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.

Tsunamis are dangerous because people don’t see the wave building until just before it crashes on the shore and wipes everything out. You may not realize it, but your credit card debt is just like that.

Over and over again, our clients tell us that they had everything under control until they lost a job or someone got sick or they had some other unexpected event. In fact, they didn’t have things under control. They just didn’t understand that their credit card debt was designed to rise up and wash them away at just such crisis points in their lives.

To credit card companies, the most profitable customers are the slow pays, the ones who regularly incur late fees and penalty rates but continue to pay. These folks are also the balance surfers. When they can’t afford a payment on one card because of a penalty rate, they’ll transfer the balance to another card that has a lower rate. The trick for the credit card companies wanting to maximize their profit is to turn as many of their cardholders as possible into these slow paying, balance surfing customers.

The credit card companies start the tsunami by playing a game of musical chairs. When a good paying customer slips a little, they ratchet up the game by imposing penalty rates and extra fees. They hope the consumer will continue to pay or if he can’t, surf to other cards so their competitors take the losses. When they’ve pushed too hard and the consumer is in danger of defaulting, they pull their chairs out by jacking up interest rates and/or minimum payments to such a level that the consumer has no choice but to surf. At some point however, the balance transfer offers dry up and the music stops. The last cards in the game are the ones that don’t get paid. When the credit card companies see this happening, they race to get their chairs out of the game. The consumer is washed out before he even knows what happened.

What does this mean for you? As long as you are charging your cards and making the minimum payments, everything seems fine, but when you hit a crisis, even just a short term one, the tsunami starts to build. Your interest rates go up, you get hit with fee after fee, and your minimum monthly payments start to climb. If you’re lucky, you can get out of the water before it gets dangerous, but for lots of people, the game moves too fast for them to do anything about it and they’re flooded with multiple credit cards that they just can’t pay back.

This game may be legal, but it is immoral and disgraceful. Do not be ashamed if you find yourself in this position. Be indignant. Recognize that the credit card companies knew this would happen to you when they started the game. They used your hard work and your belief that you should always pay your debts to drive you to your financial breaking point.

The new credit card law is not going to stop this game. It will slow it down a bit for the consumers who may stumble every once in a while, but for the consumers who have serious crises, the chairs will keep getting pulled out from under them. They’ll just receive a little extra paper to document the fact that they’re getting screwed.