If A Debt is Claimed is a Debt Owed? The Need for Record-keeping and Responding!


A recent article in the American Banker provides an example of the many problems with an industry practice of selling aged debts to debt-buyers.  Bank of America sold portfolios of credit card debt to CACH LLC, a volume debt-buyer which collects on debts across the United States.  A portion of the debt sold by BoA to CACH was either discharged in bankruptcy or already repaid.  The face value of the portfolio was $65 million but CACH bought the portfolio for pennies (actually 1.8 cents) on the dollar. 

The sale of aged debts can mean problems for an unsuspecting and unprepared consumer.  If the consumer repaid the debt already or it was discharged, the consumer rightfully believes the debt is resolved.  However the company that purchased the debt may ignore this resolution and undertake to harass the consumer for payment or, even worse, sue on the debt.  As the plaintiff—the party filing the lawsuit—the debt-buyer has the burden of proving the consumer still owes the debt.  This burden must be met before the consumer has any obligation to pay.  But many consumers do not know how to go about holding the plaintiff’s feet to the proverbial fire and, even worse, some consumers do not even respond to these lawsuits.  Result:  the debt-buyer wins even though it lacks the legally required proof.

 The moral of the story is that consumers should keep all records of satisfaction/payment in full/settlement in full and other final resolution of a debt.  “Zombie debts” can return to life at the most inopportune times.  If you are contacted or sued on a debt that you believe you have already resolved you may have valuable defenses and counterclaims (meaning possible money for you!).  If you find yourself in this situation contact Attorney John O’Neal for a free initial consultation.

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