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One question that we get from people who have been sued by a debt collector in Alabama is they say, "Wait a minute. I thought it was illegal to buy debt, or it's illegal for a company that bought a debt to sue me. I'm just going to ignore this. I'm just going to do nothing because I know this is illegal."
The problem is that there's going to be a very legal judgment against you if you have that thought, because if you say, "Hey, I'm not going to do anything," then there will be what's called a default judgment.
We point this out in other videos. A default judgment, a consent judgment, a stipulated judgment, a summary judgment: you know what the common theme is? They're all judgments, which is bad. If you do nothing, there will be a judgment.
Now, go back to the question of is it legal or illegal to buy a debt. It's legal. I have a pen here. I won this pen. I can sell it to you. I have over here a water bottle. I don't think I've opened it up, so what would you pay? Maybe you'd pay a dollar for this water bottle. Now, if I take a drink ... I don't think I have any horrendous diseases or anything, but how much will you pay for it now? Probably not a dollar anymore.
That's how it works with these debt collectors. Maybe you owe $5,000 to Chase Bank and they sell it to Midland Funding for $500. That would be 10 cents on the dollar. Usually it's not even that much, or like 5 cents on the dollar. Maybe they pay 250 for it. Maybe they pay 100 bucks for it. So companies might buy it for 20 bucks.
People go, "That's wrong to do it."
No, that's kind of like my water bottle. You'd pay me a dollar before I opened it. Now you're like, "I don't think I'll take that," or, "I'll give you a penny for it," if you're really thirsty.
It's okay to buy debt and it's okay for a company that buys the debt to then sue you, as long as they truly bought the debt.
What's amazing is in the hundreds and hundreds and hundreds of cases we've handled, we've seen these debt buyers come into court, and the judge says in essence to them: "Okay, prove that you own the debt."
They go, "Hey, we don't really have anything."
Or they say, "Oh, judge, we got lots of proof. We got this contract. We bought the debt."
The judge says, "Okay, show it to me."
The response? "Oh no no no now. I can't show it to you. This is secret."
What they really have is a hundred-page document contract where Midland or whoever buys this debts supposedly. They'll give the lawyer one page.
The lawyer comes in with one page, goes, "Here it is! Here's the proof, judge."
Judge looks at me and I look at it.
I say, "Where's the rest of this? This is like a little bitty portion of this huge contract."
They go, "Oh, oh, oh. It's so secret. Judge, it's so secret they won't even give it to me the lawyer. I'm certainly not going to give it to John Watts, and I'm not going to give it to this court, because this is super secret."
Our response is who cares if it's secret. If you sue me, and you're suing me based on you bought this debt, you better prove it. You better bring in all the documents that prove that. They just despise doing that.
That's why I say is it legal to buy debt. Sure, it's legal. It's like buying a pen, buying a used water bottle. Probably wouldn't pay much for it.
It's okay to do that, but if you're going to sue somebody you better be able to prove that you own the debt.
If you, a consumer in Alabama, have been sued by a debt collector, by a debt buyer, they're threatening to sue you, always remember it's not just enough to prove that you owe the debt. They have to prove that they OWN the debt or they have no right to sue you.
I hope this has been helpful to you. If nothing else, you got to find out the price for a used water bottle. Not very much. Give us a call if we can help you with a debt collector issue. 205-879-2447.
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You can go to www.AlabamaConsumer.com. Wherever you're watching this video, or maybe there's an article beneath it, if it's helpful to you, feel free to like it or to share it with others.
That way it will help spread the message about what the law is in Alabama as far as buying and selling debt.
Thanks for watching this, and I appreciate your time.
John G. Watts
205-879-2447
Watts & Herring, LLC
Birmingham and Madison Alabama offices (Serving clients in all parts of Alabama)
www.alabamaconsumer.com/
No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.