If you’re sued for credit card debt by someone else other than the original creditor, that “third-party debt collector” has an extra burden to prove in court in order to win.
A third-party debt collector, properly referred to an “assignee,” is typically a debt-collection firm that buys accounts that are in default from creditors. They purchase the accounts, often for pennies on the dollar, and initiate aggressive collection efforts to recover the amount they believe is owed on the original debt. Often the consumers that are sued for credit card debt have never heard of the assignee and, as a result, demand proof of the original debt. Unfortunately, the assignees rarely have physical evidence of the original debt, which often leads to their inability to collect on it.
In DNS Equity Group Inc. v Lavallee, Nassau Dist Ct, Feb. 22, 2010, Ciaffa, J., index No. CV 12388/09 (2010 NY Slip Op 50298 [U] [26 Misc 3d 1228 (A)]), a Second District Court of Nassau County case, a third-party debt collector/assignee, sued for credit card debt that originated with Chase Manhattan Bank. DNS Equity clearly stated in its complaint that it “is the assignee and/or purchaser of all rights and privileges of the credit issuer (to wit, CHASE MANHATTAN BANK) which issued a credit card to the Defendant(s).” The defendant timely filed an answer, setting forth a general denial of the debt. Shortly thereafter, the plaintiff filed a motion for summary judgment, and included copies of billing statements showing charges by the defendant, and evidence of payments and credits applied to the Chase Manhattan Bank credit card account.
When Sued for Credit Card Debt, What Does a Third-Party Debt Collector Have to Prove In Court to Win?
Credit card debt law is well settled in that a third-party debt collector must present proof of its status as an assignee to the person sued for credit card debt (see Palisades Collection, LLC v Kedick, 67 AD3d 1329, NY Slip Op 08259 [4th Dept 2009], Rushmore Recoveries X, LLC v Skolnick, 15 Misc 3d 1139 [A], 2007 NY Slip Op 5104 [U], Citibank, N.A. v Martin, 11 Misc 3d 219 [Civ Ct, NY County] and Palisades Collection, LLC v Gonzales, 10 Misc 3d 1058 [A], 2005 NY Slip Op 52015 [U] [Civ Ct, NY County]). The third-party debt collector also must submit proof that the debtor was given notice of the assignment (see Caprara v Charles Court Assoc., 216 AD2d 722, 723 [3d Dept 1995]), proof that the assignment was not acquired for an improper or illegal purpose (cf MVB Collision, Inc. v Allstate Ins. Co., 25 Misc 3d 168 [Nassau Dist Ct 2009]), and proof that the plaintiff is not engaging in usurious conduct when initiating credit card lawsuits (see Citibank [South Dakota], N.A. v Mahmoud, 19 Misc 3d 1141 [A], 1008 NY Slip Op 51091 [U] [Civ Ct, Richmond County]).
If you are sued for credit card debt and the third-party debt collector fails to submit the required proof, it cannot prevail on a motion for summary judgment. In the case of DNS Equity Group, supra, Nassau County District Court Judge Michael A. Ciaffa held that the plaintiff failed to meet its burden. He found that “…the affidavits submitted in support of plaintiff’s motion contain a series of contradictory assertions by individuals who claim, without documentary proof, that they have some form of ‘personal knowledge’ of facts relating to the chain of assignment. One affidavit, from an ‘authorized representative’ of a non-party company named Dodeka, LLC, asserts that the latter company ‘has made a complete assignment of said debt and that DNS Equity Group, Inc., is the owner thereof. . .’ But that affidavit, sworn to on May 11, 2009, is silent as to when the assignment was made. It, too, appears to have been made on ‘information and belief.’ And the assignment, itself, is not annexed or otherwise specifically described. Nor does the affidavit disclose what position the affiant holds at Dodeka. Nor does the affidavit describe her authority or describe what records she has relied upon in making the subject assertions. Such conclusory allegations, on their face, are insufficient to prove plaintiff’s entitlement to judgment as an assignee.”
For this reason, as well as others, the plaintiff’s motion for summary judgment was denied, and the person sued for credit card debt was able to proceed to trial.