Credit Card Agreements and Definition of Creditor

[nascar]

Consider the following;

TILA, which governs credit card "agreements," defines a creditor as a "person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement." As such, in terms of that definition, a "creditor" is not a purchaser of delinquent debt. Do you agree with that? The FDCPA does.

An agreement which prohibits an assignment is generally unenforceable. That's what gives creditors the right to sell or assign delinquent debts. But, what if the credit card agreement itself defines, and in doing so limits, who the account can be assigned to? It doesn't prohibit assignment, it just defines to whom an assignment may be made.

A certain credit card agreement contains the following (quoted from an actual agreement, not hypothetical):

"We may assign, sell or transfer your Account and amounts owed by you to another creditor at any time."

Now comes my question. If a purchaser of delinquent debt, or JDB, is not a creditor, and the credit card agreement, by its own terms, limits assignments only to "another creditor," is an assignment to a JDB a valid assignment under the terms of the agreement? Is there an effective transfer of rights under the terms and conditions of the agreement? What do you think?

I'm going to take the position, for the purposes of this discussion, that an assignment to a party who is not by definition a creditor is not a valid assignment under the terms and conditions of an agreement that specifically limits assignments to other creditors. This isn't a trick question. Agree or disagree, I'd like to hear your thoughts on this.

[remus936]

Nascar you will make a great lawyer someday...As for as JDB's I would have to agree with you, as they are not a creditor. They just buy paper. That should help a bunch of people on here...too bad not me...

How would one argue that in court?

[legal_loansharking]

Typically in the ch agreement fine print that only an ant can read, it states its successors and or assigns, does not define just assigning it to another creditor. Some may not have this, but I know some do.

[nascar]

it states its successors and or assigns, does not define just assigning it to another creditor.

That's what I would expect to see as well However, I've recently read some agreements that used the exact wording as I've quoted above. If you have a copy or copies of a credit card agreement, what does yours say? Anyone?

[Lecasbas]

I have a current cc agreement which states:

Assignment of Account

We may sell, assign or transfer your Agreement and Account or any portion thereof without notice to you. You may not sell, assign or transfer your Account.

Under this agreement the OC can sell the debt to anyone. Under the agreement you posted the OC could not sell the debt to anyone, by definition, who is not a "creditor".

Under the definitions of the FDCPA, the JDB is a "debt collector" 803(6). The section of TILA you cited would not classify the JDB as a "creditor".

So when the CA collecting for the JDB references the JDB as the "creditor" then the CA has knowinging misreprensented the JDB's true idenity.

How do you think the JDB should be referenced? You have already said "not creditor". FDCPA says "debt collector". It would be a little cumbersome for the CA collecting for the JDB to reference the JDB as a CA also but that is what I would define the JDB as.

Basically, the JDB is the debt collector who bought the debt. Is there a shorter title?

[willingtocope]

To add to the confusion, I think there is a difference between and OC "transferring" a debt that is current, a debt that is delinquent. I've maintained all along that if your CC payments are up to date, and MBNA gets bought by "whoever"...no problem. But, if your account was delinquent, then the new "whoever" is really a JDB.

[Methuss]

I had this discussion with a lawyer ad Edleman a few years ago. I don't think much, if anything, has changed on this subject. Here's the rundown.

If a creditor is bought out in full by another creditor by way of merger or acquisition, the new "owner" of the account is a creditor regardless of the payment status of the debt under the FDCPA. This is because the transfer of the debt, delinquent or not, was not a mechanism of collection/recovery.

If a creditor sells a debt that is current to another, the new owner is a creditor under the FDCPA because the debt was not delinquent when it was acquired.

If a creditor sells a debt that is delinquent, even if only by one day, to another, then the new owner is a debt collector under the FDCPA. They cannot claim to be a "factoring company", an owner of an account stated, or a creditor ... and even claiming it is a violation because it misrepresents the character of the debt and is deceptive on its face.

I think the issue here is what definition governs. If you have a claim under TILA then the TILA definition applies. If you have a claim under the FDCPA then the definition there applies. They do not cross each other. Definitions in a law are context-specific to the law they are included in.

[willingtocope]

I defer to my learned colleague from the great state of FL...

[valorman]

If a creditor sells a debt that is delinquent, even if only by one day, to another, then the new owner is a debt collector under the FDCPA. They cannot claim to be a "factoring company", an owner of an account stated, or a creditor ... and even claiming it is a violation because it misrepresents the character of the debt and is deceptive on its face.

There are JDBs throwing AFFIDAVITS OF OWNERSHIPs these days who ever demands validations of debt.Stating in there words."The account and all the proceeds of the account are now owned by the assignee ,sellers interest,sellers power and authority to do and perform all acts necessary:".

Can they claim this AS stated? and how do the debtor counters to that?

http://en.wikipedia.org/wiki/Ownership

[nascar]

Can they claim this AS stated? and how do the debtor counters to that?

Any such self-serving affidavit is not worth the paper it's written on. It does nothing more than express a legal opinion and doesn't actually prove anything.

[valorman]

Any such self-serving affidavit is not worth the paper it's written on. It does nothing more than express a legal opinion and doesn't actually prove anything.

I have no doubt on this as you stated.Then what grounds they have to submit this affidavit of ownership in the courts against the debtors through their attorneys.How do the debtors can strike this in court? As hearsay or other definitions?.

sorry if i am off topic but i am in the same situation and I need to know.

[Lecasbas]

Here's a general description of affidavit:

http://definitions.uslegal.com/a/affidavits/

In accordance to the FDCPA the CA or JDB must produce evidence from the OC to support its ownership or assignment of the debt.

The affidavit is self-serving in your case because the affiant (CA or JDB, for example) is attesting to its own evidence about the alleged debt as being authentic. It will work in a default case because no one shows up to ask for validation.

If you are denying the debt, you could make your own affidavit using a graduated denial and send a copy to all parties involved and to the clerk of court. You could also ask that the Plaintiff's affidavits be stricken because they are hearsay.

The Plaintiff would then need to send to the OC for an affidavit. This would be costly, if available to it at all. A smart CA will drop the case because it knows it cannot produce, or afford to produce, the evidence the FDCPA requires.

You should start another thread if you want to ask further questions as we are starting to drift from the main topic.

[Methuss]

I have no doubt on this as you stated.Then what grounds they have to submit this affidavit of ownership in the courts against the debtors through their attorneys.How do the debtors can strike this in court? As hearsay or other definitions?.

sorry if i am off topic but i am in the same situation and I need to know.

An affidavit is nothing more than a sworn statement. Basically a self-serving affidavit is nothign more than the JDB standing before the judge with their hand up saying "I swear this is correct." Usually if you read these things carefully you will notice that all it says is that they bought the account. It says nothing as to if the account was accurate and legitimate in the first place.

If you, as the defendant, object and ask that they provide strict proof of their claim, then they must do so or the affidavit is nothing more than unprovable hearsay. It's really not that complicated when you analyse it.

[valorman]

I thank you guys for great tips that help me a lot because tomorrow i have to go to court and this was awesome quick knowledge provided.