When a person satisfies a debt either through payment or bankruptcy discharge, it should be gone forever – dead and buried, never to be seen again. This seems like common sense, right? Unfortunately, millions of Americans are falling victim to lawsuits based on “zombie debts,” or debt accounts that been sold for pennies on the dollar to debt buying agencies such as Midland Funding and Encore Capital, despite having already been satisfied or forgiven due to an expired statute of limitations.
How Does Debt Buying Work, And Why Is it a Problem?
From medical debts to overdue book club subscriptions, any and all debts that an original creditor cannot collect are generally written off as a loss. In order to recoup some of their losses, creditors will sometimes sell these debt accounts at a fraction of the cost to junk debt buyers. Debt buyers then proceed to sue or harass the original debtor for the full amount of the account, oftentimes without first checking the legitimacy of the debts. Most debt lawsuits are filed based on the hope that defendants simply will not respond to the court summons, thereby resulting in a summary judgment for the debt buyer and giving them the authority to garnish the original debtor’s wages, commence foreclosure proceedings, or force the sale of their non-exempt possessions.
To put in perspective how large this problem has become, one needs only to look at the number of plaintiff’s lawsuits filed in Newark, St. Louis, and Chicago from 2008 to 2012. In all three of these areas, debt buyers were revealed to be by far the largest group using the state legal systems, having filed more lawsuits than all other plaintiff’s suits combined.
The growth of the debt buying industry is largely due to its ease of entry. In many states, companies may purchase and collect on debt without the need for any special licenses. The popular HBO comedy news program “Last Week Tonight with John Oliver” recently highlighted this glaring issue by starting its own debt buying company called Central Asset Recovery Professionals, or “CARP,” aptly named after the bottom-feeding fish – and purchased roughly $15 million worth of medical debt for a minimal $60,000. The show then proceeded to comically thumb its nose at the debt buying industry by choosing to give away the debt rather than collect on it.
How Can I Fight a Zombie Debt Lawsuit?
If you have received a notice from a collection agency over your outstanding debt, it is imperative you contact an attorney as soon as possible to avoid a summary judgment. Defendants who fail to retain powerful legal representation or attempt to defend themselves against debt lawsuits often end up losing in court. A knowledgeable attorney can help you properly respond to a court summons and advocate for a dismissal on your behalf. Since junk debt cases are often filed in large quantities, it is not uncommon for these types of lawsuits to be lacking the necessary documentation to prove a plaintiff’s claims, allowing a skilled defense to advocate for a dismissal on the grounds of legal insufficiency.
At Lebedin Kofman LLP, our powerful New York City debt collection lawsuit attorneys can help you prepare an effective defense against the claims of creditors and protect your rights as a consumer. Backed by a proven record of success and numerous positive client testimonials, we have what it takes to get the results you need. To find out more about how our firm can help you fight back against creditors, call (888) 605-2705 or schedule a free consultation today.