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Debt Buyers

Encore Capital Group Promises Not to Sue on Time-Barred Debt, Not to Robo-Sign (in New York)

“Pennies on the dollar” is perhaps an overstatement. According to Paragraph 4 of a January 6, 2015 settlement agreement reached with the New York State Attorney General, Encore Capital Group, Inc. (which is publicly traded and is the parent of junk debt buyer Midland Funding, LLC) “paid approximately $1.2 billion to acquire portfolios, primarily charged-off credit card portfolios, with a face value aggregating $84.9 billion.” When you do the math (1.2 billion divided by 84.9 billion), that comes out to about 1.4 cents on the dollar — i.e. less than two pennies on the dollar.

As part of the settlement, Encore promises that it will stop suing to collect debts which are barred by the statute of limitations in New York. The full text of the settlement is Here.

Debt buyers routinely sue consumers after the statute of limitations has run, both in Maryland and around the country. The FTC’s study of the large debt buyers found that 30% of debts purchased were at least three years old and therefore were likely beyond the statute of limitations in Maryland and some other states.

Encore entities filed law suits and obtained thousands of judgments on time barred debts:

Read More »Encore Capital Group Promises Not to Sue on Time-Barred Debt, Not to Robo-Sign (in New York)

Midland Funding And its Attorneys Sanctioned By Court For Frivolous Debt Collection Lawsuit

It is well known that some debt collection attorneys mass produce lawsuits and do so without properly reviewing their own documents. As one former collection attorney, quoted in Jake Halpern’s Bad Paper, put it “[t]here’s no way that you could effectively double-check all that stuff.” Despite slipshod review of the case files, the collection attorney’s firm netted “astronomical” profits.

However, the New York courts are not happy with this sort of behavior and Midland Funding LLC v. Austinnam is an excellent expression of their displeasure. In Austinnam, the court imposed a fine as a sanction on both the plaintiff, Midland Funding LLC, and its attorneys.

Read More »Midland Funding And its Attorneys Sanctioned By Court For Frivolous Debt Collection Lawsuit

Prepaid Debit Cards and Wire Transfers in Debt Collection Scams

Scammers call and demand immediate payment via wire transfer or prepaid debt card. According to a recent statement from the Maine Attorney General

The red flag, however, is that they want you to make an instant payment with a pre-paid debit card or wire transfer. This is how you know you are getting scammed. Hang up the phone immediately.

Read More »Prepaid Debit Cards and Wire Transfers in Debt Collection Scams

Robo-Signing and Foreclosure Deficiency Judgments in Maryland

Robo-signing of affidavits and other legal documents used in Maryland foreclosures has led to the predictable scenario where long after the foreclosure was approved, junk debt buyers are now seeking foreclosure deficiency judgments on what was the difference between the amount of the mortgage and the price fetched at the foreclosure sale.

Most participants in our legal system agree that robo-signing (including consensual forgery, perjury, and falsely stating one has personal knowledge of events) is an assault on the integrity of the courts. But as is well known, when faced with admittedly fraudulent documents, most courts simply looked the other way, and allowed the foreclosures to go through.

A recent article in the New York Times by Gretchen Morgenson illustrates the long shadow that robo-signing in foreclosures has created, and shows why robo-signing’s negative effects on people’s legal rights will continue for years to come. By way of example, although the state of Maryland disciplined two lawyers for admittedly submitting false affidavits in thousands of foreclosures, not a single one of those foreclosures was overturned. See here and here. Now the deficiency amounts from cases like these are being sold for pennies on the dollar to junk debt buyers, who are reopening the foreclosure cases and seeking tens or even hundreds of thousands of dollars from former homeowners who thought their cases were finally over. The good news in Maryland (unlike in other states) is that a law was passed which shortened the statute of limitations from twelve to three years on seeking foreclosure deficiency judgments.

Read More »Robo-Signing and Foreclosure Deficiency Judgments in Maryland

Major Banks Tell Credit Reporting Agencies That Consumers Owe Debts Discharged in Bankruptcy

Usually, zombie debt is associated with unscrupulous debt collectors, trying to collect debts beyond the statute of limitations or which were discharged in Bankruptcy. However, according to Jessica Silver-Greenberg at the New York Times’ Dealbook, four major banks are under investigation: JPMorgan Chase, Bank of America, Citigroup and Synchrony Financial (formerly GE Capital).

Read More »Major Banks Tell Credit Reporting Agencies That Consumers Owe Debts Discharged in Bankruptcy

Maryland Void Judgments May Be Attacked at Any Time, at Any Place, and in Any Proceeding

September 20, 2014

“[A] void judgment…is open to attack [ ] in any proceeding, direct or collateral, and at any time or place….”

Finch v. LVNV, 212 Md. App. 748, 768 (2013).

In Maryland, the law is clearly established that a debt collector must be licensed to collect debt in Maryland, either by letter and phone calls, or by filing lawsuits. The question arose as to whether judgments obtained by unlicensed debt collectors (many of whom later went on to obtain a license) are valid. The court in Finch stated loudly and clearly that judgments obtained in Maryland by unlicensed debt collectors are void.Read More »Maryland Void Judgments May Be Attacked at Any Time, at Any Place, and in Any Proceeding

Can a Judgment Holder Assign a Judgment Several Years After the Corporation Was Dissolved?

September 20, 2014

In Maryland, a judgment is valid for 12 years, and may be renewed at any point within those twelve years. In Maryland right now, there has been a rash of new debt buyers garnishing people’s wages by claiming to be the assignee of judgments that are as old as 10 years, and which were obtained by prior debt buyers which have long since filed articles of corporate dissolution. [1] In several active cases, the original judgment creditor was Platinum Financial Services Corporation (which filed Articles of Dissolution with the State of Maryland on March 25, 2009), and the new purported Assignee is Palisades Acquisitions XVI, LLC. The validity of those assignments depends on whether a corporation that has been dissolved can legally later assign judgments 3, 4, 5 or more years after the corporation filed its articles of dissolution.Read More »Can a Judgment Holder Assign a Judgment Several Years After the Corporation Was Dissolved?