Those in Pittsburgh, Pennsylvania, worried about creditors filing a lawsuit against them for the debt they owe should be ready to fight back in court. According to a judge who oversees many cases involving credit card debt, major creditors and their collection practices are mirroring the robo-signing scandal that plagued the foreclosure market. Because of this, many cases have been dismissed, despite the companies' legal rights to collect on the debt.
This may give debtors in such instances more time to repay the debt they owe. According to the judge, who has seen as many as 100 credit card collection suits in a day, approximately 90 percent of these lawsuits are flawed and leave the companies unable to collect on the debt that they are allegedly owed.
In one such case, American Express sued a woman, who the company said had stopped making payments on the $16,000 in debt that she owed the credit card provider. The woman admitted to being behind on her payments, but said that she did not owe that much. An employee from American Express testified, but the testimony provided was so generic that the judge decided that it was not substantial enough to prove what American Express had alleged. The same witness had testified in other cases for the creditor with similar results.
The judge compared it directly to the robo-signing scandal by calling it robo-testimony. Other judges have agreed, suggesting that flaws are becoming more and more common in credit collection suits. Some believe that credit card companies are performing illegal activities by increasing the size of the debts that are owed with unapproved fees and interest charges or trying to collect on debts that have already been paid. As if people weren't having enough trouble making ends meet already.
Source: DealBook, "Problems Riddle Moves to Collect Credit Card Debt," Jessica Silver-Greenberg, Aug. 12, 2012
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