What Should You Do If Sued by a Debt Collector?

TL;DR

If you're sued by a debt collector, respond promptly to avoid default judgments, which can lead to wage garnishments and bank account levies. A recent court ruling in Arizona favored a consumer against Midland Funding, highlighting the importance of fighting back. Seeking legal advice can help you utilize defenses and potentially secure a favorable settlement.

Transcript

everybody dijon Skiba from the consumer Warrior Project and I'm also an attorney Arizona consumer law group were based in Mesa Arizona you know today we got a ruling from the court in one of the junk debt buyer cases that I was handling junk debt buyers are these companies that buy old charged off debts from credit card companies and then they file... Read More

Key Insights

• 💳 Junk debt buyers purchase old charged-off debts from credit card companies for a fraction of their value.
• 🌥️ Midland Funding, one of the largest debt buyers, filed over 500,000 lawsuits in one year alone.
• ❤️‍🩹 Many individuals sued by debt buyers are unaware of the lawsuits and end up with default judgments.
• 🥺 Responding to lawsuits and seeking legal assistance can lead to favorable outcomes or settlements.
• ❓ The Consumer Financial Protection Bureau has imposed sanctions on numerous debt buyers for their practices.
• 👽 Debt buyers can take actions such as wage garnishment, bank account levies, and property liens once they have a judgment.
• ✌️ Arizona consumers have strong defenses against debt buyer lawsuits, as shown by the victory in the mentioned case.

Questions & Answers

Q: What are junk debt buyer cases, and why are they important?

Junk debt buyers purchase old charged-off debts from credit card companies and file lawsuits to collect on them. These cases are significant as they impact thousands of people's finances.

Q: What happens when a debt is charged off?

When a credit card company determines they can no longer collect on a debt, they charge it off as a loss on their books. However, they can still attempt to collect on it or sell it to a junk debt buyer.

Q: How do junk debt buyers operate?

Most debt buyers purchase these debts for pennies on the dollar, sometimes less than a penny. They then file a large volume of lawsuits to collect on these debts, potentially resulting in default judgments for individuals who do not respond.

Q: What should individuals do if they receive a lawsuit from a debt buyer?

If served with a lawsuit from a debt buyer, it is crucial to respond within 20 days to avoid a default judgment. Seeking legal advice and understanding one's defenses can help in fighting these cases.

Summary & Key Takeaways

• A court ruled in favor of a client in a case against junk debt buyer Midland Funding, who had claimed the client owed over $20,000.

• This victory marks the second time the court has ruled in favor of the consumer, potentially resulting in the consumer receiving a refund for attorney's fees.

• Junk debt buyers purchase charged-off debts from credit card companies and file lawsuits to collect on them.