A lawsuit brought by the state of Colorado late last year sheds light on the world of buying charged-off consumer debt.
What was the lawsuit about?
In a lawsuit against several debt collectors and debt buyers, Colorado said the companies had purchased thousands of charged off debts from U.S. Bank and Wells Fargo for likely just pennies on the dollar.
But even though the banks transferred the debts to the companies, no documents related to the debts were also transferred.
The only document provided to the debt buyers was a spreadsheet containing information about the account holder’s:
- Social Security number
- amount of debt
- the date the debt was charged off
If the debt buyers requested additional documents related to each account they were allegedly charged more money by the banks.
Because of the limitations on obtaining account documents directly from the lenders, the state of Colorado alleges that at least one of the debt buyers “engaged in a routine and pervasive scheme to fabricate documents” when pressed to do so by a defendant consumer.
Unfortunately, most consumers do nothing when sued by a debt collector.
If you’re facing debt collection contact us immediately so we can discuss what defenses might be available.