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Good read, some highlights

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A few quotes I found worthy of highlighting that reflects a lot of what has been discussed on this board over the years.

WOW - this could be a huge shift in favor of the JDB in laying foundation to introduce documents from the OC without an OC witness, Mike Buckles (note: on second reading, I'm thnking he's just talking about defaults):

Now, one of the issues that came up today was about the debt buyer's records. And this is a legal issue. There's been case law, both in Connecticut and in Massachusetts, that the business records of the creditor are the business records of the debt buyer, that you can transfer those business records. Some people get kind of fixated on paper -- piece of paper -- "Do you have that piece of paper?” And what the two courts talked about was the electronic records, that if you download the electronic records from a creditor to a debt buyer, then that's their business records. So, if you have an account statement from a debt buyer, one that reflects the debt buyer, by the way -- doesn't try to present it as an image of somebody else's statement, such as the creditor -- then that should be adequate, at least for the purposes of your prima facie case.

If it goes to trial, rules of evidence apply, except for the "relaxed rules" in small claims, Judge Lipman:

Now, it gets a little bit trickier when someone files an answer and what information is then needed to prove that. And in our state right now, our Supreme Court has up in front of it a case that was appealed from small claims court where the judge basically allowed business records of the debt purchaser to be entered, basically saying it's a business-record exception to the hearsay rule. The other side says, "No, there's no foundation.” The creditor said, "Well, this is small claiMs. It's supposed to be relaxed. You're not supposed to apply strict rules of procedure,” although it doesn't specifically say that you relax evidentiary rules, but that's what was argued. Our Supreme Court has that right now up on cert. So, it's possible in Iowa that we will have a strict proof requirement that you have to have the first-party person there present to establish a case or we might have a relaxed Supreme Court ruling that says, "No, all you need is that information,” and that there's an exception, and it can be introduced. So we're kind of in flux right now. We're not sure how the court's gonna rule on that.

Judge Lipman:

And that's part of, again, the frustration on the difference between the default stage and then we have the challenges of trial. On the default stage, you're talking about information of a debt, you know? There's nothing about evidence. You're not looking at what's admissible. You're looking at a verified account or an affidavit. You don't even need the creditcard statement to get your default. When it comes time for a disputed trial, then I think the rules of evidence come in. and they have to prove their debt. My experience is, especially on third-party debt cases, I have never seen Mr. Capital One ever in my courtroom. He's never appeared. Or whoever they assign it to -- or Mister -- whoever the first-party-debt person is. So, traditionally, someone challenges it, if it's not mediated and settled, and that frustrates me because I see people mediating cases they shouldn't be mediating, but if it's not settled, then the creditor drops the case because they know they don't have their witnesses there, they don't have their evidence there, they can't prove their case. They dismiss their case, and, unfortunately, they file again. And a lot of times, we can't catch that because it's sometimes coming under a different name, a different debt buyer. So, as a court officer, there's -- when you have -- we don't 107,000 cases pending, but we have a lot for our county and few resources. We just can't catch all that, so, invariably, it happens.

Hmm... any case law or ideas on how to attack a JDB witness by asking for his travel schedule?

Pete Barry: I just wanted to make a comment. I just saw, in the last, I think, week to 10 days, I saw an advertisement in one of the major trade publications for a debt buyer who's advertising to hire a professional witness to travel throughout the United States, to travel 90% of the time. And I'll make that advertisement part of this record, but I find that that does violence to the notion of a custodian of records. You've got a person who's traveling 90% of the time -- "90-plus percent" is what the ad said -- and that person is gonna testify all over the United States, hopping from jurisdiction to jurisdiction, testifying about what? About how they traveled, airport food? What? I don't know what else they could testify on. That person hasn't worked there previously, and now suddenly, they get hired and brought in to be a professional witness for that debt buyer. I just find that -- I mean, would the court chime in on that, how they would weigh that testimony from a professional witness by a debt buyer? Susan Moiseev: Worthless.

>> Jeff Lipman: Worthless.

>> Pete Barry: Worthless?

>> Jeff Lipman: Worthless.

>> Julie Mayer: Okay, let's hear from Judge Moiseev and then Judge Donnelly.

>> Susan Moiseev: How do they establish a foundation?

>> Jeff Lipman: It's got to be contemporaneous. It's got to be the original creditor. It's got to be contemporaneous from someone with personal knowledge.

>> Julie Mayer: Do you want to

Rozanne Anderson:

I also think another point of discussion that is outside the judicial system but important to the process is the fact that is an asset suddenly defective when a consumer has lawfully disputed a debt under the FDCPA? Because I will tell you on behalf of members of ACA, we are not particularly huge fans of the system where a consumer exercises their rights under the FDCPA, they dispute a debt, they request verification -- which I will add is a different topic than the rules of evidence for suing on an account. But anyway, and that dispute is not somehow -- That doesn't follow the account. Because what happens is then, if the account is returned to the creditor, for whatever reason, that account is reassigned to a debt collector, that new debt collector should be aware, should somehow be made aware that you now have an asset that has dispute, a big "D" on it. And that's another -- whether each of you understand that, that is something that, from the industry standpoint, we like -- You know, we want proper notice, we want good service, we want debts that have -- We have access to the appropriate documentation, we want the chain of title, and we don't want defective debts to keep flowing in and out of the system because it serves no good for anyone.

Bob Markoff:

There's private industry is moving in that regard. I see representatives from two companies that can provide chain of title, secure chain of title with debt, the registration of the debts, the charge-off balance, documents. Due to the passage of time and the improvement of technology within the industry, the ability to store vast amounts of data and charge-off statements -- we are moving in that direction, we as an industry. I assure you, NARCA members -- we want the information. If I could voluntarily give every consumer every piece of paper that they wanted or at least a charge-off statements of accounts, I mean, I would do that. I don't need, and we, NARCA members -- you don't have to file a motion for discovery. If we've got it, we're going to give it to the consumers because we know that it promotes resolution of the matters, even prior to litigation.

Judge Donnelly:

One of the problems I find is even determining when the contract was formed or when the transactions occurred also may determine the interest rate, which determines how much. So that when there's no evidence of the last transaction, which is what triggers the operating customer agreement at the time, at least under Illinois law, it's the last transaction determines the date of the operative customer agreement. So when they attach a customer agreement to the contract but don't indicate when that customer agreement was in effect and when the last date of purchase was, use of the card, I don't know what the private law is, what the contract is, and that's, in terms of adjudicating how much, most of the time, it is a dispute about what the operative interest rates. And because, as we know, under credit-card-agreement acts, the interest rate has changed dramatically over the past 20 years. It really is important what customer agreement was in effect at the time of the last transaction, and those two things are never provided in the contract, so we can never determine, actually, the amount owed.

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On garnishing funds, specifically exempt funds, Julie Nepveu:

This is a multibillion-dollar industry to garnish funds, even from people who have exempt funds, because the bank makes $200 just for being contacted by the collection attorney for receiving the garnishment out of the exempt funds and then piles on top of that all of the insufficient-fund fees and orders the checks so that the checks bounce, the highest one first and then the next and then the next so that people get multiple overdraft fees on their account. It's a multibillion-dollar industry, and it's not gonna go away until the Treasury issues some regulations that they've been pretending they were gonna issue for many years now, and they haven't. This all started in 1999, when they started the Electronic Fund Transfer Act. They did not protect the people whose funds were being electronically transferred into these accounts. So, in 1999, for ten years now, they've had all these banks who know exactly where that money is coming from. The bank knows because it says right on the electronic transfer, you know, whether this is Social Security or whatever. Everyone knows. There are certain states where the banks, in fact, do have to check because local law requires it. But the feds -- There's mixed messages being sent. If you look on the OCC's website, it says, "Well, it's best practices, but we think the law's not clear, so we're not gonna require it."

Just interesting cause I think this rings true on both sides of the debtor/JDB experience:

>> Jeff Lipman: I would say that we have as many appearances by debtors in our court when they are garnished for first time than people that actually answer their petitions, for a variety of reasons. Some of them are claiming that they never had knowledge of the debt. Some are claiming they never got served with the debt. And, again, when they're finally garnished is the first time they have an interest in defending that debt. In our court, we have very liberal rules on setting aside in a big push to hear cases on the merits. And for a lot of creditor attorneys, they actually like it when the debtor finally objects, even at the garnishment level, because it's their opportunity to have a face-to-face with that debtor and get something worked out. So, I think that even when you get answers -- I think creditors, correct me if I'm wrong, but you like it better normally when someone answers a lawsuit when the money goes to default, because that's communication. Go ahead.

>> Steve Lerch: Well, one, it's correct -- they didn't get service -- two, it's their first notice, but there are also sometimes three -- it's "finally we got your attention. We've written you, we've sued you, and you've gotten the notice. But now, all of a sudden, we're gonna take money out of your paycheck. And they come in and say, "Can we make a payment arrangement?" I have no disagreement with what he's saying, and I don't know what the percentage breakdown would be, but it's probably all three of those. And, yes, you're right -- it does finally bring them into court. And as we've repeatedly said here, we then get the communication going to resolve the issue.

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