Recently I had another trial against debt buyer Midland Funding. It was your typical Midland Funding trial – very little evidence and one Midland witness who would (of course) be permitted to appear over the telephone. Trials involving Midland Funding or any of the debt buyers are interesting legal proceedings. Because they often are permitted to have their witnesses appear over the phone, the total attendance in the courtroom consists of three people – the debt buyer’s attorney, me, and the judge.
Debt Buyer Trial Tactics
Midland Funding‘s attorney will then proceed to try and get documents they received from the original creditor introduced into evidence. They will try to do this one of two ways: through their witness (custodian of records), or through you, if you are the defendant. Often in my cases my client can’t be at the trial due to work, and if the debt buyer‘s attorney didn’t subpoena them, they don’t have to be there.
This leaves the debt buyer’s custodian of records. As defense counsel it is always interesting to sit there and watch the contortions that are necessary for Midland’s attorney to try and get their documents admitted into evidence. The problem they have is the documents they are trying to get admitted into evidence are not documents created by Midland Funding. Recently, I have had them try and get an affidavit, written and signed by someone else, admitted through one of their other employees.
This is where they run into problems. Courts are not supposed to allow hearsay to be admitted into evidence. Hearsay is basically any out of court statement, either verbal or written, that is intended to prove what ever it is being offered for. So if the debt buyer is trying to prove that they are the rightful owners of a debt by submitting documents or affidavits that were created by Chase, or Discovery, or Citibank or whoever they are claiming to have purchased the debt from, that is hearsay.
As with all areas of law, there is, of course, an exception to the rule (actually more than one, but I will just focus on one). There is no real question that these documents are hearsay. The grand hope of all debt buyers is that the judge will allow the evidence to be admitted under the “business records” exception to the hearsay rule (Rule of Evidence 803(6)). This provides that documents that are created and kept in the normal course of business can be admitted if there is a witness to testify as to how the documents were created and stored.
Here is problem number two for the debt buyers – they never have a witness that can testify to those things. I have never seen a debt buyer have a witness who actually worked for the original creditor. Their witnesses all work for them. So at the end of the day, all they can testify to is that some company sent them some documents and where they now store them. The witness will try and testify to much more, but the testimony is not based on any real personal knowledge – just assumptions.
The Root of the Junk Debt-Buyer Problem
At my most recent Midland Funding trial argument was presented by both sides at length as to why Midland’s evidence should be considered by the judge or not. The judge began to really press Midland’s attorney as to why its documents weren’t hearsay. Opposing counsel then said something that I believe is the root of the entire junk debt buyer problem: “but judge, these documents are admitted all the time!”
The judge’s response brought me some comfort (but not much). He said “yeah, and that is because in 9 out of 10 cases the defendant doesn’t have attorney and doesn’t know enough to raise the objections, and as the judge, I can’t do it for them.” Bingo.
On their face, none of these debt buyer cases have sufficient evidence to support a judgment. There is an assumption by the general public and even some judges that if the person is being sued then they must own the debt. While it is true that many people did owe a debt to the underlying creditor, they do not owe the debt to Midland or any of the other debt buyers. Further, I have handled several cases where the debt buyer simply sued the wrong person, or even sued a person who had paid the debt 100% (we even had cancelled checks!).
But what ends up happening is well over 95% of these cases end up in a default judgment where the consumer doesn’t even respond – many times due to the debt buyer not actually serving the lawsuit on them. And for the consumers that do respond, most do not have attorneys and get railroaded into a judgment. In effect, the debt buyers use the legal system (often the small claims or justice court system) to bring some legitimacy to what are otherwise bogus lawsuits.
You Must Fight Back!
In order to turn the tide of these lawsuits two things must happen. Individuals that get sued must contest them. To do this successfully you are going to have to put the time in to learn what the issues are and how to raise them, or you will need to hire an attorney. Second, states need to take notice of how these debt collectors are using the court system. Some states like Minnesota and West Virginia have taken notice and and clamping down. States like Arizona are going in the wrong directly all together.
But for sure, if you do nothing, the debt buyers will remain profitable, and the flood of lawsuits will continue. You must act. It is the way of the Consumer Warrior!