Part 3 in Series on Debt Collection Lawsuits
There are a number of different steps that occur in any debt-collection lawsuit filed in North Carolina courts. I previously explained the first step, service of the summons and complaint, and the second step, the answer or motion to dismiss. This post explains the third step in a debt collection lawsuit filed by a collector or debt buyer: discovery.
“Discovery” in a lawsuit is the process under which you have the right to see all the evidence that the debt collector has, and which it would use to prove that you are allegedly liable for the account at issue. This is the most time-intensive stage of the case, except for trial. In a collection lawsuit, like with most lawsuits, discovery is conducted under the North Carolina Rules of Civil Procedure.
Discovery makes a broad range of information is available to you about the debt collector’s claims and documents. Under Rule 26, each side is entitled to obtain “anything that would make the existence of a fact that is a consequence to the determination of the case more or less probable.” This permits extensive inquiry.
Metaphorically, you get to see all the cards in the debt collector’s hand (and they get to see all yours). This is why most lawsuits settle. When everyone knows each other’s cards, you are better able to assess the risk of moving forward and know whether or not to fold, i.e., to settle.
In a debt collection lawsuit, discovery usually involves trying to determine whether the debt collector owns your account, whether the assignments of your account are valid, and whether there are any consumer-protection laws that have been broken in the course of collecting.
There are five general categories of discovery:
(1) requests for production, (2) interrogatories, (3) requests for admission, (4) depositions, and (5) subpoenas to third parties.
1. Requests for Production
Requests for production may be sent by either party to the other pursuant to Rule 34. A request for production permits you to examine and copy any documents or things in the debt collector’s possession.
Our office typically asks for documentation of the assignments, the forward flow agreements, correspondence and dunning letters sent to you, lawsuits or complaints filed against the debt collector by other consumers, other documents related to the securitization of the debt, and the contracts pursuant to which your debt was allegedly purchased. These documents are frequently inexistent, incomplete, or fail to be produced at all.
Interrogatories maybe sent pursuant to Rule 33. Interrogatories are written questions to the other side that must be answered in writing, under oath, under penalty of perjury. The responses are usually written with the assistance of the other side’s attorney, so, as a practical matter, they are frequently of limited assistance.
In interrogatories that our office sends in debt collection lawsuits, we ask for things like the default date, the amount the account was purchased for, dates of the alleged assignments, regulatory actions taken against the debt collector, and other questions raised by the debt collector’s complaint against you.
3. Requests for Admission
Requests for admission are sent pursuant to Rule 36. Like interrogatories, requests for admission are written down and must be answered by the other side in writing. The difference is that requests for admission usually demand that the debt collector admit specific issues in the case. Whereas interrogatories seek unknown information, requests for admission seek to limit the scope of the case. These are usually sent after written discovery is complete.
For example, a request to admission that our office sends might demand that a debt collector admit that, aside from the documents already produced, there is no other evidence in their possession or control related to the case. Or, a request for admission might ask the collector to admit that one of the so-called “assignments” of your account does not actually reference your name or account number (a common issue).
Depositions in debt-collection lawsuits are conducted pursuant to Rule 30. A deposition is usually conducted in the conference room of one of the attorneys. A court reporter will be present to transcribe the entire proceeding. The attorney will ask direct questions to a representative of the other side. The deponent’s attorney is not permitted to answer for their client and can only object to certain types of questions.
In a debt collection case, our office deposes a representative of the debt collector about the issues in your case. The debt collector’s attorney can also depose you and ask you questions under oath. Transcripts of the depositions may then be used at trial.
5. Subpoenas to Third Parties
The final type of discovery in a debt collection case is subpoenas to third parties. The court rules permit requests for documents and depositions of people or companies that are not a party to the case.
For instance, in a debt collection suit, a company like Unifund, Midland Funding, Portfolio Recovery Associates, or LVNV might be the plaintiff suing you. The original creditor for the account, however, was a credit card company — someone like Capital One or Barclays Bank. Even if the original creditor was not named in the lawsuit, you can still send document requests to them or even depose one of their employees.
Even though all these types of discovery are available in a debt collection lawsuit, and even though it seems like there may be vital information that will be uncovered, discovery in the most debt collection lawsuits is often anti-climactic.
Most of the time, the debt collectors simply do not have much information. Most of the time, the documents that they produce are of limited utility. It may come as a surprise, then, that that is not necessarily a bad thing.
Why isn’t a bad thing that debt collectors frequently produce very little information? It all comes back to the North Carolina Rules of Evidence, specifically, Rule 104. The debt collector must prove by a preponderance of the evidence but that the account was yours and that the collector holds a valid assignment of the account. If the debt collector does not produce enough information to show that it does hold an assignment of your account, the collector will probably lose at trial.
This is the key to many debt-collection suits — because most debt collection law firms file numerous lawsuits at a time, it is often not worth it to them to have to spend too much time fighting about it. After all, debt collectors win about 99% of their cases. It is only the few consumers who stand up for their rights who have a chance against debt collectors in debt buyers.
DYE CULIK PC | Consumer Protection Division is a consumer-protection law firm in Charlotte, North Carolina and Boston, Massachusetts. Our attorneys represent consumers and small business against debt collectors, creditors, credit reporting agencies, banks, and mortgage companies.
SERIES ON DEBT COLLECTION LAWSUIT STEPS