Handle a Credit Card Debt Lawsuit
Written by: Kristy Welsh
Last Updated: July 13, 2017
Just when you thought big banks had learned their lesson during the mortgage crisis, now comes the news some lenders are now using the "robo-signing technique" to collect on credit card debts. During the big push to foreclose on houses and displace millions of Americans, some banks were falsifying and mass-producing forged, unverified documents to use in their foreclosure lawsuits. In the autumn of 2010, major lenders such as JP Morgan and Bank of America were forced to suspend foreclosure proceedings. Eventually, a $26 billion settlement was reached between these banks and the aggrieved borrowers due to the fact they were "robo-signing" documents and were not properly documenting their foreclosure cases.
Now, credit card companies like American Express, Citigroup, and Discover are filing lawsuits and going to court trying to collect money they say is owed to them by their borrowers. But, it has been discovered their legal processes are just as faulty and fraudulent as their predecessors, Bank of America and JP Morgan. Will these banks ever learn?
Credit Card Debt Lawsuits
According to a recent article in the New York Times, the same problem that plagued the foreclosure process is now emerging in the debt collection practices of credit card companies. Lenders are churning out lawsuits in record numbers without any regard to accuracy and validity. A judge in Brooklyn, who presides over as many as 100 such cases a day, says 90 percent of these credit card lawsuits are flawed. He claims, "the lenders are not proving to the court who owes the debt nor are they able to document how much is really owed."
This article goes on to state that interviews with dozens of state judges, regulators, and lawyers indicate this incomplete and flawed documentation is becoming more and more common in credit card lawsuits. In total, borrowers are behind on $18.7 billion of credit card debt and credit card companies are scrambling to come up with ways to start collecting on this debt.
Robo-Signing and Robo-Testimony
Robo-signing is one of those terms that emerged out of nowhere and instantly became the buzz of the Internet. As a result of a federal investigation, it was confirmed that employees of Bank of America, Wells Fargo, JP Morgan, and two other banks were signing foreclosure documents without verifying the information was accurate or complete. Stacks and stacks of documents were signed or notarized without anyone reading the documents beforehand to make sure what they were signing was indeed true. Hence the term "robo-signing" was born.
This same disregard to verifying credit card debt has surfaced with a new cast of characters. Not only are employees of major lenders just signing whatever documents are set before them, but they are testifying in court on hundreds of cases without knowing anything about each case. These employees have been found to be giving robo-testimony, or the same generic testimony given in numerous cases. This was actually documented where a judge saw the same witness in several cases, saying the same thing.
There have been cases where lenders are going after customers who's bills have already been paid or the lenders are just tacking on bogus fee and interest charges. All of this is just a matter of employees being instructed not to verify anything and to just apply fees and charges across the board without looking at each account individually.
How to Win Against the Credit Card Companies
First and foremost — don't ignore the lawsuit. Credit card companies are betting you will not show up to court and they will be awarded a default judgment. It is estimated that about 95 percent of these lawsuits are resolved by default judgment in favor of the credit card company because the borrower did not show up for the hearing. Show up to court — you never know how weak your lender's case against you might be.
If you feel a bit overwhelmed with the lawsuit process, hire an attorney. There are plenty of consumer advocate attorneys out there who love to help out the little guy. More and more attorneys know these cases are a slam dunk because the lenders can not prove their case nor are they willing to make any effort to provide any supporting documentation. When push comes to shove, if you make the lender work to prove you owe the debt chances are they will not be able to and the lawsuit will be dismissed.
Lastly, amid the surge of lawsuits being filed by the credit card companies, there is a rise in the investigations being done by the Office of the Comptroller of the Currency against larger banks such as JP Morgan. With more and more employees becoming whistle-blowers, more attention is being drawn to these lenders to make sure what they are presenting to the court is accurate and valid information. Make the lender prove their case and make sure they are able to prove the debt is yours and the amount owed. If they can't — YOU WIN!