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The Next Robo-Signing Scandal - Credit Cards?

A local judge told the  New York Times that 90 percent of credit card lawsuits in his court are flawed, and the credit card company can not prove that the debt is actually owed.  The judge went on in the interview to describe the testimony and evidence provided by many credit card companies as tantamount to 'robo-signing' and 'robo-testimony.' This is a reference to the foreclosure scandal and the challenge that many lenders face proving that they own a mortgage on a specific property. Some lenders had employees signing thousands of documents per day attesting to their claim. The employees had no firsthand knowledge of what they were swearing to and were mindlessly signing the affidavits (thus the term robo-signing).


I was actually not surprised to read this article as I have heard countless stories like this and experienced it myself.  I was recently contacted by a creditor that claimed I owed a debt from a very long time ago.  I believe they said it was from ten years ago.  I had no memory of this debt and made a very simple request.  I asked them to send me proof that this debt was, in fact, owed by me. The collection agent got very upset with me and told me that they didn't have to provide this information. I followed up by asking why this information could not be provided to me if I actually owed this debt.  The collector hung up and I have not heard from them since.


If In Doubt, Ask For Proof From A Debt Collector

If you receive a phone call from a collector and don't believe you owe the debt or question the amount, you have every right to ask for proof of their claim.  If they don't have any back up, you may be able to negotiate for a reduced amount.  I am not suggesting that we, as Christians, use a legal technicality to get out of a debt that is legitimately owed. The reality is that many times once a debt is sold to a collection agency, the amount is doubled or tripled from the original balance (when late fees and penalties are added).  Working out a settlement is generally a win-win for both parties. Since collection agencies routinely purchase debts at a very deep discount (sometimes pennies on the dollar), settlements of 30% to 50% are typical.


What To Do When You Receive A Collection Notice You Disagree With

If you begin receiving collection notices and you do not agree that you owe the debt or the amount in question, you should send a certified letter putting the creditor on notice of your dispute.  If you don't do this, you may run into trouble in court.  In some jurisdictions, not disputing a debt collector's written claim can be considered an admission to owing the debt.  I found an excellent template for a debt validation letter that you can use.

What To Do If You Receive A Lawsuit

If you receive a lawsuit, you have very limited time to respond.  Most courts allow 20 days for you to file your written answer to the lawsuit. You may be able to represent yourself if the case is considered a 'small claim.'  If you need legal assistance and can't afford a lawyer, you can contact your local county Bar Association to inquire about low cost or free legal assistance that may be available. A service that I personally use is Pre Paid Legal.  For about $25 monthly, you can access attorneys by phone in most states.  Another great resource, if you are a do-it-yourself type, is NOLO Press. NOLO offers a vast array of books on how to deal with just about every legal situation imaginable. It is important to realize that you must respond to a lawsuit or the creditor will win by default and you will end up owing the entire amount, and possibly legal fees as well.

Helping you make the most of God’s money!

James L. Paris
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