Archives for 2012

The Emotional Ties to Debt

My perception of debt and human nature has been forever changed by representing the plight of those who society has forgotten: the debtor.  There is such a stigma against someone who owes money and typically it is the debtor, himself (or herself) who applies the stigma.  It is this very stigma that keeps debtors from taking action against those who break the law.  They feel that they do not deserve help or that the problem is one of their own making.  Guilt takes over.  Many times even when the debtor is sued, they do nothing because they feel that they deserve some sort of punishment because they were unable to pay their bills.

I have seen over the years, that debt is not created out of frivolity but rather out of necessity.  In an overwhelming amount of cases that I see, the debt was created because of  bad event: illness, job loss, divorce, etc.  Moreover, people defaulted on the debt because of another bad event.  As a result, the debt bears a baggage of the emotional situations that created the debt and then defaulted the debt. Every phone call and every letter reminds a person of the emotional situation that started this cycle.  It is for this reason, that laws exist to protect consumers from harassment.

I am constantly asked by other lawyers about how I sustain financially a dedicated consumer practice that focuses so predominately on defending people when they are sued over a debt. My response is simply that somebody needs to.  These types of cases have grown more difficult over the years, requiring more work and more risk. My clients have taught me so much about how there are good people in this world and those good people are just trying to make it from point A to point B.  My cases are not about getting someone out of there debt, but rather about moving someone down this roller coaster in such a way that no matter the outcome, they don’t harbor any additional regret.

I strongly believe that our judicial system should be available to the individual and that the system should not apply different standards for a debt case than it would over companies battling over millions.  The evidence rules are the same.  The procedure rules are the same.  The law is the same. Therefore, the attention and justice should be the same. Yes, my clients owe money but that does not mean that a creditor is automatically entitled to the judgment.

Robo-signing in the debt buying industry…

According to study out of New York, “researchers found that over the course of a year, one debt buyer’s affiant identified himself as the custodian of records in 47,503 affidavits, thereby claiming to have personal knowledge of the facts of each and every case” (The One Hundred Billion Dollar Problem in Small Claims Court: Robo-Signing and Lack of Proof in Debt Buyer Cases, Peter A. Holland, http://ssrn.com/abstract=1875727).

We see this kind of problem all the time. Just last week, we represented a consumer in a suit brought by a company which allegedly purchased the debt owed by our client. At trial, the debt buyer sought to introduce into evidence an affidavit of an employee of the debt buyer. However, amongst the dozens of pages that comprised the affidavit was yet another affidavit of an employee of a mid-stream buyer of the debt. The primary affiant claimed in its sworn statement that the account changed hands a total of 3 times: from original creditor to debt buyer A, from debt buyer A to debt buyer B, and then from debt buyer B to the company suing our client. The affidavit of the mid-stream buyer, however, said in her sworn statement that the account changed hands only twice, not three times. The Judge sustained our objection to the affidavit, resulting in a take-nothing judgment in favor of our client.

If you are getting sued by a debt buyer, you should always investigate the chain of title. Moreover, look closely at the statements made by the affidavits in the case. Do they conflict with the chain of title documents? Are there inconsistencies between affiant testimony as to who owned the account and when? If so, chances are the debt buyer may not be able to prove their case in court.