Credit Card Lawsuit

I hear it all the time. Potential clients call my office because they were pursued by collection agencies on the old credit card accounts. I told them that we can defend the case and probably win. They often say "But I owe money?"

My answer to that question is no, you do not. Most people do not realize, but here's how it works with a credit card. You can get a map of the original lender. Something happens and you lose your ability to pay if you go into default. The original creditor waits until 180 days and costs that leaves the account. At this stage, the original lender has 2 choices: 1) attempt to collect from you by filing a lawsuit, or 2) the sale of debt or bad debt buyer collection agency. Often, the initial lender chooses option 2.

When a credit card account is sold, it is not sold as an individual account, but rather as part of a group block of delinquent accounts. Typically, these accounts are sold for pennies on the dollar. A group of "good" for doubtful accounts (defined as recently default) may sell for 5 cents on the dollar. It can be sold again and again, each time at lower rates. We have seen cases where $ 1,000 of debt sold at .25.

Thus, the collection agency to purchase, then file a complaint against you. That "but I owe money" enters the scene. From my point of view, you may owe money to the original creditor when you default. If you lend money or extend credit to you, you have the obligation to repay if you do not "owe money". However, once you default and they charge compensation, they have a choice to make. They can sue or sell. If they sue, so maybe you do not "owe money". But if they sell, so I do not think you "owe money" any longer.

Here's my reasoning. You have a credit account and credit is extended. You definitely need something original lender at this point. Once you default, you still "owe money". I believe, however, that if they sell the account, you do not "owe money" because they received compensation for you by default. When they sell your account, they say they want out you and they would be compensated for the default. A collection agency comes and gives money to your original creditor account. At this point, the original creditor is out of the picture. They have received this they considered to be adequate compensation for your failure. They would not have sold otherwise, right? So if the original creditor is adequately compensated, then you do not "owe money" in my opinion.

This does not mean that a legal interest, as a credit card account can not be bought and sold. These operations are certainly legal. I'm just looking from the point of view to the debtor. If you pay nothing for the collection agency if you think you "owe money, you simply pay a pure profit for the collection agency. After all, they paid only pennies on the dollar for your account. After the first 30 or so, all the money you pay for them is pure profit. Do you really "need money"?