Have you been sued by Razor Capital?  Even though Razor Capital is not an Arizona debt buyer they do file a large number of lawsuits in Arizona courts.  Razor’s business model is to purchase old charged-off credit cards, auto loans, student loans, cell phones, utilities, and other types of debt.

Like most junk debt buyers Razor Capital pays very little for its debt and then looks to either file a debt collection lawsuit to collect on the debt or package it up and sell it to another junk debt buyer.  In the last five years Razor Capital has purchased over 2 Billion dollars in junk debt – making them one of the larger national buyers of debt.

In this short video I provide further explanation of the debt buying process and how it is impacting you:

Why is Razor Capital Suing Me?

Razor Capital’s business model is to purchase portfolios of old charged off credit card debt for as little as possible and then collect on the balance owed from the consumer.  Many debt buyers pay as little as 4 cents on the dollar and sometimes even less than one cent for each dollar of debt purchased.

If traditional collections don’t work – like phone calls and demand letters – Razor Capital will then file a debt collection lawsuit.  In Arizona the law firm that handle’s most of Razor’s cases is Gurstel Chargo. One common misconception among people who have been sued by a debt collector is that the law firm handling the case is the actual party suing them.

In most cases law firms like Gurstel Chargo only represent debt buyers like Razor Capital and do not actually own the debt buying company.  (Although in Arizona there are a couple of law firms where one of the attorneys of their family members owns the debt buying company).

Arizona Justice Court v. Superior Court

In Arizona debt collection law suits are dealt with in two courts, Justice Court and Superior Court.  The Justice Court handles all of those debt collection cases where the amount being sought is less than $10,000.  This limit is exclusive of any attorney’s fees and court costs – so if Razor Capital is suing you for $9,999.99 in an Arizona Justice Court and further asking for another $3,000 in legal fees – the Justice Court can still hear your case.

The Superior Court handles those cases where the amount being sought is more than $10,000 and with no limit on the amount that can be sought.

Razor Capital is suing you because they are alleging that they purchased a portfolio accounts from a prior creditor and are alleging that you had an account that was included in the purchased portfolio.  And they want you to pay.

This short video will provide with some of the important differences between justice court and superior court in the state of Arizona.

What is the Next Step?

The most important thing to understand about being sued is that if you ignore it things will get much worse.  You must deal with this lawsuit head on.

The first step in dealing with a debt collection lawsuit is to file a written response called an Answer.  This must be drafted and filed with the appropriate court within 20 days from the day you were served with it by the process server.  Many people often believe that if they can avoid the process server who is trying to serve the summons and complaint that they will avoid having to deal with the lawsuit altogether.  Not only is this not correct, it will likely mean that you will end up with a default judgment.

Check out this video as to why you shouldn’t try and avoid the process server:

If you don’t file a written Answer a default judgment will be entered against you and then you are subject to having your wages garnished and your bank accounts frozen.

From there the case will go through a discovery phase, possibly mediation, a motion for summary judgment, a pre-trial conference, and then likely a trial. Each of these steps require you to actively participate in the process and failing to do so will likely end in a judgment being entered against you.

Do I Have a Case?

Each debt collection lawsuit has its own unique twists that can influence the outcome of the case, but when it comes to Razor Capital cases the underlying facts are very similar – i.e. a debt is owed, it was then sold to a debt buying company, and sometimes even sold multiple times to other companies, and then eventually making its way to Razor.

Because the basics on all Razor Capital cases are very similar, the issues and problems with their cases are similar as well.  Here are a few of the factors that influence whether or not you will win your case:


Here are a few more issues that come up as debt buyers like Razor Capital try and prove their case:

Unable to Prove there was a Contract with the Original Creditor

At their core the debt collection lawsuits filed by Razor Capital are breach of contract claims. In order to win a breach of contract case Razor must prove (1) that there was a contract; (2) what the terms of that contract were; and (3) that there was a breach of those terms.

In Arizona the debt collector can prove the existence of a contract one of two ways – (1) they can have the original application that was completed by the consumer at the time the account was opened, or (2) they can prove that there was an agreement between the original credit and the consumer by showing a “course of dealing”.  This essentially means that Razor has multiple monthly statements where there is proof of charges to the card and payment from the consumer.

The idea on the second one is if you are using the card and then sending them payment that you must have agreed to be bound by the terms of the credit card company.

In a surprisingly high number of cases Razor Capital and other junk debt buyers struggle with this first element.  Almost never do they have the original application from the original creditor and in many cases the debt buyer provides little more than one or two monthly statements that often don’t show any charges or any payment on the card.

This most often occurs when the consumer is not represented by an attorney.  The junk debt buyer knows they can get away with less evidence if there isn’t an attorney there to press the issue.

Also, the typical arrangement between junk debt buyers and original creditors requires that the junk debt buyer pay additional money if they need additional documents.  This means that everyone of those statements they provide you are costing Razor Capital extra money.  And when you are filing hundreds or thousands of cases per year that can really start to add up.

Pro Tip:  Even when the junk debt buyer has multiple monthly statements they may not be admissible in court. Junk debt buyers often will try and have admitted into evidence business documents (like monthly statements) of other companies who are not apart of the case.  The Arizona Rules of Evidence provide that a witness who is testifying about a document to have it admitted as evidence must be able to testify based upon their own personal knowledge.

I recently argued this case before the Arizona Court of Appeals. You can check my oral argument on this issue before the Arizona Court of Appeals below:

In the end, if they don’t have an application or they don’t have monthly statements demonstrating use and payment on the card, then the junk debt buyer will struggle to prove the existence of a contract.

Unable to Prove Damages

An important element of proving any debt collection case is establishing what is actually owed on the debt.  Arizona case law provides that merely stating in a conclusory manner the amount owed is not sufficient to establish what is actually owed on the debt.

In 2012 in the Wells Fargo v. Allen, 231 Ariz. 209 (Ariz. App. 2012) case, the Arizona Court of Appeals addressed the issue of how a balance must be proven.  You can read that decision by clicking HERE.

Pro Tip: Something to watch out for is sometimes junk debt buyer attorneys will try and rely on Arizona Revised Statute 44-7804 which states that a debt collector can establish the amount owed by providing a copy of the last billing statement. However, this law is only applicable to uncontested cases.  If you have filed an Answer to the lawsuit the case is considered contested and thus this statute does not apply.  The debt must provide a calculation of what is owed and prove it with admissible evidence.

Unable to Prove Ownership of the Account

Finally, one of the big problems with these types of cases is that Cortez Investment Co. will often have difficulty in proving that it actually owns the account that it is suing on.  This is an important part of the case because if you think about it, Cortez Investment didn’t loan you any money and you didn’t agree to pay them any money, so why should you write them a check unless they can actually prove that they own the account?

Pro Tip: To establish ownership Razor Capital needs to able to prove that your specific account was transferred from original creditor to Razor Capital (and to any other alleged owners). Often they will try and establish this by providing several “bills of sale”. Look closely at this documents.  They will never include any specific reference to your account but will usually state that the “list of accounts is attached as Exhibit A”.  However there is no “exhibit A” attached.

If they can’t show that your account was sold each and every step of the way they cannot prove their case.  Make them prove this. Proof of ownership is often where these cases are won or lost.

Can You Represent Yourself in Your Case with Razor Capital?

You are permitted to represent yourself in your debt collection case.  The question is, should you?  Obviously as an attorney I am biased in that I think you should hire a lawyer to help you with your case. But as someone who literally deals with these types of cases every working day of my life, let me give you a few things to consider:

(1) People who represent themselves in court are held to the same standard as attorneys.  This isn’t fair because you didn’t go to law school or deal with these issues on a daily basis like a lawyer does. However Arizona law requires that the judge or justice of the peace hold you to the same standard when it comes to things like knowing the Arizona Rules of Civil Procedure, the Arizona Rules of Evidence, and the relevant case law.

If you don’t have a solid understanding of these rules you will end up making a mistake and it could cost you your case.

(2) I have handled nearly 300 trials against junk debt buyers.  This means I have spent a lot of time in courtrooms watching judges and justice of the peace and how they handle these types of cases. An observation of mine is that people who represent themselves have a very difficult time winning their case and often end up with a judgment entered against them or enter into a terrible settlement offer.

(3) When you represent yourself the case will completely take over every bit of free time you have. I see this all the time. People who are representing themselves in court spend every evening trying to find forms and case law and learn the court’s procedural rules and it just get stressful.  Even in justice court it will take nearly a year (or longer) to get your case to trial. One of the biggest advantages of hiring a lawyer is it will transfer the burden of your case off of your shoulders and on to your attorney’s who can work on it all day long while you focus on your family and job.

In the video below I discuss some of questions you should an attorney before hiring them to represent you in your junk debt buyer case:

Need Help?  Contact the Arizona Consumer Law Group

If you have been sued by Razor Capital feel free to reach and to talk with one of our attorneys (John Skiba or Jesse Walker) and learn more about the strategies you can use to fight back against junk debt buyers and take care of this debt problem once and for all.  We can be reached at (480) 420-4028.