How to Defend a Debt Buyer Case

Posted by Joseph Franks on March 25th, 2020

If you have debts that are meaningfully past due, you likely have or will at some point relate with debt buyers. Several of our clients are unaware of what debt buyers are and that the procedure for defending a debt buyer case is different from that of an original creditor or collection agency. If you are one of those facing a debt collection lawsuit from a debt buyer, you need to be aware of some important rights and defenses that you have under Federal and Illinois law. Make sure you approach an experience and skilled Illinois Debt-Buyer Lawyer in order to fight your issue.

What is the difference between an original creditor, a debt collector and a debt buyer?

An original creditor is an individual or entity that you agreed to borrow money from. If you subsequently default and fail to pay the original creditor, the creditor is likely to do several things. First, the creditor will attempt to collect the debt in-house. This mostly consists of phone calls and letters. If you have not made a payment after several months, the creditor will likely assign your debt to a collection agency.

A debt collection agency is a third-party that attempts to collect a debt on behalf of the original creditor. Collection agencies must stand by both federal and state laws when attempting to collect a debt. The most important federal law governing debt collection agencies is the Fair Debt Collection Practices Act. In the state of Illinois collection practices are governed by the Illinois Collection Agency Act and the Illinois Consumer Fraud and Deceptive Practices Act.

At some point the original creditor will “charge off” your debt. This could occur before or after it is placed with a collection agency. What this means is that the creditor is writing your debt off in order to receive certain tax benefits. Once the debt is charged off, the creditor could sell the debt to a debt buyer. Debt buyers are companies that are in the business of buying debts. They typically acquire the debt from the original creditor for pennies on the dollar. As long as debt buyers collect more from you than they paid for the debt they will turn a profit.

Debt buyers are also need to abide by federal and state laws when attempting to collect on a debt. When a debt buyer attains the debt the original creditor no longer has the right to sue you. The debt buyer, though, steps into the original creditors shoes and may file a complaint against you to collect. Opportunely, defending a debt collection lawsuit from a debt buyer gives the borrower possibly more legal defenses.