"Injury in fact" a question on how junk debt buyers get away with suing consumers

[drummer55]

so I as far as I understand it a plaintiff In order to sue needs to have injury in fact.

I'm confused as to how a junk debt buyer can show injury when in fact they were not the original creditor and at the very least injured themselves by buying a debt?

[Coltfan1972]

Because the credit card contract states the account can be sold or transferred without your approval. Therefore, the new owner steps into the shoes of the original creditor.

When that happens they have all the rights and responsibilites as the original creditor. They take over the good, bad, and neutral. It's the same reason the consumer can enforce the arbitration clause in the contract even though the debt buyer did not put that clause in the contract.

[tigger]

I get that the debt buyer obtains the rights of the original creditor (to a certain degree, imo) when they purchase the debt.

But what I don't get is how (and why) "injury in fact" is not challenged more frequently in these cases. Also why the case is not usually made for "assumption of risk" (as an affirmative defense). For debt buyers suing consumers and obtaining default judgements is a very lucrative business, and they don't seem to suffer any substantial loss. They certainly aren't out the amount they sue consumers for, when they file subpoenas.

The jdb makes a conscious choice to purchase the debt (...for pennies on the dollar) AFTER it's already been defaulted on. It's part of their business model. So, where is the harm caused them, when they are purchasing this debt, and haven't actually footed the consumer's bills as the oc did?

I've also found it more than a little interesting, how they complain during discovery. I've read on this board about debt buyer's attorneys kicking up a HUGE fuss when questioned by defendants during discovery about the fact that they "PURCHASED" the debt. (They usually don't want to answer such questions as how much it was purchased for, if it was purchased, etc.)

I've wondered if the reason behind this is based on debt buyers (and their attorneys) not wanting to admit (on any level) that they did purchase the account, haven't actually lost anywhere NEAR what they are claiming they lost (and are suing the defendant for), that they haven't actually been harmed, etc. Though, this is just my personal theory and I'm not an attorney (nor a psychologist) so....(tigger shrugs)

I probably didn't answer your question, and for that I sincerely apologize. Your question just made me think about the fact that unlike the oc, the jdb can (and frequently does) profit from the consumer's default...and as such, I feel the "injury in fact" in such cases should be challenged.

...just airing some personal theories about these collection vultures. Thanks for allowing me to do so.

Edited January 14, 2012 by tigger
edited for clarity.

[calawyer]

I get that the debt buyer obtains the rights of the original creditor (to a certain degree, imo) when they purchase the debt.

But what I don't get is how (and why) "injury in fact" is not challenged more frequently in these cases. Also why the case is not usually made for "assumption of risk" (as an affirmative defense). For debt buyers suing consumers and obtaining default judgements is a very lucrative business, and they don't seem to suffer any substantial loss. They certainly aren't out the amount they sue consumers for, when they file subpoenas.

The jdb makes a conscious choice to purchase the debt (...for pennies on the dollar) AFTER it's already been defaulted on. It's part of their business model. So, where is the harm caused them, when they are purchasing this debt, and haven't actually footed the consumer's bills as the oc did?

I've also found it more than a little interesting, how they complain during discovery. I've read on this board about debt buyer's attorneys kicking up a HUGE fuss when questioned by defendants during discovery about the fact that they "PURCHASED" the debt. (They usually don't want to answer such questions as how much it was purchased for, if it was purchased, etc.)

I've wondered if the reason behind this is based on debt buyers (and their attorneys) not wanting to admit (on any level) that they did purchase the account, haven't actually lost anywhere NEAR what they are claiming they lost (and are suing the defendant for), that they haven't actually been harmed, etc. Though, this is just my personal theory and I'm not an attorney (nor a psychologist) so....(tigger shrugs)

I probably didn't answer your question, and for that I sincerely apologize. Your question just made me think about the fact that unlike the oc, the jdb can (and frequently does) profit from the consumer's default...and as such, I feel the "injury in fact" in such cases should be challenged.

...just airing some personal theories about these collection vultures. Thanks for allowing me to do so.

THe OC sells (assigns) a contractual right to the JDB. It is the right to collect money owed to the OC. Assumption of the risk is a tort doctrine.

[nascar]

Assumption of the risk is a tort doctrine.

Not that it necessarily matters to anyone who practices in California, but North Carolina recognizes assumption of the risk in breach of contract cases. Only state I'm aware of that does that.

[legaleagle]

The assumption of risk is primarily used in physical injury cases and injuries related to dangerous activities like skydiving, etc. where there is a substantial chance that you could be injured or killed. For instance, you are playing football and sustain an injury as a result of being tackled. You cannot sue the guy who tackled you, because you knew or should have known that football is dangerous and can lead to injury. Also, the other player has no "duty of care" towards you. His job is to tackle you, not protect you.

What you are addressing is a theory that since the JDB was stupid enough to buy a defaulted account, he doesn't deserve to collect the money. This is flawed reasoning. The risk in lending money is different, as it is based upon a contract of sorts and a promise to pay. The lender doesn't expect you to stiff him, he expects you to honor the contract and pay back the money.

In fact, lenders take reasonable steps to protect themselves by analyzing your credit history, employment, etc. Nowhere in that procedure can you show that the lender was reckless or negligent to the extent that he injured himself. Now, if a lender gave you a limitless credit card when you had no job, no assets, and a 400 FICO, you may have a case.

The theory you set forth blames the lender for the fact that you (or anyone) did not pay, by saying "you should have known better, the evidence that I am a deadbeat is right in front of you and you lent me the money anyway." The fact that they make you fill out a credit application defeats that argument.

When the JDB buys the account, he assumes the same risk that the lender assumed, which is a chance of not being paid. His risk is less, as he probably paid five cents on the dollar, but that compensates for the fact that the account is in default.

I've studied hundreds of credit card cases.....never once have I seen a defendant successfully raise this as a defense.