According to American Banker, JPMorgan Chase Bank is being investigated by lawyers representing Mississippi Attorney General Jim Hood, and other states are following suit. Apparently there’s some concern that Chase has been selling defaulted credit card accounts to third-party debt collectors without proper documentation.
Here’s what you need to know – and why you should care.
The Issue Of Chase’s Debt Sales Practices
The states looking into the matter are trying to figure out whether Chase sells delinquent accounts without actually confirming past-due balances. Consumer advocates fear that bank is selling unreliable or in some cases extinguished accounts to debt buyers, who then turn around and sue consumers without disclosing doubts about the accounts’ veracity.
This all stems from disclosures early in 2012 that Chase employees were ordered by managers of a credit card processing facility in San Antonio to robo-sign affidavits attesting to the accuracy of debts owed by Chase customers. The bank allegedly relied on old computer systems with inaccurate records.
The Impact Of Improper Documentation On Chapter 13 Bankruptcy Cases
If you file for Chapter 13 bankruptcy, your creditors are required to file a Proof of Claim in order to get paid through your Plan. A failure to file a Proof of Claim extinguishes the creditor’s claim against you after the case is completed.
The rules governing the filing of Proofs of Claim are technical, but simple enough. A creditor needs to provide proof that you owe the debt. A failure to do so leaves the door open for your lawyer to object to the claim and deny payment to that creditor. If your Chapter 13 Plan provides for payment of 100% of the filed claims, knocking out a false claim will save you money.
If You’re Sued For A Debt
When you’re sued for a debt, the creditor or debt collector is required to prove to the court that you owe the money, that it’s a legally valid debt, and that it’s collectible. It’s up to you to raise those defenses and demand proof, but when a debt collector can’t prove the case then it’s going to lose. Their loss, your gain.
Suing Debt Collectors
The Fair Debt Collection Practices Act regulates the ways in which debt collectors can try to collect money from you. In California, our Rosenthal Act provides most of the same protections but extends the regulations to original creditors such as Chase.
Under the FDCPA, a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. That includes misrepresenting the character, amount, or legal status of any debt.
If you’ve been contacted by a debt collector, you likely want to get some proof that you owe the debt before forking over your hard-earned money. If the numbers don’t match up or if the proof is (ahem) unavailable, you may want to talk with me about taking action.
Always Be Watching
The bottom line is this: when it comes to debt collectors, you’ve got to be on the lookout at all times. Keep notes, demand proof, and talk with a lawyer who knows the score. An ounce of prevention will not only protect your rights, it might also save you a fistful of cash.
Image credit: Digiart2001 | jason.kuffer
Jay S. Fleischman, the Managing Attorney of our Southern California office, speaks regularly at national events on the subjects of credit, debt, bankruptcy, and consumer protection. 
David B. Shaev, the Managing Attorney of our New York office, has been a bankruptcy lawyer for over 35 years. 
