Confused on SOL in Florida on CC debt

[quepasoksl]

After reading this posting in this thread :

http://www.debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=20489&highlight=sol+barred

I got summoned on SOL debt. The only “proof” of the debt is an old credit card agreement for a credit card from 1988 that I didn’t not have at the time. ON contract or anything linking me do this debt!

I know the debt is time-barred, well past SOL. I do not wish to prove this “yet” … I live in Florida.

The burden of proof is on the collection scum attorney.

Your strategy is doomed to fail and you may end up with a judgment against you. When you file your answers, if you have ANY defenses you must state them at that time. If your fail to allege defenses in timely manner you may be barred from raising those defenses later. If you lose and the CA gets judgment and you appeal claiming SOL the appeals court will say "You could have raised this defense but you didn't. Too bad for you. Pay up." If this debt is SOL, the so state. Your first Affirmative Defense should be "This action is time-barred and precluded by the statute of limitations FS 95.11" and whatever sub-paragraph for credit cards (SOL for VISA, MasterCard, Discover and Amex is 5 years in FL). Your Absolute Defense should be "This action is time-barred and precluded by the statute of limitations FS 95.11". You must claim SOL as both an affirmative defense and an absolute defense.

QUESTION: What does Civil Procedure require be attached to a complaint for damages?

Because we live in the United States of America and there are 46 states, and 5 commonwealths and numerous protectorates and territories, each has their own rules of civil procedure and rules of evidence and they vary greatly. You will need to specifically consult the FL rules of evidence and procedure. Many, but not all, have a rule that states that a contract must be attached to the complaint if it forms the basis of the complaint. Taking that a step further, many have rules that state if the contract is not attached, then an affidiavit explaining why (lost, destroyed, damaged) must be attached. Depending on what the FL rules of procedure and evidence say, you may be able to file a motion to dismiss on the basis of a contract not being attached. If an affidavit is attached by someone attesting to be knowledgeable about the debt and the amount, you can usally file a motion to strike the affidavit as hearsay, depending on what FL rules of evidence says.

QUESTION: Failing to provide proof in the original complaint should be grounds for s dismissal … how should I form this motion?

See above. However, many junk debt buyers are not using "Account Stated" or "Stated Account" as a way to avoid the contract. You will know because an affidavit is attached. Consult FL rules of evidence and procedure.

Although you haven't stated the complete circumstances that led up to the filing of a complaint against you, it would be completely foolish not to hire an attorney admitted to the federal bar and experienced in FDCPA claims. The attorney would remove the case from state to federal court and file for damages. More than likely, the CA would settle for about 5 figures since threatening to sue or suing on debts that are past SOL brings high punitive or exemplary damage awards.

I'm confused???? I thought the SOL was 4 years??? From this list:

http://www.creditinfocenter.com/rebuild/statuteLimitations.shtml

But I read the whole text of F.S. 95.11

The 2004 Florida Statutes

Title VIII

LIMITATIONS Chapter 95

LIMITATIONS OF ACTIONS; ADVERSE POSSESSION View Entire Chapter

95.11 Limitations other than for the recovery of real property.--Actions other than for recovery of real property shall be commenced as follows:

(1) WITHIN TWENTY YEARS.--An action on a judgment or decree of a court of record in this state.

(2) WITHIN FIVE YEARS.--

(a) An action on a judgment or decree of any court, not of record, of this state or any court of the United States, any other state or territory in the United States, or a foreign country.

( A legal or equitable action on a contract, obligation, or liability founded on a written instrument, except for an action to enforce a claim against a payment bond, which shall be governed by the applicable provisions of ss. 255.05(2)(a)2. and 713.23(1)(e).

© An action to foreclose a mortgage.

(3) WITHIN FOUR YEARS.--

(a) An action founded on negligence.

( An action relating to the determination of paternity, with the time running from the date the child reaches the age of majority.

© An action founded on the design, planning, or construction of an improvement to real property, with the time running from the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest; except that, when the action involves a latent defect, the time runs from the time the defect is discovered or should have been discovered with the exercise of due diligence. In any event, the action must be commenced within 15 years after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.

(d) An action to recover public money or property held by a public officer or employee, or former public officer or employee, and obtained during, or as a result of, his or her public office or employment.

(e) An action for injury to a person founded on the design, manufacture, distribution, or sale of personal property that is not permanently incorporated in an improvement to real property, including fixtures.

(f) An action founded on a statutory liability.

(g) An action for trespass on real property.

(h) An action for taking, detaining, or injuring personal property.

(i) An action to recover specific personal property.

(j) A legal or equitable action founded on fraud.

(k) A legal or equitable action on a contract, obligation, or liability not founded on a written instrument, including an action for the sale and delivery of goods, wares, and merchandise, and on store accounts.

(l) An action to rescind a contract.

(m) An action for money paid to any governmental authority by mistake or inadvertence.

(n) An action for a statutory penalty or forfeiture.

(o) An action for assault, battery, false arrest, malicious prosecution, malicious interference, false imprisonment, or any other intentional tort, except as provided in subsections (4), (5), and (7).

(p) Any action not specifically provided for in these statutes.

(4) WITHIN TWO YEARS.--

(a) An action for professional malpractice, other than medical malpractice, whether founded on contract or tort; provided that the period of limitations shall run from the time the cause of action is discovered or should have been discovered with the exercise of due diligence. However, the limitation of actions herein for professional malpractice shall be limited to persons in privity with the professional.

( An action for medical malpractice shall be commenced within 2 years from the time the incident giving rise to the action occurred or within 2 years from the time the incident is discovered, or should have been discovered with the exercise of due diligence; however, in no event shall the action be commenced later than 4 years from the date of the incident or occurrence out of which the cause of action accrued, except that this 4-year period shall not bar an action brought on behalf of a minor on or before the child's eighth birthday. An "action for medical malpractice" is defined as a claim in tort or in contract for damages because of the death, injury, or monetary loss to any person arising out of any medical, dental, or surgical diagnosis, treatment, or care by any provider of health care. The limitation of actions within this subsection shall be limited to the health care provider and persons in privity with the provider of health care. In those actions covered by this paragraph in which it can be shown that fraud, concealment, or intentional misrepresentation of fact prevented the discovery of the injury the period of limitations is extended forward 2 years from the time that the injury is discovered or should have been discovered with the exercise of due diligence, but in no event to exceed 7 years from the date the incident giving rise to the injury occurred, except that this 7-year period shall not bar an action brought on behalf of a minor on or before the child's eighth birthday. This paragraph shall not apply to actions for which ss. 766.301-766.316 provide the exclusive remedy.

© An action to recover wages or overtime or damages or penalties concerning payment of wages and overtime.

(d) An action for wrongful death.

(e) An action founded upon a violation of any provision of chapter 517, with the period running from the time the facts giving rise to the cause of action were discovered or should have been discovered with the exercise of due diligence, but not more than 5 years from the date such violation occurred.

(f) An action for personal injury caused by contact with or exposure to phenoxy herbicides while serving either as a civilian or as a member of the Armed Forces of the United States during the period January 1, 1962, through May 7, 1975; the period of limitations shall run from the time the cause of action is discovered or should have been discovered with the exercise of due diligence.

(g) An action for libel or slander.

(5) WITHIN ONE YEAR.--

(a) An action for specific performance of a contract.

( An action to enforce an equitable lien arising from the furnishing of labor, services, or material for the improvement of real property.

© An action to enforce rights under the Uniform Commercial Code--Letters of Credit, chapter 675.

(d) An action against any guaranty association and its insured, with the period running from the date of the deadline for filing claims in the order of liquidation.

(e) An action to enforce any claim against a payment bond on which the principal is a contractor, subcontractor, or sub-subcontractor as defined in s. 713.01, for private work as well as public work, from the last furnishing of labor, services, or materials or from the last furnishing of labor, services, or materials by the contractor if the contractor is the principal on a bond on the same construction project, whichever is later.

(f) Except for actions described in subsection (8), a petition for extraordinary writ, other than a petition challenging a criminal conviction, filed by or on behalf of a prisoner as defined in s. 57.085.

(g) Except for actions described in subsection (8), an action brought by or on behalf of a prisoner, as defined in s. 57.085, relating to the conditions of the prisoner's confinement.

(6) LACHES.--Laches shall bar any action unless it is commenced within the time provided for legal actions concerning the same subject matter regardless of lack of knowledge by the person sought to be held liable that the person alleging liability would assert his or her rights and whether the person sought to be held liable is injured or prejudiced by the delay. This subsection shall not affect application of laches at an earlier time in accordance with law.

(7) FOR INTENTIONAL TORTS BASED ON ABUSE.--An action founded on alleged abuse, as defined in s. 39.01, s. 415.102, or s. 984.03, or incest, as defined in s. 826.04, may be commenced at any time within 7 years after the age of majority, or within 4 years after the injured person leaves the dependency of the abuser, or within 4 years from the time of discovery by the injured party of both the injury and the causal relationship between the injury and the abuse, whichever occurs later.

(8) WITHIN 30 DAYS FOR ACTIONS CHALLENGING CORRECTIONAL DISCIPLINARY PROCEEDINGS.--Any court action challenging prisoner disciplinary proceedings conducted by the Department of Corrections pursuant to s. 944.28(2) must be commenced within 30 days after final disposition of the prisoner disciplinary proceedings through the administrative grievance process under chapter 33, Florida Administrative Code. Any action challenging prisoner disciplinary proceedings shall be barred by the court unless it is commenced within the time period provided by this section.

History.--s. 10, ch. 1869, 1872; s. 1, ch. 3900, 1889; RS 1294; GS 1725; s. 10, ch. 7838, 1919; RGS 2939; CGL 4663; s. 1, ch. 21892, 1943; s. 7, ch. 24337, 1947; s. 24, ch. 57-1; s. 1, ch. 59-188; s. 1, ch. 67-284; s. 1, ch. 71-254; s. 30, ch. 73-333; s. 7, ch. 74-382; s. 7, ch. 75-9; s. 1, ch. 77-174; s. 11, ch. 78-435; s. 1, ch. 80-322; s. 34, ch. 83-38; s. 1, ch. 84-13; s. 1, ch. 85-63; s. 139, ch. 86-220; s. 1, ch. 86-231; s. 1, ch. 86-272; s. 1, ch. 88-397; s. 20, ch. 90-109; s. 1, ch. 92-102; s. 520, ch. 95-147; s. 2, ch. 95-283; s. 4, ch. 96-106; s. 1, ch. 96-167; s. 15, ch. 98-280; s. 2, ch. 99-5; s. 12, ch. 99-137; s. 2, ch. 2001-211.

Sooooo can someone clear this up for me??? I am working on filing an answer for a friend and wanted to quote the correct statue but now I'm not sure what statue states it is 4 years???

Thanks in advance!!

[quepasoksl]

BTW no affidavit or original copy of contract was attached to the complaint. This is from a JDB that either bought or was assigned as it states that 'Plaintiff is a corporation and is the present owner of the subject account by purchase and assignment. '

Thanks again

[LadynRed]

The part of the statute you want is here:

FLORIDA SOL &

CAUSE OF ACTION

Section 95.11, Florida Statutes, as follows:

OPEN ACCOUNTS. (credit cards !)

Within 4 years -

an action founded on a statutory liability, or a legal or equitable action on a contract, obligation or liability not founded on a written instrument, including an action for the sale and delivery of goods, wares, and merchandise, and on store accounts.

Written Contracts

Within 5 years -

an action on a judgment or decree of any court, not of record, of this state or any court of the United States, any other state or territory in the United States or a foreign country, or a legal or equitable action on a contract, obligation or liability founded on a written instrument

Any action not specifically provided for in these statutes.

Cause Of Action

95.031 Computation of time.

--Except as provided in subsection (2) and in

s. 95.051 and elsewhere in these statutes, the time within which an action shall be begun under any statute of limitations runs from the time the cause of action accrues.

(1) A cause of action accrues when the last element constituting the cause of action occurs.

FLORIDA LIMITATION ON CREDIT "CONTRACTS"

687.0304 Credit agreements.--

(1) DEFINITIONS.--For the purposes of this section:

(a) "Credit agreement" means an agreement to lend or forbear repayment of money, goods, or things in action, to otherwise extend credit, or to make any other financial accommodation.

( "Creditor" means a person who extends credit under a credit agreement with a debtor.

© "Debtor" means a person who obtains credit or seeks a credit agreement with a creditor or who owes money to a creditor.

(2) CREDIT AGREEMENTS TO BE IN WRITING.--A debtor may not maintain an action on a credit agreement unless the agreement is in writing, expresses consideration, sets forth the relevant terms and conditions, and is signed by the creditor and the debtor.

(3) ACTIONS NOT CONSIDERED AGREEMENTS.--

(a) The following actions do not give rise to a claim that a new credit agreement is created, unless the agreement satisfies the requirements of subsection (2):

1. The rendering of financial advice by a creditor to a debtor;

2. The consultation by a creditor with a debtor; or

3. The agreement by a creditor to take certain actions, such as entering into a new credit agreement, forbearing from exercising remedies under prior credit agreements, or extending installments due under prior credit agreements.

( A credit agreement may not be implied from the relationship, fiduciary, or otherwise, of the creditor and the debtor.

Title VIII

LIMITATIONS

Chapter 95

LIMITATIONS OF ACTIONS;

95.04 Promise to pay barred debt.--An acknowledgment of, or promise to pay, a debt barred by a statute of limitations must be in writing and signed by the person sought to be charged.

95.10 Cause of action arising in another state.--When the cause of action arose in another state or territory of the United States, or in a foreign country, and its laws forbid the maintenance of the action because of lapse of time, no action shall be maintained in this state.

A credit card is an open-ended account, NOT a written contract, and that is CLEARLY defined in the Truth in Lending Act.

[quepasoksl]

Thank you Ladynred. Just wanted to make sure I was interpreting things correctly. Have a good weekend!!

[gdouglaslee]

Being in FL the strategy by CA attorneys is to sue under the legal theories of Unjust Enrichment, Quantum Meruit, Breach of Contract and Account Stated. Your summons will state exactly that but not necessarily in that order. I've seen dozens of cases by people from FL sued for Discover, Cap One, Providan and other credit cards and not a single person was able to escape judgment claiming a 4 year SOL. That's probably because the the SOL is 5 years for an account stated, which is what the attorneys sue under. They don't need the credit application or a signed contract, just a few billing statements. That's sufficient to prove an express/implied contract.

I've seen numerous references to the 4 year SOL based on an open-ended account and TILA etc etc, but after searching on LEXIS for 3 months I have been unable to find a single case where the consumer prevailed. I haven't been able to find a single person on 6 different credit boards that successfully used that argument in states where the SOL exceeds 4 years for credit cards.

Since I live in Ohio where the SOL for credit cards is 6 years, I would certainly like to know what defenses were used, what motions were filed and what arguments were made to prevail on a claim that the SOL for credit cards is 4 years even if the state statutes say it is longer. If anyone knows of any person or of any case law where the 4 year open-ended TILA thing actually worked and resulted in a dismissal with prejudice please let me know. That info would certainly warrant it's own locked thread with a sticky.

[LadynRed]

There have been several cases where I helped someone use the TILA definition of a credit card being an open-ended account to win a lawsuit on an SOL debt. One of them was in OHIO! People HAVE won using the TILA to back up the usually shorter SOL (in most states) but FL seems to be a real problem in this area.

I don't understand how they can ignore a FEDERAL Act. Between the TILA on open-ended accounts and the FDIC's definition of a written contract (which is NOT even close to a credit card account definition), I don't see how these judges can interpret for the longer SOL of a written contract.

Unfortunately, most of these cases come up on small claims courts or other levels that are NOT a court of record, so there's no case law to be found.

[quepasoksl]

Ok, so when a JDB purchases your 'account' and is unable to produce ANYTHING other than the screen capture print out of transactions and say a copy of the fine print credit card agreement terms, do you think the 4 year SOL can fly??? I'll have to go back and check the two complaints that have been filed against myself and my ex to check the wording. One was an original creditor B of A, and the other was CACV.

I think the majority of my creditors have charged off and sold my accounts to JDB. If the SOL is 5 years then I guess I'll have to stick it out another 2 years and try to avoid filing bankruptcy.

Thanks for your help gdouglaslee and ladynred, I appreciate it.

[gdouglaslee]

There is nothing in Ohio case law regarding a 4 year SOL for credit cards. In the Truskin case at the appellate court level, the justices cite IL case law Harris Trust & Savings saying a bank card is a written agreement which would fall under a 15 year SOL and is exempt from the UCC. Truskin's attorneys never raise TILA as an issue except that in this case, the debt was a consumer-merchant relationship and not a consumer-bank-merchant relationship and it was not a credit card but it was a revolving account.

There is an Ohio statute that does actually exempt credit cards issued by a bank from written agreements, making it a 4 year SOL but there is no case law on it. It is either readily accepted, or it has never been challenged at any level or in any motions. Ohio law prohibits businesses from suing in small claims courts. All suits must be filed in municpal court, or in common pleas court if the amount exceeds $15,000.

All case law concerning TILA in Ohio is related to interest rates, late fees and overlimit fees or to the statute of limitations for suing under TILA, not credit cards and the statute of limitations as it applies to credit cards under UCC.

Like Florida, most CAs/JDBs sue under an account stated which has a 6 year SOL in Ohio and a 5 year SOL in Florida. That apparently has not been challenged either so it is unknown if people are aguing that since the underlying debt is a credit card, it has 4 year SOL. I can't find anything in Florida under statute 95 for a 4 year SOL for credit cards. Of course, like Ohio, the absence of reported case law doesn't mean that it is not 4 years.

[LadynRed]

GDL - I quoted the FL statute section and even bolded part of it above. WhyChat has this posted on his site and he IS in FL.

[whoisjohnny2004]

So should someone living in FL assume 4 or 5 years for the SOL on credit card debt? -Thanks!

[LadynRed]

The SOL on credit cards is FOUR years in FL, per the posted statute. Its a 'contract not in writing' /open-ended agreement. However, the problem seems to be the prevalence of CA-friendly judges who take the sides against the consumer in FL.

[whoisjohnny2004]

I am not sure if I am understanding this correctly (for the state of FL):

If the CA produces a signed contract to prove that the debt is mine then it would fall within the 4-year SOL (b/c classified as an open account)?

If the CA 'loses' or fails to produce a signed contract (only a few billing statements), then it could be classified as an 'Account Stated' and could have a SOL of 5 years?

If the above is true, WHY would a CA produce a contract, instead choosing to provide a few billing statements to sue? My wife is in a situation where an alleged debt would fall over 4 years but under 5 years and she needs to know what to expect.

Thanks!

[quepasoksl]

This was posted on another site I visit. I found this part interesting in relation to Florida and the SOL.

She and her husband decided to go ahead with their home closing and fight Asset in court. She says she has retained an attorney who believes the four-year Arizona statute of limitations applies to her debt and has expired. Asset says the five-year Florida statute applies. Ms. Norwood says she refused a recent Asset offer to settle the case for $2,000 and that she received the company's legal papers on Oct. 15.

So that is interesting...... When I went before the Judge for my one case and she mentioned SOL of 4 years so I just don't know if it is a hit or miss type thing depending on how the Judge assigned wants to rule or what.

No matter what Asset sucks!!!!!

Posted by Xanthos on another credit site(Thank you!!!)

Small Claims

Once-Ignored Consumer Debts

Are Focus of Booming Industry

Asset Acceptance, a New Type

Of Collector, Hits Paydirt

Suing for Modest Sums

Some Fight Back -- and Win

By SUEIN HWANG

Staff Reporter of THE WALL STREET JOURNAL

October 25, 2004; Page A1

In 1996, when Heather Scott's marriage split up, she defaulted on $3,000 she owed on her Discover credit card. "It was either that or feed my kids," the Phoenix woman says. Until recently, she probably could have walked away from her credit-card debt with little more than a damaged credit report. But an increasingly aggressive debt-collection industry is going after people, like Ms. Scott, who used to fly below the radar.

For six years, she heard nothing about her Discover debt. Then, in 2002, she was sued in small-claims court in Phoenix. A company called Asset Acceptance Capital Corp. had bought her Discover debt and wanted to collect. The 35-year-old single mother of two, who says she couldn't afford a lawyer, didn't show up in court. Asset won a default judgment of about $9,500, including more than $2,000 for the company's legal fees. For the past year, the company has been taking about $100 out of the $625 paycheck she receives every two weeks as an administrative worker for the state of Arizona.

Speaking generally, Asset makes no apology for pursuing people who failed to pay their bills and says it treats them all fairly. The company has now agreed to settle with Ms. Scott. She will pay an additional $3,000, for a total of $6,111, or 36% less than the court judgment.

Asset's hard-hitting strategy of going after consumers in small-claims courts has affected tens of thousands of people around the country. In the process, the company is helping reshape the burgeoning business of profiting from bad consumer debt.

Most home and car lenders have never hesitated to chase debtors who fall behind on payments. But many other consumer lenders, such as credit-card issuers and businesses ranging from health clubs to utilities, traditionally didn't tail debtors for more than a few months. These companies have feared bad publicity and have wanted to avoid the costs of pursuing what often are relatively small debts.

As the number of these debts grew, a new breed of collector sprouted, eager to buy up consumer debt that creditors had given up on. Now, as more Americans are juggling more debt than ever before, the newcomers have grown into a multibillion-dollar industry that is scraping the bottom of the barrel to go after debtors who previously would have been left alone. Unlike old-fashioned collection agencies, which pursue debtors on behalf of a client company and keep a set percentage of what they gather, the newer debt-buying companies typically acquire large portfolios of bad debt at a discount.

The king of the debt buyers is Asset Acceptance, based in Warren, Mich. It scoops up the oldest, least-desirable debts that creditors have already charged off as losses. Sometimes, Asset chases debtors after as many as three previous collection firms have failed. Asset and its rivals can make a profit because they keep costs low, paying as little as two cents on the dollar for debt. Asset adds a legal component to the strategy, employing an army of outside lawyers to file thousands of small-claims suits each year. "These debts have already been through an arduous process -- they've had the kitchen sink thrown at them -- so we need to go beyond our predecessors to be successful," says Asset's chairman, Rufus H. ("Bud") Reitzel.

Financially, Asset has been a huge success. It employs 1,600 people, up from 37 in 1996. It owns 16 million accounts, including $4.2 billion in debt bought just last year. Revenue has grown an average of 57% a year since 1999, topping $160 million last year. The company's operating earnings, which reflect a reorganization related to Asset's initial public offering in March, grew on average by 58% a year, to $54.8 million last year. A group led by Bear Stearns Cos. took Asset public on the Nasdaq Stock Market at $17 a share. It closed Friday afternoon at $18.90, down 24 cents.

Asset's rising fortunes reflect those of the booming debt-buying industry, as growing numbers of creditors -- from credit-card issuers to phone companies to hospitals and gyms -- turn to selling their bad debts as a source of revenue. In 1993, $660 million of charged-off credit-card debt was sold, according to the Nilson Report, a trade publication. Last year, the number reached $57.3 billion.

In the past two years, three debt buyers -- Portfolio Recovery Associates Inc., Asta Funding Inc. and Asset -- have issued shares to the public for the first time. Encore Capital Group Inc., a debt buyer in which Wall Street veteran Nelson Peltz has a major stake, moved from over-the-counter trading to the more prestigious Nasdaq Stock Market last year. Encore's shares have soared to $18.52 as of Friday, compared with 30 cents in the beginning of 2002.

Asset and other debt buyers say they frequently offer to resolve debts for far less than what they are owed, benefiting consumers. Asset further asserts that by buying old debt, it indirectly encourages new lending and the lowering of borrowing costs. "We are the good guys," Mr. Reitzel says.

His company's new collectors go through four weeks of training that drills them in federal debt-collection laws, and executives say their employees are so sincere that some debtors send collectors gifts and cards for Christmas. Some attorneys who have represented consumers against Asset say the outside lawyers the company hires are generally professional in their dealings.

Small Claims

But there is more to the story. According to some lawyers and advocates for consumers, Asset uses the relaxed rules of small-claims and municipal courts to file suits that contain little documentation of the debts it seeks to collect. These courts typically allow for quick judgments when legally unsophisticated defendants fail to contest the suits, the critics say. Once it obtains judgments, Asset can use the full weight of the legal system to enforce its victories, primarily by seizing assets or garnishing wages.

When individuals fight back against the company in court, consumer lawyers and advocates say, Asset often drops its suits, not wishing to engage in expensive legal skirmishing. The upshot is that poorer and less sophisticated debtors are more likely to face a judgment for Asset, these lawyers and advocates say.

Asset counters that it tries to collect from all of its debtors before going to court. The company denies that its methods are harder on the unsophisticated. It says that all of its legal actions are backed by the "documentation necessary" and that it informs consumers quickly when they have been sued.

"Frankly, a debtor is a debtor," the firm said in a written response to questions. "If a person has the resources to pay their past obligations, we will pursue the matter to the fullest extent." Collections that include filing suit generate roughly a third of the company's revenues and have been important to its overall strategy, Asset said. But legal actions aren't its "primary objective." The company said it has assisted millions of consumers in resolving past financial obligations, adding, "We firmly believe that our corporate mission is to treat our customers respectfully -- a critical component of our success."

What Asset has discovered -- and what other debt collectors are realizing -- is the power of small-claims and municipal courts. Set up to help individuals quickly settle minor disputes, these courts generally offer cheaper filing fees and often require plaintiffs to gather less evidence to get suits started. These courts also sometimes impose less onerous requirements for giving defendants notice that they are being sued. And judges overseeing small claims typically plow through dozens of cases a day -- far more than conventional judges -- making it more likely that a plaintiff will walk away with a quick default judgment.

Judi Norwood received a call from an Asset attorney in July. Back in 1999, when she graduated from Arizona State University, she says she couldn't find a good job and defaulted on what she owed on her MBNA credit card. She says she doesn't remember the amount. Ms. Norwood fended off collectors for several months, and then, when she didn't hear anything for a few years, she thought a bad period had ended.

She married, had a son and now works as a waitress at a steakhouse near Florida's Gulf Coast. Her husband is a surveyor. They lived with his parents to save money and had put aside $5,000 for a down payment on a small home of their own when the call came from Asset -- less than a week before they were scheduled to close on their new home. She says the Asset attorney told her the company would sue unless she paid off the old MBNA debt, which Asset said had grown to nearly $7,000, including interest. That's nearly twice the credit limit on her old MBNA card, Ms. Norwood says.

She and her husband decided to go ahead with their home closing and fight Asset in court. She says she has retained an attorney who believes the four-year Arizona statute of limitations applies to her debt and has expired. Asset says the five-year Florida statute applies. Ms. Norwood says she refused a recent Asset offer to settle the case for $2,000 and that she received the company's legal papers on Oct. 15.

While Asset appears to be following the letter of the law, its practices concern some legal experts, who say small-claims court was never intended for this kind of litigation. "The consequences of small-claims court is the same as any other court, and now [a company] has the full panoply of remedies to collect," says Richard Alderman, director of the Center of Consumer Law at the University of Houston Law Center. Because conventional courts typically have more safeguards for defendants, he adds, debt-collecting companies should be forced to file their suits there, "before we start garnishing wages, taking away property, and doing things on a wholesale manufactured basis."

Asset says it goes to great lengths to keep track of and obey laws that vary greatly from state to state. It also says it doesn't always file suit in small-claims courts. In Michigan, for example, attorneys are barred from appearing in small-claims court, so Asset's lawyers use more traditional courts, a company spokesman says.

Many veterans in the debt-buying industry say that other things being equal, women are more likely to repay than men. A former manager of one of Asset's regional branches says Asset's computer system flags accounts on which women are the primary debtors. Another category that gets highlighted is debtors who have previously promised to pay.

But Asset denies focusing on women. The company says it doesn't know whether women repay more readily.

Six years after her divorce and default on her credit-card debt, Ms. Scott of Phoenix heard from an Asset lawyer that she was about to be sued. Unable to pay for her own lawyer, she says she went to a free legal-services agency where a lawyer told her there was no point in showing up in small-claims court. That was bad advice, which Ms. Scott says she followed.

Asset won a default judgment of $7,731 in February 2002, a sum that included interest costs and $2,035 for Asset's legal expenses and court fees. Two months later, Asset offered to settle for $3,290. Ms. Scott says she didn't have it. By August, Asset had withdrawn the offer, and the total bill had risen to $9,537. Then, last month, Ms. Scott offered to pay the company another $3,000 that a relative agreed to lend her. Asset accepted the settlement. "I had to get it behind me," Ms. Scott says.

Court Skirmishes

Some former debtors and lawyers who have skirmished with Asset say Ms. Scott may not have had to pay the company anything if she had gone to court and contested its claims.

Asset acknowledges that, when buying a pool of debt, it typically gets a bare-bones list of debtors' names, their social security numbers, the amounts creditors were owed and the date of last activity. To acquire more information would require creditors to dig deep into their files, which would cost Asset dearly. In many instances, where debts have already changed hands, industry executives say it is very difficult to obtain definitive documentation.

As a result, if a debtor can plausibly argue in court that the amount Asset is seeking may be incorrect, a judge may dismiss the case for lack of evidence, some consumer attorneys say. "They usually don't have the documentation," says Glen Chulsky, an attorney in Dover, N.J., who now represents individuals but previously did work for debt-collection firms.

Jason David Fregeau, a lawyer in Longmeadow, Mass., says he has faced off against Asset seven times in recent years, and each time the company has settled because it lacked documentation. "I have yet to see them prove their case," he says.

Asked about these assertions, the company says it has acted appropriately. Asset confirms that it is often hard to prove old debts and that consumers are challenging its documentation more often.

Asset executives say the vast majority of debtors know they owe money, and those complaining about court proceedings are merely trying to escape from paying. "If a person has a plausible or legitimate reason why they cannot pay, or if the debt is fraudulent, then we will work with them to resolve the issue," the company said in its written statement. "However, from our experience, we find that most people accept their responsibility and pay their past obligations."

Paul Zecchino says Asset appeared out of the blue, suing him three years ago in connection with an old Citibank credit-card debt for $6,000. Astonished by the amount Asset was demanding, Mr. Zecchino, a freelance writer in Englewood, Fla., consulted with lawyers and responded to the court that he lacked knowledge of Asset's claims. He asked that the company provide evidence. Asset never responded, Mr. Zecchino says, even when he offered to settle the case for a smaller amount. The suit was eventually dismissed.

Idalberto de la Torre appeared in a Miami small-claims court in November 2003 to contest Asset's suit against him. The company demanded $1,800 in old Providian Financial Corp. credit-card debt, plus another $900 in legal fees. Mr. de la Torre, an administrator for Delmonte Fresh Produce Inc., hired an attorney and was able to produce copies of credit reports that he says showed that Asset's records were wrong. Asset agreed to drop its suit.

Asset farms out legal cases to an army of lawyers who earn a percentage of everything they collect. The company is one of the few debt buyers to maintain a big in-house legal staff, as well.

At its headquarters, one group of workers does nothing but manage lawsuits. "We're making sure the attorneys are getting things done," says President Brad Bradley, gesturing to workers typing busily in their cubicles. The company won't say how many suits it files, but industry veterans estimate that the figure reaches into the tens of thousands a year. Asset says the suits it files are only a fraction of the 16 million accounts it is currently processing. The company added in a written statement that it believes itself to be "at the low end of the industry when it comes to legal collections."

The debt-buying industry suffered a big setback in the late 1990s, when the then-biggest player Commercial Financial Services Inc., collapsed in an accounting scandal. But the industry bounced back as consumer debt continued to increase.

A doctor's son from Mount Clements, Mich., Asset's Mr. Reitzel, 70, started a finance company in 1962 that loaned people money to buy carpets and vacuum cleaners. He visited borrowers' homes every Friday for payments. In the 1970s, he began buying bad debts from other companies but struggled to find sellers. "We'd go around to karate schools, I'm not kidding you," says the businessman. The savings-and-loan debacle of the late 1980s gave him his first big break. With his wife helping out in the office, Mr. Reitzel and Mr. Bradley, his son-in-law, drove around the country, buying up S&L loan portfolios and loading boxes of documents into a U-Haul truck.

While today the company says it sues only recalcitrant debtors, Asset has internal quotas to encourage employees to refer cases to the lawyers. Newer collectors are expected to refer two or three debtors a month, while the quota for those with more than a year's experience is 12, a former employee says. Asset said in a written statement that collectors are asked to turn over accounts because otherwise they would tend to continue working on them, decreasing the overall efficiency of Asset's collections efforts.

Asset's success with lawsuits has inspired rivals to follow it into the courtroom. Portfolio Recovery Associates, a Richmond, Va., debt buyer whose shares skyrocketed after it went public in 2002, says 29% of its second-quarter revenues were generated by legal collections, up from 25% the year before.

Asset employees say they pride themselves on their civility. One worker consoles a debtor, saying, "Oh, I know, I know it. Welcome to the club."

"You catch more flies with honey than vinegar," the Asset employee says later, "and we spread a lot of honey."