Debt Collectors Lie to the Courts, a New York Federal Court Finds

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Debt Collector Lied to Courts

A New York Federal Court found that a certain debt collector has been lying to courts on a grand scale.  The procedure is a little complicated, but an explanation will highlight some of the issues debt collection defendants frequently face.  In this particular case, the debt collector essentially manipulated Courts into granting default judgements against defendants that never knew they were being sued, and without proper evidence of the debt that was owed.

The Court found that a Debt Collection agency engaged in what is known as “sewer service.”  “Sewer service” occurs when defendants aren’t properly notified that they have to appear in court.  After failing to properly notify the borrowers that they had to appear in court, the debt collector would seek a default judgement against the borrower.  When the judgement was granted, the debt collector would then submit an affidavit of personal knowledge of the debt.  With the affidavits, debt collector employees swear to the courts that they have personal knowledge of the debt owed.  In this particular case, the affidavits were actually “robo signed” – that is, they were printed out in batches of fifty.  The debt collector employees were only checking one out of each batch.

So, basically, the debt collector sued borrowers without telling them to come to court,  then asked the court to sanction the borrowers for failing to appear by entering a default judgement against them.  Then, when it came time to prove that the borrower owed money in the first place, the debt collector forged the evidence.

This particular debt collector did this to more than 100,000 borrowers.  That’s a big number.  It would be comforting to think that this decision would dissuade other debt collectors from taking similar actions, but when so many borrowers don’t even challenge the debt collectors’ tactics, they have every incentive to continue violating the law.

Read more about the case here.

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