the company stop contacting her. Shortly after, she starting receiving multiple hang up calls, which turned in to calls depicting graphic sexual threats against her. Luckily, she was recording all of the calls and took the company to court. ABC News aired Ms. Mey’s story on April 25, 2012. See the Nightline story here.

Attorney Rex Anderson fights abusive debt collectors, like the ones in this story. If someone is harassing you, please call Rex Anderson, P.C., at (810) 653-3300, to see what legal action you can take.
 

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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.

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Many debt buyers lack admissible proof that it is entitled to the relief requested. It is not unusual that 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. Failure to prove a proper assignment of the debt to the debt buyer is fatal to the collection case. If the Plaintiff cannot proves he owns the debt, then he has no standing to sue the debtor. A court’s failure to require admissible proof the debt buyer owns the debt on which he is suing has led to consumers being sued multiple times on the same debt. This demonstrates the due process concerns which are implicated when courts enter judgments against consumers based upon robo-signed affidavits and insufficient proof. Like the robo-signing crisis which is now infamous in the foreclosure context, similar issues of robo-signing and other shortcuts have led to a de facto system of robo-justice, which all too often wrongly enters judgment against unrepresented consumers, despite lack of sufficient proof as to liability, standing or damages.

Debt buyers rely on overburdened small claims and district courts, where they ask the court to “relax” the formal rules of evidence. There, debt buyers argue that the court need not apply evidentiary standards such as hearsay, authenticity of documents, proof of chain of assignment, or certainty as to the amount of damages. Rather, the debt buyers argue that informal proof of the debt, such as affidavits by a debt buyer's own employee, should be sufficient to prove standing to sue (i.e. chain of assignment uninterrupted from original creditor to the current debt buyer), liability and damages. However a witness should not be able to swear to the truth of facts when he or she has no knowledge of facts. A relaxed evidentiary standard does not mean that there are no standards at all and yet this is exactly what many courts are allowing unless you bring it to the court’s attention.

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