Yesterday I was telling you about Frank, Shirley and Kelly, and I could have told you about dozens, possibly hundreds, more. Their stories are typical of people being sued by debt collectors, and they’re typical of the people who choose to stand up and fight.
You may have noticed I didn’t say anything about whether Frank, Shirley or Kelly actually owed any money.
Actually, they probably did. There was some question in my mind about Kelly’s suits, and in all of them there was certainly a question about how much was owed, or to whom. But did they owe the money to someone? I’m almost sure they did. That is the situation faced by a majority of people being sued by debt collectors, and it doesn’t matter.
Law suits are a question of evidence, as I will discuss a little later – the debt collectors have to prove you owe the money if you fight, and they usually can’t.
On the other side of that, I know of plenty of people who have told me they didn’t owe anybody any money, but they didn’t fight. In those cases, the debt collectors got their judgments. A lawsuit is a contest. It isn’t about what is true – it’s about what you can prove (or not). Beating the debt collector is first about answering and then making them prove their case. It takes more than that, though, because they do have tricks up their sleeves.
So let’s talk briefly today about the debt industry and their tricks. We’ll follow up on this tomorrow with how it plays out in court – and what you can do about it.
The Debt Industry
American debt – and particularly consumer debt – has run completely rampant over the past twenty years. Americans now owe over a trillion dollars in consumer debt (mostly credit card debt), and much of that is “stressed.” Auto loans are another trillion, much of it “stressed.” That is, the people owing are walking on a tight line, and if anything happens, they could get knocked off it. And stuff does happen. You know it does. After a couple of late payments, loans are considered stressed, and it doesn’t take much more for people to stop being able to pay at all.
It’s actually impossible to get definite numbers, but it looks like at least a million lawsuits get filed per year based on consumer debt. It may be far more than that. When I was practicing law almost ten years ago, it was not unusual for over a hundred cases to come up in a single day in a single court room. And on one day there were over 700 cases on the docket. On a single day! In a single court room! In one county – in Missouri, hardly the biggest or most daring state of the Union.
In other words, when we talk about debt collection, we are talking about a truly gigantic machine. And I don’t need to tell you that most of the people getting “processed” by that machine are not Rockefellers. No, they’re normal, regular people, who in many cases were lured into unsustainable debt – and in almost all the cases certainly never wanted not to pay what they owed. But stuff happens.
Consumer debt is “transferrable.” That means that if you owe me $100, I can sell the right to collect that money to someone else. Don’t fall for the people who say that isn’t true – I’ve seen some of their videos on Youtube, and they’ll get you in trouble. A whole lot of debt gets sold in the U.S.
What happens is that big creditors – and this is mostly the banks that issue credit cards – sell debt that is in default (“bad” debt) to companies that specialize in collecting it. These companies are pretty big, and they end up with a whole lot of “claims” they are trying to collect. That all make sense to you?
And so on those days I mentioned where there are a hundred – or several hundred – lawsuits in court on a single day, there might be only a few debt collectors, and a few lawyers representing them, there at the time.
How can they do all this? Only one way. For the process to work, almost everybody being sued has to give up!
Most of them do it by not showing up at all (defaulting), but plenty of them do it by showing up to sign “whatever” it takes to delay the problem for a while (“give-up settlements”). Not two in a hundred actually fight – and probably not even one.
That means a single lawyer could “process” several hundred thousand dollars’ worth of judgments in an hour or two. Not bad work if you can get it! – If you’re a lawyer who doesn’t mind doing that to people.
If you’ve watched some of my videos, you may have seen me talk about debt law being “factory” law, and that’s what I mean. One lawyer handling a hundred cases in an hour – that’s assembly line work. So what does that mean to you? And how can it be helpful to know?
Whether you are being sued by a debt buyer or original creditor, you are being sued by a company that has a certain, routine way of doing what they do. They follow this routine because (1) they have so many cases; and (2) they need to keep their expenses to a minimum; and (3) it usually doesn’t matter what they have or do because most people will automatically give up once the lawsuit is filed.
In that scenario, spending any money on building their case is a waste of money, and debt collectors don’t like to do that. So they don’t.
Please understand: I’m not saying debt collectors are dumb or lazy. Economics drives their decision to do almost nothing to prepare their cases. And it is these same economics that give us such a good chance of winning. Your key to defending yourself and what you have is to take intelligent action. If you can do that, you can turn the tables on them completely.
Sounds so simple, right? We’ll show you why it’s true tomorrow.