• DYE CULIK PC | Consumer Protection Division

Unifund CCR Employees Can't Testify On Credit Card Statements in Debt Collection Lawsuits

Updated: Jan 22

Debt buyers like Unifund CCR Partners have a serious hurdle in the debt-collection lawsuits they file in that they are prohibited under the North Carolina Rules of Evidence from giving testimony about the records of original creditors, and the original creditors are rarely willing to help Unifund by testifying. Consumers can use this to their advantage.

In a debt-collection lawsuit filed by a debt buyer, may the debt buyer’s employee testify about the records of accounts purchased from an original creditor? No, according to one decision of the North Carolina Court of Appeals involving Unifund CCR Partners.

Debt buyers are companies that purchase bad debts in order to collect on them. Usually, debt buyers file lawsuits in North Carolina state court. Debt buyers do not issue loans or grant credit. They just buy the ownership rights via an assignment. Unifund is one of the largest debt buyers that files lawsuits against consumers in state court.

A problem arises under the rules of evidence when a debt buyer goes before a judge or jury. The rules of evidence say that if you want to testify about something, you must have personal knowledge about it. Debt buyers don’t have personal knowledge about the accounts they collect – the debt buyers didn’t issue credit, didn’t send monthly statements, and didn’t maintain the computer systems used to service the accounts. The debt buyers buy bad debts from the original creditors.

This was the issue in Unifund CCR Partners v. Dover, 681 S.E.2d 565 (N.C. Ct. App. 2009), a decision made by the North Carolina Court of Appeals. Unifund filed a collection lawsuit and asked the court to rule in its favor. There was no affidavit from the original creditor, though. Instead, Unifund tried using an affidavit from its own employee to authenticate the original creditor’s statements. The court held that this was insufficient:

[T]he “Affidavit of Indebtedness” does not verify the invoice because although the affiant asserts that she has personal knowledge of an existing debt between [Unifund] and [the Consumer], no factual basis for such debt is stated in the affidavit or elsewhere in the Record on Appeal. There is no evidence that the [Debt Buyer’s employee] was in any way connected to the establishment or maintenance of the alleged credit card account with [the Original Creditor] or the alleged acquisition of the account by [Unifund] from [the Original Creditor]. See Bramco Elec. Corp. v. Shell, 31 N.C. App. 717, 719, 230 S.E.2d 576, 577 (1976) ("An affiant who verifies an account of goods sold and delivered, which is to be received into evidence and taken as prima facie evidence of its correctness pursuant to said statute, shall be regarded and dealt with as a witness pro tanto, and to such extent must meet the requirements and is subject to the qualifications and restrictions as other witnesses."). Accordingly, there is no showing of the affiant's competency to testify to anything further than [Unifund’s] acquisition of accounts from [the Original Creditor], as noted by the bill of sale.

The court basically said that if a debt buyer (or anyone, for that matter) does not have personal knowledge of something, they cannot testify about it. After all, that is the definition of hearsay – claiming in court that something is true just because someone else said it out of court. Under the rules of evidence, that is not admissible.

Rule 602 of the North Carolina Rules of Evidence makes this clear. Rule 602 says that “[a] witness may not testify to a matter unless evidence is introduced sufficient to support

a finding that he has personal knowledge of the matter.” Unifund’s witness in this case did not have personal knowledge.

This is an issue that frequently comes up in lawsuits filed by debt collectors and debt buyers. They purchase accounts for pennies on the dollar, but they do not have the documentation to prove they own it – at least not in a court of law. The original creditors sold the debts so cheaply that they won’t voluntarily show up at trial just to help debt buyers like Unifund.

There are many ways to defend against lawsuits by debt collectors and debt buyers, but the lack of evidence as described above is extremely common and is a strategy that our office frequently uses when defending consumers against debt buyers’ lawsuits.

Culik Law is a Charlotte, North Carolina law firm that helps consumers subject to unfair or deceptive acts by debt collectors and debt buyers. If you received a debt-collection lawsuit, contact us to see if we can help.