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July 13, 2012

How do I know if the amount demanded by the debt collector or debt buyer is accurate?

Posted by Dan Dewoskin in Blog, Debt Collection Defense

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Debt buyers file lawsuits demanding amounts that may not be familiar to you.  It is important that you know down to the penny how they calculated that amount and whether or not they are illegally collection interest or fees they are not entitled to collect.    One of the most important questions a person can ask when he or she is being sued for a debt by a debt buyer or credit or even harassed by debt collectors over the phone is “How do I know that I owe you that amount?”  This seems like it should be an easy question, but unfortunately it requires some work and some real analysis.  The last person in the world you should ever trust as to how much you owe is the person or company trying to collect from you.  They do not have your best interests in mind and stand to benefit from giving you inaccurate information.  Don’t just take their word for it.

Companies like Portfolio Recovery Associates, LLC, or PRA for short, are in the business of buying charged off credit card debts and suing consumers for those amounts.  Often, PRA may include a statement with a lawsuit that will have some amount that it claims it is due.  However, PRA may refuse to provide documentation as to how it ends up with this amount unless the case goes to litigation and it is required to do so by law.

Furthermore, companies like PRA and Midland Funding, LLC do not generate the documents that itemize or show calculations as to how much is owed by a consumer in principal, late fees, interest, etc.  Thus, at best they can only forward on what they have obtained by the original creditor, such as the credit card company, or some previous “owner” of the account, such as another debt buyer company.

If you were to go to a restaurant and have lunch with a friend, you expect an itemized bill at the end of your meal.  If the server brought you a piece of paper that said $15.28, without any description of the items that you and your friend ordered and ate for lunch, you would ask for more explanation.  You want to know that you are not paying for drinks that were not ordered and that the costs were what you recognized from the menu.

Well, in the case of a lawsuit by a third party debt buyer, you should never just take the company’s word as to how much you owe.  The company may be including fees and other charges that it is not entitled to collect.  The best way to deal with the situation is to compare the amounts demanded to your own records and notes regarding the account, but it is not always easy depending on how old the account may be.  In fact, if the account is too old, it may no longer be collectible under the law in the manner the company is collecting and the debt buyer may be liable for violations of federal law.

If you do not have your own records or notes to compare, the best thing is to demand full documentation of the debt.  This may mean that you have to use the power of the court to compel production of certain documents from the plaintiff debt buyer company or another party.  What should be clear is that, just as there is a difference between paying for what you order at lunch and paying for an extra appetizer, there is a difference of perhaps tens, hundreds, or even thousands of dollars at stake when you fail to demand proof of every one of the allegations and/or claims made by debt buyers in the course of their collection lawsuits.

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Author: Dan Dewoskin