John Oliver Exposes the Ugly Secrets of Debt Buyers

Today in my Facebook feed I was surprised to see John Oliver of “Last Week Tonight” do a segment on how debt buyers are hurting consumers across the country – and he even put the spotlight on Arizona as one of four states that are actually making it easier for junk debt buyers to operate with almost no oversight.

Even though I fight debt buyers like Midland Funding, Encore Capital, Portfolio Recovery Associates and others every day it never ceases to amaze me how the judicial system, these debt collectors to trample on the rights of Arizona consumers.

I can only assume that the reason for allowing debt buyers to operate with little regulation and almost free reign in the court system is because judges and legislators figure “well, they must owe someone”.

And in fact, I have had a judge say those exact words to me in a court hearing.

The Problem with Junk Debt Buyers

As John Oliver colorfully explains in his segment, there are many problems in the junk debt buying world and these problems impact many families. Oliver cites that the nation’s largest debt buyer, Encore Capital (also know as Midland Funding and Midland Credit Management) claims that at one point 1 in 5 Americans will have owed money to Encore Capital.

Despite a full 20% of American consumers owing debts to one junk debt buyer, they are permitted to flood local courts with thousands of lawsuits each month that are supported little to no actual evidence.

As Oliver mentions, most of these transactions between banks and junk debt buyers involves little more than a spreadsheet with names and other contact information.

If a consumer disputes the debt or fights back against the lawsuit then the debt buyer is forced to go back to the original creditor and obtain documentation, which when they do often only results in one or two monthly statements and a generic “bill of sale” that the debt buyer alleges gives them the right to sue on the debt.

Then, if you push the case to trial, the debt buyer will then have a witness appear that works for the junk debt buyer.  You will never get a witness who works for the original creditor or any subsequent purchaser of the debt.  Only the debt buyer’s own employee will appear and not surprisingly claim that everything is accurate.  This is despite the fact that the contract that they alleges transfers ownership of the debt from the original creditor clearly states that the debt is sold “without any warranties”, “as-is”, and often “with all faults”.

Arizona Consumers Hit Hard by Junk Debt Buyer Lawsuits

Arizona is a debt buyer-friendly state, both in the laws passed by the legislature and how its courts interpret them in consumer debt collection lawsuits.

For example, debt buyer lawsuits end in a default judgment nearly 95% of the time.  This means that the consumer who was sued by the debt buyer didn’t file a written response with the court.

In Arizona, even if a consumer doesn’t file a written response to the debt buyer’s lawsuit the court is still required to review the documentation and determine if the debt is owed by the consumer and if the debt is owned by the debt buyer who brought suit.

The Arizona legislature passed a law that allows debt buyers to prove the amount owed by providing one single statement with an amount owed on it.  There is no requirement of showing any purchases where made or that the consumer agreed to the underlying account.  Just that the debt buyer be in possession of a statement showing an amount owed.

In most cases the debt buyer provides what is known as a “charge off” statement that shows a balance with no charges and no payments.

In no other context would this be sufficient evidence to support an amount owed.  Yet junk debt buyers get a pass based upon this Arizona law.

Have you Been Sued by a Junk Debt Buyer?

If you have been sued by a junk debt buyer let us take a look at your case and help you in fighting back.  You can reach me personally at john@skibalaw.com or at (480) 420-4028.