Midland bought a credit card account that I supposedly owed. The account was nearly six years owed. In 2007, I discovered their claim on my credit report and requested (registered mail) verification under the Fair Debt Collections Practices Act (FDCPA). They never responded.
Early in 2009, I received a summons to court. This is in Tennessee. The only verification included in the suit was an affidavit from an employee at Midland -- someone who had no knowledge of the underlying credit card contract.
I checked for Court Rules and followed them and the FDCPA. I denied that I owed the debt; if I did owe a debt, the amount claimed was incorrect; and the legal action on the debt was barred by the Statute of Limitations.
I countersued under the FDCPA. It's not permissible to bring suit for collection before debt is verified. Also, Midland put libelous information on my credit report, caused me emotional distress and loss of time.
Finally the trial date came. Midland immediately withdrew their suit when I asked to cross examine any Midland witnesses regarding verification of the underlying contract (all credit card suits are contract disputes and require an agreement in writing as the basis for any suit). The attorney tried to testify for Midland as he was the only one in court. I asked the court to disregard the testimony as the attorney had no knowledge of the record keeping procedures within Midland. The judge asked more than once how Midland had brought suit without proof of a debt. The attorney could not answer that.
The attorney argued that Midland owned the debt and was not a debt collector under the FDCPA. I countered that Midland was not there to be cross examined in that regard, so there was no proof that they were not a debt collector. I also showed where Midland does practice the "art" of debt collection.
The judge could award me up to $1000 under the FDCPA without my having to prove damages. I did show him where I had received negative credit actions due to Midland's adverse credit report. I could not prove money damages, though.
The judge said he couldn't believe that a company would sue without proof of their claim. He then awarded me $1000. That was four months ago. Midland dragged their feet to pay, but I received a check for $1000 today.
Good guys can win.
The lessons: Midland is huge and doesn't have good communications between its many branches (I learned this through calling about where my court award was).
They quite likely have no original documentation on the debts they buy (they may have nothing more than the total you supposedly owed). Computer records are usually horrible. A printout is not proof of a debt. Where's my signature on a contract? Where's my signature for each alleged transaction under that contract?
They definitely do not have first hand knowledge of the contract underlying their purchased "debt" and would not be able to say more than "we bought this debt and were told that it was owed by this person." That's not good enough. Unless the court is totally pro-collector, they will not allow Midland to speak to the validity of the underlying debt. That would require the head of record keeping for the company that originally owned the debt.
By denying the debt/amount/contract/validity, you force Midland into having the employee responsible for their records show up for court. Obviously, the expenses of this would usually outweigh even claims in the $10-15k (with all fees, late charges, interest, costs, etc. on my supposed debt, they were claiming close to $25k). It's the only way they can try to prove the debt.
So, for those of you who know you owe the debt and know the amount claimed is valid, go for a settlement. But, I would bet you do not really know if amount of the total debt is correct (the interest they tack on may not be valid). For that single reason, you can deny the debt. They have to be accurate in the amount sued for, and close doesn't count here.
In looking back, I should have also sued under the FCRA (Fair Credit Reporting Act). That would have covered their failure to make an accurate report to the credit bureaus. It would have also kept them from possibly getting out of my countersuit because they weren't a "debt collector" under the FDCPA. The FCRA has a similar possible award of $1000 with no proof of damages required. So, one could collect up to $2000 without proof of damages ($1000 under each act).
If Midland doesn't remove every negative report they made on me, I will file suit in federal court under the FCRA.
In the times I went to court for pretrial things, I watched hundreds of people have default judgments signed against them because they didn't show up for court. By showing up and denying the debt, they could have forced the collector to at least settle for less. Then I saw those who came to court and admitted the debt. Most of them were admitting that they owed a debt and they had no idea if the amount was correct. Legally, and without lying to the court, they could have denied the debt.
The attorney for the collector may seem like a nice guy. But, wait until you win a judgment. The Midland attorney left the courtroom in a huff after my award was announced. In doing that, he showed disrespect to the court. I'll bet the judge won't forget that next time :-)