DEBT BUYER CASES
Defending Debt Collection Cases
A new breed of aggressive debt collection firms are going after our clients, attempting to garnish
even exempt funds bank accounts, and levying judgment liens on homes. Combined with
increasing numbers of clients who are the victims of identity theft and unauthorized use of credit
cards, this makes defending collection cases more important than ever.
In recent years, a whole new business has sprung up in the debt collection world – debt buyers
are purchasing accounts for pennies on the dollar, which in the past would have been simply
written off as uncollectable by the banks and other creditors. All the debt buyers typically
receive is a bit of electronic data showing the name, address, Social Security number, account
number and a dollar amount supposedly due. They rarely, if ever have any documents containing
the debtor’s signature or any evidence that the amount claimed is correct.
When examining a credit card collection case, first look to see if the plaintiff is a debt buyer
(assignee) or the original creditor. If original creditor, are there any defenses?
1. Statute of Limitations - written contract, 10 years; if not, 5 years
2. Identity theft or unauthorized use; mistaken identity
3. Paid in full/settled in full prior to suit
4. Discharged in BK
If the plaintiff is a debt buyer, consider above, and review the complaint carefully. Is there a
contract attached to the complaint? Typically, it will be just the brochure or boilerplate card
member agreement and terms, without anything identifying the defendant. It will not have the
client’s signature, address, or anything. Does the “contract” even name the correct original
creditor? What is the interest rate, if any, showing in the boilerplate? How does that compare
with the interest rate claimed in the lawsuit? Look for a promulgation date of the document (tiny
print at the bottom somewhere with a date such as 1/97). How does that compare with the date
the client opened the account? If this “contract” is dated after the client opened the account, the
debt buyer can rarely demonstrate that it was mailed to the client.
Ask the clients when they stopped paying - the date of default (typically, thirty days after the last
billing statement) determines when the statute of limitations begins to run. Unscrupulous debt
collectors may alter the default date, a practice known as “re-aging” an account, in order to get
around a statute of limitations. Moreover, the creditors’ bar believes that the 10-year statute of
limitations applies to credit cards accounts, based on a written contract theory, while the
consumer advocates argue convincingly that the 5-year limitations period for oral contacts must
apply, because the terms of a credit card contract change over time and can only be proved by
oral testimony as to the terms applicable at any given time, and the charges made from time to
The primary defense in these cases is that the debt buyers do not have any admissible evidence to
prove up their cases. Sometimes they can produce a few billing statements, but nothing showing
what the client purchased, how much of the balance claimed due consists of interest, late fees,
etc, or how they even arrived at the total balance claimed due. The complaints rarely contain all
the elements of a cause of action for breach of contract or account stated.
It is best to file a jury demand, then a motion to dismiss. However, if the amount claimed is
under $10,000, it is considered small claims, and you may not file a 2-615 motion, but you can
file a motion for summary judgment. Beware of requests to admit, the plaintiff may try to get
your client to admit they owe the money.