90% of credit card lawsuits can't prove borrower owes money (more robo-signing) [View all]

[HiPointDem]

Credit card debt collection may achieve the dubious distinction of making mortgage servicers look good.

The New York Times has been keeping a bit of a watch on this area, and reported earlier that credit card debt collection was a heavy user of robosigned affidavits.

A new story recounts how credit card companies frequently file erroneous lawsuits, sometimes saying a customer owes money when they’ve paid off the balance (sound familiar?) but more often, the consumer disputes the accuracy of the balance. And unlike foreclosure-land, where even after the revelation of widespread and varied mortgage abuses, most judges are pro-bank, in the credit card realm, the conduct of lenders is so bad that experienced judges are skeptical of them.

Lenders, the judges said, are churning out lawsuits without regard for accuracy, and improperly collecting debts from consumers. The concerns echo a recent abuse in the foreclosure system, a practice known as robo-signing in which banks produced similar documents for different homeowners and did not review them.

“I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” said Noach Dear, a state civil court judge in Brooklyn, who said he presides over as many as 100 such cases a day….

The problem, according to judges, is that credit card companies are not always following the proper legal procedures, even when they have the right to collect money. Certain cases hinge on mass-produced documents because the lenders do not provide proof of the outstanding debts, like the original contract or payment history.

Apparently a hedge fund is backing a company that buys bad debts from credit card companies, debt they’ve already written off, shortly before the statue of limitations is about to expire, for pennies on the dollar. They then file suit. They don’t even plan to spend any money fighting, they just intent to win default judgments. So if you hire a lawyer and merely file an answer, you win. But a remarkably high percentage of people fail to do that.


http://www.nakedcapitalism.com/2012/08/judge-90-of-credit-card-lawsuits-cant-prove-borrower-owes-money.html