Getting a lawsuit from a company you have never heard of can be confusing. The complaint says you owe money, but you do not recognize the account, do not remember opening it, or never agreed to the debt in the first place.
That does not mean the lawsuit is automatically valid.
A debt buyer can sue only when it has a legally enforceable claim. And in Maryland, debt buyers have specific documentation requirements when they bring consumer debt collection actions.
But there is an important distinction. You do not have to prove that you do not owe the debt. The person or company suing you has to establish its claim.
What Is a Debt Buyer?
A debt buyer is a company that purchases consumer debt from an original creditor or another owner of the debt. The debt may have been sold one or more times before it reaches the company suing you.
That can create problems.
The name on the lawsuit may be completely unfamiliar even though the alleged debt supposedly came from a credit card, loan, medical account, or other consumer transaction. If a debt buyer is suing you, there are specific steps you should take before assuming you have to pay it.
The Debt Buyer Has to Prove the Debt
A debt buyer cannot simply tell a Maryland court that you owe money and expect to win.
Maryland law requires a debt buyer, or a collector acting for a debt buyer, to possess specified documents before initiating a consumer debt collection action. The law also sets out evidence that must be introduced in these cases, including proof that the debt or account exists. That proof can include a document signed by the debtor, a bill or other record showing purchases or payments, or documentation from the original creditor establishing the account and showing its use.
The debt buyer also has to establish its right to collect the particular debt. If a company bought a large portfolio of accounts, it still needs to connect your alleged account to that purchase.
A spreadsheet with your name and a balance may not answer all of those questions.
What If You Never Opened the Account?
This is where identity theft, mistaken identity, and recordkeeping errors can become important.
You may recognize the original creditor but know that you never opened the account. Or you may have never done business with the creditor at all. Someone else may have used your information, or the debt may simply have been attributed to the wrong person.
Debt collectors sometimes pursue people for accounts that do not belong to them, including situations involving mistaken identity or identity theft.
Do Not Ignore the Lawsuit
If you receive a lawsuit for a debt you do not recognize, the answer is not to throw the papers away.
Ignoring the case can result in a default judgment. Once a judgment is entered, the debt buyer may have additional remedies available to collect it.
Read the summons and complaint carefully. The court papers will tell you what you are being accused of owing and what you need to do to respond.
You do not need to admit that the debt is yours simply because a company has filed a lawsuit.
What to Look For
• The original creditor. Determine who the debt supposedly came from.
• The account. Check whether the account actually belongs to you.
• The amount. Compare the amount claimed with your own records.
• The ownership. Determine how the debt buyer claims it acquired your particular account.
• The records. Look for account statements, payment records, agreements, and other documents supporting the claim.
• The dates. Check when the debt allegedly arose and when the lawsuit was filed. Maryland law prohibits a creditor or collector from initiating a consumer debt collection action after the applicable statute of limitations has expired.
What If the Debt Buyer Cannot Prove Its Case?
That is an important question for a lawyer to examine.
A debt buyer’s purchase of a portfolio does not automatically establish that every account in that portfolio belongs to the person being sued. The plaintiff still has to prove the elements of its claim and comply with Maryland’s requirements for consumer debt collection actions.
And if the collector made false statements, pursued the wrong person, or otherwise violated federal or Maryland consumer protection laws, there may be additional claims or remedies available.
How a Maryland Debt Collection Attorney Can Help
Being sued for a debt you never agreed to can feel like you are being asked to prove a negative. You are not required to simply accept the allegation because a debt buyer put it in a complaint.
An attorney can review the lawsuit, the account records, the alleged ownership of the debt, and the debt buyer’s collection conduct. The goal is to determine whether the debt belongs to you, whether the debt buyer can prove its claim, and what defenses or legal claims may be available.
If a debt buyer is suing you for a debt you never agreed to, contact our team at Holland Law Firm for a review of your case.