What do Debt Collectors and Mortgage Companies Have in Common?

by Fred Abramson on November 1, 2010 · 0 comments

News that mortgage service providers failed to accurately document the seizure and sale of tens of thousands of homes have caused a public outcry.  Robo-signers for mortgage companies verified the truth of foreclosure documents without even reading them. The New York court system now requires attorney’s to verify foreclosure papers.

The mortgage companies are not the only businesses using robo-signers. It has come to the attention of  the New York Times that debt collection companies have been using robo-signers for years.  As an attorney, I have encountered the issue of robo-singers on thousands of occasions.  If your debt was verified (checked) by someone who does not have personal knowledge of your file, you are probably in luck.  The debt collector usually can’t prove your debt.

This is how it works.  Large banks, such as JP Morgan Chase and Bank of America sell a debt that is difficult to collect to a debt collection company.  The debt collection company purchases the debt for pennies on the dollar.

The debt collection party first attempts to send a threatening letter with a follow up phone call. When that fails to work, they hire a lawyer to help collect the debt. That is when the fun and games begin. The debt collection company doesn’t have first hand knowledge of the debt.   A robo-signer from the debt collection company then verifies the debt.

The Times reports the extreme example of a  robo-signer who sued his company for wrongful termination because his demand for a better pen was denied. He was signing so many documents that apparently bics hurt his hand.

The law firms are hoping that people fail to answer the lawsuit and try to collect on a default judgment.

If you have been sued as a result of an alleged debt you should:

  • Read the papers that are given to you to find out the party that is suing you.  Do you have any relationship with the business suing you?
  • What are you being sued for? Is it a credit card debt?
  • Ask for verification of the debt. Make the law firm provide paperwork proving that you owe the debt. Often they are unable to come up with it.
  • When was the lawsuit filed? Depending how you have been served, you must provide an answer within 20 or 30 days.
  • Has the debt been resold? If the debt has been resold to a company that is located outside New York, it is unlikely that they will be able to provide a witness at trial. Even if the debt is valid, they will be unable to prove it and you will win.
  • Where are you being sued?  If you are a New York resident and the lawsuit is in New Jersey, they do not have proper jurisdiction over you and you can have your case dismissed.

If you have been sued in New York for a debt, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.

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