Debt Buyers Lead to More Debt Collection Lawsuits
The recent great recession has led to a boom in the debt buyer industry and has flooded the courts with debt collection lawsuits. According to the Wall Street Journal, Encore Capital Group, Inc., which owns Midland Funding, LLC filed 245,000 lawsuits last year, and nearly half of its $487.5 million in gross collections came from debt collection lawsuits last year.
While the debt buyer industry’s profits have soared the mass filing of lawsuits has gotten some debt buyers in hot water in the courtroom. For example, CACV and the debt collection law firm Johnson, Rodenburg & Lauinger were ordered to pay a consumer damages of $308,000, plus $108,000 in legal fees and costs for pursuing a debt collection lawsuit that was past the Statute of Limitations in violation of the Fair Debt Collection Practices Act. In that case, the consumer had suffered a head injury in 1990 and had been living off of Social Security income. The consumer said that he had not made a payment for more than eight years and that the debt was past the Statute of Limitations. However, Johnson, Rodenburg & Lauinger continued to pursue the law suit against him. The consumer then hired an attorney who got the lawsuit against him dismissed. The lawyer then filed a lawsuit against CACV and Johnson Rodenburg & Lauinger in Federal Court.
In another case, a Federal Judge in Ohio ruled that Midland Funding, LLC had violated the Fair Debt Collection Practices Act because Midland had filed phony affidavits in state court in an attempt to collect a debt from a consumer. The affidavits in question stated that a Midland in employee had verified that the consumers owed the debt based upon personal knowledge. However, that same employee testified under oath and said that he signed roughly 200 to 400 affidavits a day, and that he rarely checked to see if any of the accounts were accurate. The judge certified the case as a class action lawsuit.
Always consult an attorney if you are contacted by a debt collector or if you are served with a debt collection lawsuit.
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