Settling Debt Buyer Lawsuits

Debt buyer collection lawsuits can be settled at a deep discount just before trial, but you may not want to wait that long. What’s best for you depends on your emotional make-up and financial situation.

Who are these people and why are they bothering me?  

Debt buyers are large companies that buy defaulted debt to collect for their own account. Cavalry SPV I; LVNV Funding; Midland Credit Management; Portfolio Recovery Associates, and Velocity Investments are among the largest.

 Debt buyers don’t issue credit cards or lend money, so your first encounter might be a collection letter out of the blue. You wonder: Who are these people? Why are they bothering me? Is this a scam?

Or you might meet for the first time when they sue you. No scam now. Instead, a new set of problems. It’s real. I’m worried. Will I lose my home? My job? Can I go to jail?

Worry is the real killer.  And it’s completely unnecessary. So, step one is to relax!

In a debt buyer collection lawsuit, you have the legal advantage. The debt buyer must prove that it bought your debt and owns the right to sue you. To do this, they need a witness from the “original creditor” – i.e.: the lending bank or credit card issuer - to testify at trial, essentially: “Yeah, we sold them your debt”.

Assuming, for the moment, that it is your debt, if they have this witness, you lose.

But they won’t.

Here’s why. The major banks sell off massive amounts of defaulted debt. Millions of accounts. Debt buyers file many thousands of collection cases every year, which result in thousands of trials. Repeat: thousands of trials.

So here is the key question: How many people do you think major banks and credit card issuers employ to testify in the thousands of debt collection cases in which they have no financial interest whatsoever? Easy: Zero. No witnesses.

That’s why debt-buyer cases settle for less right before trial. At the outset of a collection case, debt buyers lack the incentive to offer deeply discounted settlements because they have no immediate risk of loss. As the trial approaches, though, things change. Debt-buyers face the risk of losing at trial and collecting nothing. So, just before trial, they’ll settle for less.

It typically takes a year to reach trial in California, possibly longer in the larger counties. Waiting for trial isn’t for everyone. Especially, the worriers. We are all "wired" differently, and some people just worry. If they’re sued, they need it over with. Now! Nothing to worry about, done. For these folks, waiting for trial doesn’t mean a better settlement, it means more worrying and more lost sleep. For these folks, it makes more sense to settle quickly - even if it means paying a little more - especially if it means buying peace of mind.

There is no correct answer. If you have questions about what is right for you, call us at (877) 320-2380 for a FREE consultation. No obligation. Or just click to call.  We’d be pleased to go over what’s best for you.