We've previously discussed the stategy of filing an answer when you are being sued by a debt collector. Once you have filed an answer, you have avoided the possibility of having a default judgment entered against you, and that's a good thing. But sooner or later, unless you are able to settle the case with the debt collector, or somehow the debt collector files and wins a motion for summary judgment (discussed elsewhere), the case is going to be listed for trial before a judge, and you will have to be ready to appear in court for a real life trial. And the trial isn't going to be anything like what you typically see on the daytime TV courtroom shows.
Let's assume you have been sued by a debt collection company named Tiger Collections, and that Tiger has purchased your debt from Bank of America (BOA). Debt buying is big business, and we intend to tell you all about how it works in future blogs. Since Tiger is suing you, they are the plaintiff and you are the defendant. The plaintiff has the burden of proof, so in order to win the case, Tiger is going to have to prove several things to the judge. For example,
1) Tiger has to prove that you signed an agreement way back when with BOA.
2) Tiger also has to prove the amount of money you owed on this debt to BOA, and how that particular amount was calculated.
3) Tiger is going to have to prove what the terms of the agreement you signed with BOA were.
4) Tiger is also going to have to prove that you somehow violated the specific terms of your agreement.
5) Tiger is further going to have to prove that they have the legal right to sue you. As far as you are concerned, you never bought anything from Tiger, you never used a Tiger credit card, you never even heard of Tiger before this lawsuit, so who are they to suddenly sue you and demand that you pay them all this money that they claim you somehow owe them?
6) Tiger is going to have to prove that somehow they legally took over this account from BOA. They could have purchased your account, they could have gotten an assignment of your account, or they could have legally obtained your account through some other fashion. The bottom line is that if Tiger can't prove it has the legal right to sue you, the judge should throw this case out of court, and you should win.
Here's just a little bit of information as to why you are being sued by Tiger. In our example, Tiger is what some people might call a "junk debt buyer." Let's say BOA has millions of people using BOA credit cards. Probably 95% of those people pay their debts on time, and maybe 5% have fallen on hard times, and haven't been able to pay BOA for the last 6 months. Let's assume that the total amount of money owed to BOA by these people is $1 million. BOA makes a lot more money by collecting high interest rates on their credit cards than they do by suing people who don't pay.
So instead of filing lawsuits against these 5 percenters who can't pay the $1 million that they owe BOA, here's what BOA does. BOA takes all of these bills totalling $1 million, and puts them into a big bundle and calls Tiger. The BOA representative speaks to Tiger's President and says, "Hey, Joe, its been a couple of months since we've talked, and we've now got $1 million of bad credit card debt from around 10,000 people. How about if you take these accounts off our back, and pay us $.10 on a dollar. So you can buy all of these accounts for $100,000, and you can go sue them and collect all you can. Good luck, the money you collect can be all yours, and we will be legally assigning all of these accounts to you."
Joe quickly takes the deal. He knows a number of these people will file bankruptcy and some people won't have the financial ability to pay anything, but all in all, he's been making a very good profit on these deals in the past, and he expects to make nice money on this new deal, so he jumps on it before BOA starts calling other junk debt buyers.
Now when Tiger purchases these 10,000 accounts from BOA, Tiger doesn't get a whole lot of paperwork on the people that owe BOA all of this money. So if Tiger sues someone, and that person has filed an anwer and insists on going to trial, Tiger just might not have all the paperwork it needs to prove that the person they are suing really owes all of this money, and they also might not have all of the paperwork that they need to prove that they legally bought this account from BOA.
So here's how maybe you can win your case. When you go to court for trial, as the defendant, you don't have to prove anything. This is surely not a criminal trial, this is what we call a civil trial. But I want to make this analogy, because most people know that in a criminal trial, the defendant is presumed totally innocent, and the only way the defendant is found guilty is if the prosecutors can convince the jury of the defendant's guilt beyond a reasnoable doubt. The defendant doesn't have to testify, and the defendant doesn't have to present any evidence. The burden is totally on the prosecution, and if they can't prove the case beyond a reasonable doubt, the defendant has to be found not guilty.
So in this caseTiger has to prove all those things I stated in paragraphs 1 to 6 above. If Tiger can't present the original agreement, if Tiger can't prove the amount of money owed, if Tiger can't prove that you violated the agreement, if Tiger can't prove that they have the legal right to sue you, etc., well, the judge should rule that you have won the case, and that Tiger can't collect any money from you.
In fact, if you hold firm, and you insist on having your day in court and don't back, guess what might happen. Well, here's a real life example of what recently happened to one of my clients, let's call him Bill. Bill fought hard, and he was ready and excited to go to court, because Bill figured that the lawyer really wouldn't be able to prove the case against him. Well, Bill was right. Here's what happened. Bill did not have to go to court at all. Yes, he won the case without having to go to court for trial. How could this be?
Here's how. About three days before the trial date, the defendant's attorney called the court and said he was dropping the case against Bill. That means Bill wins. So why did the lawyer drop the case against Bill? I don't know for sure, but I know what my suspicion is. I strongly suspect that the lawyer realized that he simply couldn't prove the case against Bill. He may not have had a copy of the original agreement that Bill signed, and the lawyer didn't want to show up for court and be embarrassed in front of the judge.
So the moral of the story is this. If you are being sued on a credit card debt, and especially if you are being sued by a junk debt buyer, make sure to file an answer to the complaint, and don't be scared to go to trial, because by insisting on going to trial, what might ultimately happen is that the junk debt buyer just might voluntarily dismiss the case against you.
You can then celebrate your victory, and it will be a really big win for you, because its sort of like when David slayed the huge giant Goliath. The odds were stacked greatly against you. The multi million dollar debt buyer versus little old you. And guess who won?