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Learn How to Defeat Debt Collection cases Involving Junk-Debt-Buyers and Other Robo-Signers

posted by Nathalie Martin

Professor Peter Holland (U Maryland Law) has written a fantastic paper explaining in great detail how to defend against a debt-buyer-lawsuit, and possibly recover for Fair Debt Collection Practices Violations as well. Jessica Silver-Greenberg has followed on with an interesting New York Times article  in which one Brooklyn judge estimates that “roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt.”
Many of these suits are brought by companies who buy long lists of aged debt, some of which is time barred, some of which has been discharged in bankruptcy, and some of which already has been settled or collected upon. The buyers typically pay pennies on the dollar for lists of these debts, and have no receipts or proof that the debts are still due.  In fact they know little to nothing about the debt, which is typically sold as is with no representations that the debts are still due.

Some of the tips Peter provides in his step-by-step guide to defeating these suits, typically brought by companies include the following:

1. Read the complaint and supporting documents very carefully. Is the named plaintiff the same party named in the documents supporting the debt? Is there any chain of title tying the plaintiff to the debt? Is the debt collector licensed in your state? Is the contract for the debt even attached to the complaint? How is the debt supported by evidence? If there is some document attached to prove the debt, can you read it? Was it generated after the fact? By whom? Has the statute of limitations run?

2. Know the elements of an “account stated” cause of action. These include the establishment of a debtor-credit relationship, an agreement by the debtor and creditor as to the amount due, and an agreement by the debtor to pay the amount allegedly due.

3. Carefully scrutinize the affidavit.  Here comes the fun. Google your affiant. Many people who have signed these affidavits have admitted under oath to singing thousands of these in one day, and many have signatures on Google that will not match the ones in your affidavit.  Look at your state’s affidavit rules. Of course these rules will require affiants to have personal knowledge and likely yours will likely not qualify as evidence.   If the affidavit says this is true “to the best of my knowledge” the affiant is admitting to not knowing the real facts and the affidavit can be stricken from the evidence.

4. Master the relevant rules of evidence. No personal knowledge, no recovery. No proof of debt, no recovery.

5.  Tell the judge why this matters. Many of these debtors do not owe these debts.

There is much more in the article so take a look.  This could be a fantastic way for some of our unemployed students to help pay the bills, particularly where there are FDCPA violations.   



I'm not sure I like this version of the account stated doctrine. First, a debtor-creditor relationship is an agreement by the debtor to pay. Therefore, an agreement by the debtor and creditor as to the amount due is tantamount to an agreement by the debtor to pay the amount due.

Second, an account stated is not an agreement as to the amount due. It is a CONSTRUCTIVE agreement. If a debt exists, the creditor presents the debtor with a liquidated statement of the debt, and the debtor ignores it, the account stated doctrine has full effect. Restatement (Second) of Contracts 282.

Outside of payment law, this doctrine works as an evidentiary principle: the account stated is prima facie evidence of the debt if not timely objected to. In payment law, the doctrine is a bit stronger, and often precludes contrary evidence. UCC 4-406, 8-406.

thanks Ebenezer, helpful comment. Also, check out his article. I may have mis-quoted him. ;)

"Many of these debtors do not owe these debts." [citation needed]

This is valuable but I disagree with the person who said the plaintiff can't prove its case in 90% of the cases. What he means, I think, is that the plaintiff can't get the documents that support the existence and amount of debt into evidence because they are hearsay and it lacks the originator's witness to testify to authenticate them and pass the business records hurdles. However, what he overlooks is the ability of the plf to depose the defendant and get testimony admitting some amount of debt, which is likely greater than what the plf paid for the account. What saves the defendant is that such an activity may be cost-ineffective for plfs in many cases.

This is probably as good a place as any to note the value to debtors of the decision last year of the NYC Civil Court in American Express Bank FSB v Dalbis that collection suits arising from agreements governed by UT law, which is a commonly chosen governing law, are subject to a one year SOL. Given that defaulted receivables are typically more than 6 months old when a collector first acquires them, a lot of collection suits don't get filed within that window.

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