Unfortunately, most people do nothing to defend against debt collection lawsuits. Maybe that’s because they don’t think there’s anything that can be done or maybe they don’t want to spend any money. But there may be defenses to these lawsuits and it might be cheaper to hire an attorney than to let a large debt become a judgment.
One defense is to challenge the documentation a creditor has at the time of the lawsuit. In Iowa there are two ways a creditor can get a judgment on a credit card debt in Iowa. The first is by providing an account agreement with the consumer, a final or ‘charge-off’ statement with the consumer’s address, and a sworn statement from a person with knowledge that regular monthly account statements were sent to the consumer at the address provided by the consumer, the charge-off statement is the sum total of those statements, the consumer used the credit card, and the consumer never objected to the monthly statements.
The second way a judgment on a credit card debt can be obtained is by filing an account agreement with the customer and a transaction history ending at a recent charge-off statement, together with a sworn statement from a person with knowledge authenticating these two items. In this event, the creditor is limited to recovering any increase in debt shown on the transaction history, plus ongoing interest.
If the creditor or debt collector’s lawsuit lacks any of the documentation required by these two methods the consumer may have defenses that can be raised.
Many debts are now collected, not by the original creditor or even by a collection agency representing the creditor, but by a company who has bought these debts for pennies on the dollar. At such low prices original creditors have no incentive to provide the debt buyer with any loan documents like credit applications or account statements. As a result, debtors can be sued by a debt buyer with none of the evidence that would typically be required to prove that the agency suing is actually the owner of the debt.
Debt collection agencies have also been known to use false affidavits, sue the wrong person, sue on debt beyond the statute of limitations, sue on debt discharged in bankruptcy and sue on debt that’s already been paid. In some cases debt buyers just find people with the same or a similar name to sue, regardless of whether the person is actually the one who incurred the debt. In other cases, employees of the debt buyers engage in “robo-signing” of affidavits where they machine stamp their name to thousands of affidavits in a single day, despite the requirement that the affidavit be signed only after the person has personally reviewed and verified the accuracy of the information. And since defendants in nearly all debt collection lawsuits don’t do anything to challenge the legitimacy of the claims, debt collectors are winning record numbers of lawsuits, resulting in garnishment of wages and bank accounts.
If you live in central Iowa, are facing debt collection and want to discuss defending these lawsuits, contact us immediately after a debt collection agency contacts you so we can discuss your options.