Debt Buyer Lawsuits

There is considerable public and media scrutiny of the industry of debt buyers. The practice has also drawn the attention of law enforcement and consumer advocates. The New York attorney general publicly condemned the debt buying industry. In addition to a long list of other controversies, debt buyer lawsuits have been cited as an example of indirect discrimination. However, the issue of the disproportionate impact of debt buyers on minority communities is hardly new.

The most controversial aspects of buying debt cases involve informal “hallway conferences” with defendants. The goal is to make the proceedings disarming, but when the defendant is without legal counsel, these discussions can take on a more sinister tone. This article examines the legal issues relating to these situations. The FTC also lists hundreds of debt buyers. A recent study conducted by the firm of Jefferson Capital found that only about half of the firms in the U.S. are regulated by the Federal Trade Commission (FTC).

While many state laws have been introduced to combat debt buyer litigation, most states do not have laws in place to protect consumers. In many cases, consumers cannot avoid dealing with the companies they owe money to. As a result, the debt buying industry is thriving. In 2013, third-party debt buyers recovered $55.2 billion in debts, generating close to $10.4 billion in fees and commissions. There are also at least 2,000 debt buyer firms in the U.S., according to the FTC.

Controversial Debt Buyer Lawsuits

While it is important to protect consumers, these companies have a history of ignoring consumers. A recent report from the Center for Responsible Lending concluded that debt buyers’ practices were unfair and prejudicial. Although some states have enacted these laws, many states have not acted. These organizations and others have been sued by consumers for their illegal actions. So, they have no choice but to pursue legal action against debtors.

The CFPB has also warned about the pitfalls of debt buyer lawsuits. A debt buyer’s legal actions may not be based on evidence and should be avoided. The plaintiff must show that the debts were real. The plaintiff must prove that the debts were sold by a third party. The case may end in a bankruptcy. If the buyer is successful, the plaintiff will be able to collect the amount that was not paid.

Debt buyers’ legal actions are a source of controversy. Several states have banned these companies from doing business, but the CFPB’s actions are not the only problem. There are many other factors that can make or break a lawsuit. One of these is that a debt buyer’s legal team often has no legal knowledge of the ins and outs of the industry. In these cases, the lawyer is obligated to represent the client.