Debt Collector Buys Consumer’s Right to Sue
When it comes to trying to get out of trouble, debt collection companies and debt buyers will do just about anything. In a move that should at least be recognized as clever, one debt buyer a few years ago attempted to buy its way out of being sued under the FDCPA.
Suits Filed Against Consumer and Debt Collector
The case began easily enough. A consumer was sued on a debt. She did not respond, and a judgment was entered against her. When she eventually learned about the suit and the judgment, she countersued under the Fair Debt Collection Practices Act (FDCPA), alleging that the debt collector’s collection and court practices were illegal.
In many cases, debt collectors who obtain judgments against consumers realize that the consumer may have little or no money to pay off the debt, and in many cases, the consumer certainly has no property or asset that can be sold to satisfy the debt.
However, here, the consumer did have one asset: the pending FDCPA lawsuit against the debt collector. The debt collector went to court, and forced the rights to the lawsuit to be auctioned off, to satisfy the collections judgment it had already obtained. The rights to the lawsuit were auctioned off and purchased. Who purchased the rights to the suit against the debt collector? You guessed it—the debt collector itself (for a whopping $250).
Because the debt collector then owned the lawsuit against itself, and not the consumer, the consumer’s FDCPA lawsuit was dismissed by the court.
Legal or Illegal?
Many feel that what the debt collector did violates the FDCPA, and that a consumer’s federal rights should not be able to be auctioned away. Even if technically legal, the scenario surely violates the intent and spirit of the FDCPA.
Although this kind of thing has not become a trend, it certainly could. In many cases, collection lawsuits are filed, and consumers countersue in the same suit for FDCPA violations. A debt collector could rush its own collection case to judgment, and admit that the FDCPA counterclaim continues. However, once judgment in the collection suit is entered, the collector could then proceed to force the rights to the FDCPA case to be auctioned off.
The case is also a reminder that your contingent assets are still assets. A contingent asset is something that is owed to you, but you don’t have yet. For example, your company may be providing you a bonus, you just don’t have the check yet.
Personal injury cases are often contingent—you may have a pending lawsuit, that at some point in the future will settle or go to trial. Although you don’t have a verdict, a decision, or any money from the suit, the right to the lawsuit is still a contingent asset that a collector can try to take to enforce a judgment.
Questions about foreclosure, debt collection, or consumer credit problems? Contact the Miami consumer rights attorneys at Jacobs Legal today.