Proving Ownership of the Debt – How Big is that in Debt Law?


Proof of Ownership of the Debt – How Hard Can it be?

To download a free copy of this article in pdf form, click here: How Hard is Proving Ownership

I get comments like this all too often: “A debt collector got a judgment without even proving ownership of the debt.” It makes me feel bad, but it makes me angry, too. Let’s talk about proof of ownership and then seque to a larger point – the point that ever person being sued by a debt collector MUST LEARN.

Proof of Ownership

It is not hard to prove ownership in the law. For a car or piece of real property (land), you just need a title (car) or (deed). You get them, essentially, by the seller giving the buyer a bill of sale which in turn gets verified by the state.

The state procedures complicate things a little bit, but it’s basically a very simple, rubber-stamped process. It is a mistake to regard this process as much of a hurdle or legal protection against the collectors. It isn’t in anybody’s interest to make it difficult or unpredictable – on the contrary.

Selling a debt is easier than selling a car. You need a bill of sale that identifies the thing being sold. And that’s all. Our commercial system favors a simple sales process because people believe that where there is easy and rapid commerce, there will be more commerce, and that makes everybody better off. That’s the theory, anyway.

It is Possible to Blow it

Now, as it happens, debt collectors sometimes do not satisfy this very simple process. How? By not identifying the thing being sold.

A typical debt bill of sale document says, “I, Bank, hereby assign all rights to the following debts to Debt Collector. See Attachment A for the debts assigned.” Sometimes – and quite often, actually – the debt collector, in attempting to prove it owns the debt, neglects to attach the “Attachment A” to its proof. That leaves the bill of sale unconnected to any specific account and thus fails to prove that the debt collector owns the debt.

The courts should always take that failure seriously, as it really does mean the debt collector did not prove it owned the debt. If it happens at trial, and you demonstrate the failure of proof, it should result in instant dismissal of the case because you have shown that the plaintiff has not established a constitutional requirement – that it be a true party in interest.

Still, you can see how it is basically a technicality, and you should know that the courts don’t like technicalities that help people avoid debts.

Chain of Title

Now let’s go one step further. Suppose a debt collector buys a debt and then sells it to another
debt collector. That happens all the time. If either of the bills of sale forget to attach “Attachment A,” then you say that the debt collector cannot prove a “valid chain of title.” That’s because with rare exceptions, a party that does not own a valid title cannot sell a valid title.

Again, though, not all courts are sensitive to the justice of this “technical” rule. It is NOT really a “technical” rule. Proof of title is critical to making sure that the plaintiff is the correct party in interest, as a bogus suit which manages to get a judgment against you will not bind the person with a legitimate title. If they scam you enough to get a judgment, then this will not stop the person with the legitimate title from suing you. Why should it? And that means you might have to pay twice.

Nevertheless, the courts have treated this requirement as if it were a technicality because it can look like the debt collector simply overlooked that element of the proof. You will be burned sometimes if this is all you depend on. Even though in my opinion you should always win.

The Bigger Issue of Attacking on ALL Fronts

Okay. Now let’s move on to the bigger issue. We put out a video called “The Most Dangerous
Myth for People in Debt” which may give you some insight into this question. The point there is that is that you cannot depend on other people – not courts, debt collectors, or opposing lawyers – to help you. You can’t depend on them to do the right thing.

In the real world, what you have to do is pile up as many reasons to do the right thing as possible and hope that one of them works.

If they don’t legitimately prove ownership you should win and probably will win more than 50% of the time. If that’s all you’ve got, you go with it, right?

But if you’ve got a debt collector, you know the chances are strongly against them having
legitimate, admissible evidence of the amount of the debt.

So you attack that, too.

They probably don’t have good evidence that you owe any debt, or that the original creditor
ever sent you statements, so you attack those things, too.

Any time you stop attacking before you run out of things to attack, you’re depending on someone else to take care of you. You’re hoping they’ll do the right thing without having been told all of the reasons to do so.

And how do you know what to attack? By doing discovery, by probing, researching, thinking… by doing everything you can, in other words, to find out what to attack. Our materials help you develop a full plan of attack and help you at every stage in implementing that attack, from answering the petition and submitting discovery, to motions and eventually trial.

Whether you use our materials or not, make sure you keep attacking the debt collector’s case until there’s nothing left to attack. Then you can hope to win.

Your Legal Leg Up

Your Legal Leg Up is dedicated to helping people defend themselves from debt lawsuits without having to hire a lawyer. Lawsuits have a number of points where specific action is called or, and we have products to help you deal with most of these situations. We also have memberships that give you access to more materials and better training, and also provide a regular opportunity to ask questions and get answers in real-time. You can use this time to find out what the debt collectors are trying to do and what you might do in response, and you can get guidance on the issues that matter and how to think about and address them.

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Should I Buy Your Motion to Dismiss Pack?

Short Answer: Only if you need to file a motion to dismiss.

Long Answer – As follows:

When Should One Purchase our Motion to Dismiss Pack?

A lot of people buy our Motion to Dismiss Pack on the theory that they want the case against them to go away. It isn’t as simple as that. The motion to dismiss pack is applicable to situations where (1) you have filed a counterclaim and the debt collector moves to dismiss it, or (2) you have some legal basis for arguing that even if everything the petition against you is considered true the debt collector does not have a right to collect from you.

The first of these possibilities – that you are defending against a motion to dismiss – is obvious. If they want to dismiss, you will probably want to defend against that. Your motion to dismiss their claim is more of the question.

Purpose of Motion to Dismiss

A motion to dismiss is a way to “test the adequacy of the petition.” It is NOT a way to test whether the debt collector has evidence to support its lawsuit. Motions to dismiss are therefore appropriate, most generally, when you have a challenge to the company’s right to sue you in a specific court or in general, or when you have a challenge to the court’s power over you. There are also what are known as “equitable” considerations we will discuss.

The Debt Collector’s Right to Sue You

The main way this comes up is in jurisdictions where they have passed regulations on debt collectors which the collector has not followed. Most typically this is an issue of registering or not. Several states require debt collectors to register in some way before pursuing debt – and debt collectors often ignore those regulations. If yours did, a motion to dismiss on that basis would be a good idea.

Another way the right to sue you comes up – much less frequently – is that the petition fails to allege ownership of the debt. This could happen, for example, where ABC Collectors are suing you on a Citibank credit card. If they allege in the petition that they bought the debt, then you will want to find out what evidence they have, but this is part of the suit and not a motion to dismiss. If they fail to allege why you’re supposed to owe them on a debt apparently owing to Citibank, a motion to dismiss is probably in order.

The Court’s Right to Hear the Case

You may want to challenge the court’s power to hear the case against you. This arises in two ways. First, the suit could be brought somewhere other than the jurisdiction in which you live. You live in X county, and they bring suit in Y county and you never lived there. That would likely deprive the court of jurisdiction over you and constitute a violation of the Fair Debt Collection Practices Act.

The other, more common, reason for this sort of motion to dismiss has to do with service. Were you served correctly? And this question can be rather complicated. For present purposes, we merely say that a motion to dismiss is the appropriate way to challenge the court’s power over you, and this is a motion you would want to file before taking any other action in the suit. If you think you were not served properly, in other words, you will probably want to file a motion to dismiss.

“Equitable” Circumstances

There are certain gray areas that might be appropriate for a motion to dismiss, and these are called “equitable” considerations.

“Equity” is a historical reference to the way courts used to be in England, but for our purposes they refer to something more like moral rightness. If the debt collector waited too long to bring suit, if it did something to prevent you from making payments, or if you settled the case previously and they still sued you might all be examples of equitable defenses. While they DO involve evidence beyond the pleadings (the normal boundary line for motions to dismiss), you could probably bring these things as motions to dismiss. You would also be wise to plead them as “affirmative defenses” in your answer if you file an answer

What Motions to Dismiss are NOT for

You don’t file a motion to dismiss because you aren’t satisfied with attachments to the debt collector’s petition or don’t think they have the proof. Yes, you’ll attack their case – but later, and in another way. You don’t file a motion to dismiss because you just want the case to go away. And you don’t BUY a motion to dismiss pack here as an inexpensive way to defend the case in general. Our motion to dismiss pack is a specific product aimed at a specific situation. If it doesn’t apply to your situation, you will simply want to get the Gold Debt Litigation Membership and start doing the things you need to do to win the case.

Motions to Dismiss when Sued for Debt

Motions to dismiss are different from Motions for Summary Judgment Motions. They rely only on the pleadings. This video explains what a motion to dismiss is and how to deal with it if you’re pro se.



You Can Get A Motions to Dismiss Pack

One of the best defenses to a lawsuit is a motion to dismiss, and often you must file your motion to dismiss before filing an answer or you will lose important rights. On the other hand, the debt collector may well file a motion to dismiss your counterclaim or even affirmative defenses. This Motion to Dismiss Pack helps you file a motion if you need to – or defend against the motion if the plaintiff files on against you.

It contains

  • Instructions
  • Motions to Dismiss in Debt Cases Report
  • Sample Motion to Dismiss Plaintiff’s Claims for Breach of Contract and Account Stated” in pdf and Open Office (Word compatible) formats
  • Sample Memo In Support of Motion to Dismiss in pdf and Open Office (Word-compatible) formats
  • Sample Memo in Opposition to Plaintiff’s Motion to Dismiss Counterclaims in pdf and Open Office (Word-compatible) formats
  • Basic instructions of legal research

These are the things you will need to attack the pleadings of the debt collector and begin your defense of the lawsuit. In many cases you need to do this before filing your Answer or you will lose certain important rights.

Sample motion to Dismiss

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Motions to Dismiss for Failure to State a Claim

A Motion to dismiss is a request to the court to “kick out” the case against you. It isn’t based on evidence that you have or could produce or show (a motion for summary judgment is the way you do that), but rather is designed to “test the sufficiency of the pleadings.” Debt defendants tend to overuse the motion to dismiss – or to “over-rely” on them. They often do not work, but filing them can be a way to familiarize yourself with the law and to slow the pace of the lawsuit – things which are helpful to pro se debt defendants.

In plain English, a motion to dismiss argues that the plaintiff has not alleged enough facts – even if everything it does allege is considered true – to make a claim against you that the law would recognize. I have, in other articles, compared it to a speeding ticket for “driving 25 mph in a 30 mph zone.” It just isn’t illegal to do that, and the case would get kicked out.

Of course it is rarely so simple. From time to time I suggest possible violations of the Fair Debt Collections Practices Act (FDCPA). For example, I have suggested that including the supposed right to verify in the Petition is deceptive and unfair. Eventually someone will allege that in a counterclaim, and the debt collector will probably file a motion to dismiss, arguing that including that language in the petition does not violate the FDCPA. So you can see from that example that motions to dismiss can be brought against counterclaims as well as claims in a Petition.

Procedure for Motions to Dismiss

Motions to Dismiss are controlled by the Rules of Civil Procedure for your jurisdiction. Find the appropriate rule by looking up “motions” or “motion to dismiss.” You will see that there are many enumerated bases for motions (at least in Missouri). In general, if the argument is that there simply isn’t a right to the relief requested from the court (as in my examples above), you can usually file this motion at any time because the court really lacks the power or authority to do something the law doesn’t allow. If the argument is about whether the court has authority over you, on the other hand (because you weren’t served correctly, for example), you would probably need to bring a motion to dismiss before answering the petition.

You can, and probably should, in general, bring a motion to dismiss before you answer a petition. In other words, if you file a motion to dismiss, you almost certainly do not need to file an Answer. The motion stops the clock on the time for responding. If you lose the motion, the court will order you to respond to whatever part of the petition or claim that remains.

It isn’t always clear who needs to “set” the motion to dismiss for a hearing. In general I suppose it is whoever wants the case to move forward – and that usually means the debt collector. The case will not move forward until the motion to dismiss is resolved. Sometimes courts will dismiss the entire action for “failure to prosecute” if the debt collector does not call the motion. Sometimes the judge will pressure the defendant to argue the motion or will deny it if it isn’t set for argument. This seems to depend on the personality of the judge.

For a sample Motion to Dismiss a simple debt collection, please click here.

Incidentally, these motions are sometimes called “motions to dismiss for failure to state a claim,” and that is the name of federal rule 12(b)(6) (and many state court rules as well, which are usually identical). Remember that you won’t be bringing your motion under federal law but whatever your applicable state law is.

Kicking Debt Collectors out of Court – Jurisdictional Issues

We discussed two kinds of jurisdictional issues in a recent teleconference – two different issues that call for very different responses.

In this video we’ll discuss what happens when the debt collector doesn’t show its ownership of the debt and when you are not properly served with the lawsuit.

– Jurisdictional Issues in Debt Law


Ownership of the Debt

When debt buyers bring a lawsuit, their ownership of the debt is always in question. It won’t be their  name on the debt instrument or contract,  and they will have purchased the debt – gotten it on “assignment.”

There is nothing wrong with that, let me emphasize. Most debts are freely transferrable (unless either a contract or law says they can’t be transferred) – so in most cases this will not be an issue. But what is an issue is proof of ownership. Only the true owner of a debt is permitted to bring a lawsuit. In a way that’s a no-brainer, isn’t it? If I happen to hear that someone owes you money, I can’t sue them for it can I?

No – if I want to sue, I must prove that I am the “true party in interest.”

Without the true party in interest’s participation, the court  does not really have jurisdiction over the subject matter of the case. If I bring suit on a debt someone else owes you, and that person gets around to pointing out that I don’t own the debt,  the case should be dismissed immediately – without prejudice. If the person being sued does show that the plaintiff cannot prove ownership, the proper response by the court is to dismiss immediately without taking any other action – it can’t make a judgment about the validity of the debt without the real owner being present.

You can attack ownership of the debt at any time, and in a debt case you should always contest the issue not only because you might win, but also because  debt collectors actually try to collect debts that don’t belong to them fairly often. You should always make them prove it.

In the case of the big junk debt buyers, they often will have a so-called “bill of sale” between the original creditor and the junk debt buyer. It will say that the  creditor is selling and assigning umpteen million dollars worth of debts to the debt collector. It will mention an attachment with the numbers of the accounts sold.

And it will often not have that attachment or anything else linking your account to that sale. That is inadequate proof of ownership. It is no proof of ownership. If you attack the case on that basis it should be dismissed – unless the debt collector can supply the information. For some reason,they often cannot.

You can make this argument at any time.It isn’t waived by you participating in the case. Any time you can prove the debt ownership isn’t established, the case should go away.

Sewer Service

Sewer service is different. In this situation, the process server threw the summons into the ditch while the defendant was watching and then swore to having given the summons to the defendant. In that situation, the defendant is forced into a choice: attack the court’s jurisdiction immediately by motion to quash, wait and attack jurisdiction, or defend. If you take actions to defend on the merits of the case – you say you don’t owe the money – you will likely be “waiving” or letting go your attack on the court’s jurisdiction.

If there is anything suspicious to you about the way you were served, or if the language of the petition filed against you is not clear or understandable, you need to look at your rules of civil procedure – under the “pleadings” section – before you file an answer. Otherwise you risk waiving your attack and “consenting” to whatever was wrong. Sometimes you can lose your best defenses if you do this.