Consumers Fight Back Against Credit Card Suits


Companies in the credit and banking industry rely on the fact that few defendants show up in court after they’ve been sued.

These companies know that when the debtors don’t appear, it’s an automatic win for them and they can then garnish wages to collect the balances due. Now, though, consumers are beginning to fight back – and they’re winning in many of these court cases.

Maybe it was the robo-signing scandal or the weak economy, either way, consumers are routinely showing up to argue their positions to prevent being stuck with court costs, legal fees, and of course, the award amounts, especially when they feel as though they are in the right. Other debt collectors are able to freeze the defendant’s bank accounts in order to collect the amount owed. While that’s not legal in many jurisdictions, there are those that are able to take that avenue in order to collect.

No Documentation, No Case

In one case, a New Jersey collection agency was forced to drop its lawsuit against a couple when the judge ordered the business to prove the MasterCard account actually existed. The company representatives couldn’t – and the judge dropped the case immediately. That means the $1,500 MasterCard credit card balance along with interest, late fees and of course legal fees were wiped away. Not only could the collection agency not present current documentation that proved the account, but it couldn’t even prove it had a contract with the bank that issued the MasterCard.

One bankruptcy attorney said it’s rare for an account to transition from the original creditor to a debt collection agency with all of the necessary documentation. In fact, most cases are won in court for no other reason than the creditor not showing up. If more did appear, the odds of hearing the judge decide for the plaintiff would be rare. Its a growing problem too – in fact, it seems as though the debt collection agencies are taking hits from many sides these days.


First, the debt collection sector is catching heat from the Consumer Financial Protection Bureau and could very well see big changes in the coming month. Those changes could also mean a huge overhaul in the way the industry is allowed to do business. This, coupled with the lack of documentation that, up until now, had been more of a well kept secret between debt collectors and their clients (including credit card companies, medical providers and banks), it appears the bottom might be falling out.

There’s little, if any organization, either. Dr. Chris DeRitis, a consumer credit expert at Moody’s Analytics, said,

A lot of this debt gets traded three, four or five times. It’s a messy business.

Indeed, many are comparing it to the foreclosures of 2010 where it was revealed many lawsuits were “robo-signed” by people who had no idea what the documentation was. You may recall the $26 billion settlement that five banks were forced to pay this past February.

From judges to lawyers to consumer advocates are all saying the chaos is overwhelming and a judge in the same jurisdiction as the suit mentioned above said after seeing so many similarities, he decided to insist the plaintiffs bring far more conclusive evidence to court. Judge R. Stanton Wettick said,

You don’t know if, in fact, they are the owners of the debt.

In that suit above, the debt collection agency withdrew the suit when they it couldn’t present the terms and conditions associated with the account, along with other documentation. A spokesperson with the collection agency admitted they didn’t have “a document that no longer exists”. He said he believed what they did provide, however, should have been sufficient.

Many Failures

Another judge in Alabama says she has seen so many failures to follow legal procedures that even if the collection agency has a legitimate case, the inability to play by the rules via signed contracts, terms and conditions and other information is what keeps many of the agencies from winning these days.

So just how much money is at stake? The Federal Reserve puts the dollar amount of all credit card payment delinquencies close to $19 billion. This might be why a full two-third of all consumers who are sued for damages never even show up in court. But here’s the bigger problem: there have been many instances of the collection agency altering the facts; in one case, one debt collector actually added charges on the debtor’s accounts. If the CFPB has anything to do with it, those practices will cease.

It should also be noted there are far more debt collectors who operate in an ethical and legal manner. The consumers simply have no choice in decided who should hound them for those late payments.

Have you ever been sued for overdue credit card or bank debt? We’d like to hear your story. Visit us on Facebook, Twitter and of course, we invite you to leave your comments below.


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