Playing the odds

When you’re being pursued by a debt collector, sometimes it feels like the odds are against you. Even when you know that the debt is not yours. You keep getting calls. You’ve tried to explain, but they keep calling. And sending letters. And now they’ve filed a lawsuit against you. What can you, one little person, do to defend yourself against a billion-dollar industry with tens of thousands of employees and complex algorithms and computer programs?

The most important thing for you to do is answer the lawsuit in court. It can be intimidating to be sued and to be served with a summons and complaint. But don’t ignore it. Just by filing your answer within the time limit set by the court, you can change the odds to your favor.

Debt collection is a billion-dollar industry generating huge profits for companies that buy up bad debt and then try to collect on it. Debt-buyers typically pay between 3 and 8 cents on the dollar for batches of debt that credit card companies, banks and others have written off. In some ways, it’s just a numbers game. And they play the odds. So if they can collect more than 8 percent, they make a profit. If they can collect 100 percent from you, they’ve just made a huge profit.

And one of the easiest ways for debt collectors to do that is to file a lawsuit and get a default judgment. When you are sued, the general rule is that if you just ignore the lawsuit and don’t answer it in court by the date set, your failure to answer can lead to a default judgment against you for the entire amount of the lawsuit. And the plaintiff doesn’t have to prove much beyond that he sued you and you defaulted, or failed to answer. Debt-buyers have made fortunes with this strategy. In one New York study, it was found that third-party debt collectors got default judgment in 81 percent of the cases they filed.   If you don’t answer a lawsuit, you make it easy for them to get a judgment. Then they may be able to garnish your wages or seize your property. And your chances of eliminating that judgment are close to zero.

Your best bet is to stop them from getting the default judgment in the first place. And to do that, you must answer the complaint. A good consumer lawyer will help you answer the complaint and assert all of your defenses. Now the debt collector can’t just claim you owe him money, he must prove it in court.

When debt buyers purchase big batches of debt for pennies on the dollar, they get lists of names and addresses, account numbers and amounts. And they aggressively pursue consumers on those lists. They’ve got phone banks and automatic dialers and lawyers and collectors.

But there’s one thing they likely don’t have: the documents to prove the debt exists. Fewer than 1 in 8 accounts purchased by debt buyers come with documentation of the debt, according to a report by the Federal Trade Commission. That gives them less than a 12 percent chance that they can prove that debt to a court. The other 88 percent chance is with the consumer. So now the odds have changed.

If you need help, contact the Law Office of Mary Higgins at 302-894-HELP (4357) –

Posted on February 19, 2016