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Judge: 90 percent of credit card debt collection lawsuits flawed

The only thing worse than harassing debt collectors are companies who attempt to collect on bogus or erroneous debt. According to a recent report, credit card companies are having some of the same paperwork difficulties that plagued the mortgage lenders when they attempted to foreclose on mortgage debt with incomplete or erroneous documentation. With the recession and recent hard times hitting many Coloradoans and others around the country, many credit card companies are struggling with keeping up on their credit card debt collection efforts.

As a result, many of the bigger companies, such as American Express, Discover Financial and Citigroup are choosing to file lawsuits in an effort to collect on delinquent credit card debt. The problem is, these companies are relying on error-filled or incomplete or inaccurate documents and vague witness reports, according to judges that hear these cases. These judges said that a number of lenders are filing lawsuits disregarding accuracy and attempting to collect debts from consumers without the proper evidence required.

That means if you disagree or dispute a credit card debt or debt amount, there is probably a good reason to.

Thanks to the foreclosure crisis and mass filings of foreclosure requests, many Americans are familiar with the term "robo-signing," now this same practice appears to be in use when it comes to filing lawsuits in an effort to collect on credit card debt. Banks are preparing similar documents for each case without first reviewing them for accuracy or even legitimacy. In fact, one civil court judge out of Brooklyn, New York, claims that "roughly 90 percent" of all the credit card debt lawsuits are flawed in that the lender cannot prove the debtor even owes the debt.

Case in point: last year, American Express sued one account holder for $16,000. The consumer admitted to being late with payments however disputed the total amount in the lawsuit's claimed debt. After an employee of American Express provided the court with the same general testimony she had given in prior cases the judge tossed out the case claiming her testimony amounted to nothing more than "robo-testimony."

Whenever a consumer suspects a company of either illegally attempting to collect on a debt, or using harassment or other intimidating tactics to collect on a debt, it can be beneficial to consult with an attorney who can explain your rights and what you can do to ensure the collection efforts are legitimate and legal. An attorney can also explain your options for filing bankruptcy, which may allow you to discharge much if not all of your credit card debt.

Source: The New York Times, "Problems Riddle Moves to Collect Credit Card Debt," Jessica Silver-Greenberg, Aug. 12, 2012

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