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This is the title of an ABA Journal article, except that I substituted the word, "people," in place of the word, "defendants," by Terry Carter (posted online on November 1, 2015).
The article's main point is that debt buyers clearly seem to follow an established business model (disputed by debt buyers), in which they buy the debts of people, meaning that they can then file collection suits to recover the alleged debts, and more. Debt buyers file robo-signed affidavits in large numbers with exhibits as "evidence" of the debt which in many cases is not owed by the people being sued.
Although they should not ignore these complaints, people often do ignore them, whether because the collection suits are filed in small claims courts (which they often are) and the consequences of not responding to them correspondingly seem small, or because the people who allegedly defaulted on a debt never asked for the loan, or the people do not recognize the name of the plaintiff suing them because they have never heard of it.
For whatever reason, people do not respond when they are sued in such matters -- something which the debt buyers allegedly count on as a part of their business model. When the people do respond with a lawyer, either the debt buyers dismiss their lawsuits right away (frequently) or the people represented by lawyers win on the merits (also fairly frequent when people are represented by counsel in these lawsuits, according to the ABA Journal article). According to statistics presented in the article, fewer than 2% of the people sued in these cases are represented by a lawyer, however.
When as happens in the vast majority of these cases the people do not respond, the debt-buying-plaintiffs request that the clerks enter default judgments, all without a judge ever seeing the complaint or the "affidavit" or its exhibits. Statistics in the article reflect that over 99% of judgments in such cases were entered without a trial.
"A clerk simply processed the creditor's claim based on a document stating little more than this person owes us this much, and the fact that she was served with the suit, then entering judgment after it went unchallenged." Terry Carter, ABA Journal, supra.
At this stage of the business process, the people who are sued really are debtors now: Judgment debtors. The next step in the process is that the judgment creditors -- the debt buyers -- execute upon the judgments and seize and sell the judgment debtors' assets to satisfy the judgments.
The article describes this business model as "unprecedented":
The debt-buying industry has understandably taken advantage of this and put an unprecedented burden on the nation's courts--state venues, usually small claims or others of nonrecord jurisdiction.
There is precedent for the burden placed on the nation's courts by a business model involving the calculated use of "robo-signed affidavits," however: The foreclosure crisis. In Florida, for example, the Courts were nearly overwhelmed with foreclosure suits. One way in which the Florida Supreme Court dealt with the explosion of foreclosure suits was to institute special Mediation Foreclosure procedures. The new mediation requirements in foreclosure cases have played a part in lowering the numbers of foreclosure filings, but foreclosure litigation is still a burden on the Florida Courts. Nationally, predatory lending practices of mortgage lenders and their servicers included lender force-placed insurance practices and foreclosure lawsuits based on robosigned affidavits.
By definition, such affidavits are signed robotically and are not made on personal knowledge. Robosigned affidavits accordingly contain the testimony of witnesses who do not have a clue about the truth or falsity of what they are swearing and affirming to be true. These and other similar business practices brought about a so-called National Mortgage Settlement. Neither the national settlement nor the settlements in individual cases have stopped the lenders' alleged predatory practices. See "SETTLEMENTS HAVE NOT STOPPED LENDER FORCE-PLACED INSURANCE PRACTICES OR LAWSUITS," posted on Insurance Claims and Issues Blog on Monday, December 14, 2015.
Obviously, that includes robosigning.
A solution in some States, such as in California, has been to enact legislation to address the debt-buyers' business model and litigation practices. Other States, such as New York, have enacted new Rules of Court to deal with the same issues. However, as is noted in the ABA Journal article, clerks of Courts are still so overwhelmed that no-one can confirm compliance with the new laws or with the new rules, as the case may be.
Until the clerks get their heads above water and their desks above paper filings, something can be done to further justice and slow the cause of injustice in the interim. Clerks can refuse to enter defaults; they can refer the cases to judges. Judges for their part can and must refuse to enter judgments which are not based on admissible evidence. Anything less and the clerks and the Courts will continue to complain about being overwhelmed, and as in the case of their cousins the mortgage lenders and mortgage servicers filing foreclosure lawsuits, the plaintiffs who file debt collection cases will demand that the judicial system now take steps to "streamline" dockets and reduce obstacles such as evidence, in order to accommodate the massive and overwhelming numbers of collection lawsuits which these debt-buying-plaintiffs file.
Or else they will overwhelm the system, they will say.
Please Read The Disclaimer. ©2015 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). The National Mortgage Settlement and the shameful practice of "robosignings," among other practices, are addressed in § 4.3 in particular. All rights reserved.
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