Debt Buyers Usually Win Debt-Collection Lawsuits By Default Without Having To Prove Case, New Study
The study, which surveyed 4,400 lawsuits filed by debt buyers, found that in the vast majority of case (98%) consumers had no lawyer to represent them.
Debt buyers are debt collectors who buy defaulted debt from the original creditors in order to sue consumers to collect on the accounts.
As a result of not having attorneys, consumers lost the cases “by default.” That is, when a consumer does not respond as required under the court rules, the consumer loses without having a chance to make the debt collector prove that it owns the account. This goes against one of the foundational principles of the American justice system, the adversary system, which says that each party should have the opportunity to present its strongest case to a judge or jury before it wins or loses a lawsuit.
A few years ago, the Federal Trade Commission declared that “the system for resolving disputes about consumer debts is broken.” It urged states to pass legislation to provide “adequate protection for consumers.” This study shows that far more protection is still needed for consumers against debt collectors and debt buyers.
When consumers do have a chance to fight back against debt collectors, however, our office often sees that cases can be dismissed or settled, or that we can pursue debt collectors for violations of the Fair Debt Collection Practices Act.
The study is available here: Junk Justice: A Statistical Analysis of 4,400 Lawsuits Filed by Debt Buyers
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