If you are reading this article then you probably live in Virginia and you probably just received a Warrant in Debt. The Warrant in Debt was either just mailed to you or you found it on your door. Upon taking a closer look at the Warrant you notice that the Plaintiff, the company that is taking you to court, is named Portfolio Recovery, LVNV Funding, Midland or perhaps CACH, LLC. Right now your head may be spinning a bit as you try to figure out who in the world these guys are and why are they suing you. Allow me to shed some light.
Who is Portfolio Recovery, LVNV Funding, Midland, etc? They are simply companies that buy consumer debts from the original creditors like Bank of America, a.k.a FIA Card Services (the branch of Bank of America that handles their credit card accounts), Capital One, Discover and other credit card companies. They buy these accounts for a fraction of what is owed on the original account after the accounts have been charged off and then they sue the person that allegedly owes the money. It is purely a volume business. They buy tens of thousands of accounts each year, file lawsuits on just about all of them, and while they certainly do not collect on all the accounts they purchased, they still make a ton of money because they purchase so many accounts.
So, why is Midland, Portfolio Recovery, LVNV, etc. suing you? Well, because they want to make money of course and they are counting on you to make their job very easy. These “debt buyers” –as they are commonly referred- prey on the fact that at some point, in the vast majority of cases, you did in fact owe some money to one of the big banks/credit card companies from whom they bought these accounts. They know that most people want to do the right thing and pay what they owe if they have the means to do so. Right of the bat they have a psychological edge on you. Again, most people want to pay back what they owe if they have the financial means to do so. Second, statistically speaking, they know that about 80% of people who get a Warrant in Debt will not bother showing up in court. They also know that among the minority of people that do show up in court will not be retain the services of an attorney. That means an easy judgment –as in victory- for them followed by an easy wage garnishment once they figure out where your work. Bottom line, they are counting on your incorrect assumption that they are entitled to your money. They are counting on the fact that you will not pick up the phone, hire an attorney, and fight back!
Is there any way to defend yourself from a lawsuit by Midland, Portfolio, LVNV or some of these other “debt buyers”? Yes! You can hire an attorney like myself who handles these kind of lawsuits to defend you in court. Notice that I did not say anything about filing for bankruptcy! While I am primarily a bankruptcy lawyer, I firmly believe in the notion of using bankruptcy as a last resort. As far as what type of results can you expect if you hire me do defend you in court? Well, why I certainly cannot make any guarantees, and while every case is different, if the past is an indicator, then it will not surprise me if I can dispose of your lawsuit without you having to fork over a penny to the company that sued you. To be clear, I am talking about the situation where the plaintiff is in fact a “debt buyer” as opposed to the original creditor.
How much will it cost me to hire you to defend me in court? While each case is different, all I can say is that the cost will be a whole lot less than what you are being sued for. A flat fee arrangement will be worked out from the get go.
One Reply to “Are you being sued by a Debt Buyer?”
Purchasing debt is a perfectly legal and legitimate transaction. Not all debt buyers sue their debtors, and even those that do use litigation, don’t sue ALL of their debtors. (If the balance is small, it just isn’t worth it to them.) These companies pay pennies on the dollar for the debt owed, so look at it this way: If you owe $1,000 (and I’m talking about the actual balance you owe, not the fees and penalties the debt buyer tacked on – that’s pretend debt), you can be sure that they bought the debt for well under $100. Do you think they’d rather settle with you or sue you? Duh. DO NOT pay anyone promising to settle the debt for you! You can pick up the phone and do it yourself in one call. After they prove that you owe the money, and that they do in fact own the debt, you might open the negotiations by offering them 20 or 30%, in 3 monthly payments. Tell them that’s all you can afford, and mention the word ‘bankruptcy’ a few times. If they only get 20% out of you, they have still more than doubled their investment. Look, I hate collection stuff as much as anyone, but if you owe it and they own it, they can and will hound you nearly to death. Be sure you google FDCPA (Federal Debt Collection Practices Act) before you talk to them and memorize the law.. If the debt buyer violated ANY of the provisions of the FDCPA, file a complaint against them immediately.
Disclosure: I am not a lawyer, am not in the collection business and want nothing from anyone.
I’m a former mid-level mgr for a credit card company and am just sharing. Good luck!