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Debt-buyers may file suit against the wrong people

Arkansas Residents may be interested in a recent report that suggests that there has been an increase in debt-related lawsuits filed against individuals who are not liable for the balance. Debt-buying companies, who purchase liabilities from credit card companies after they have written off the accounts, file many of these lawsuits, and the Center for Responsible Lending reports that these debt-buying companies have doubled their income since 2009.

Many of the files on the written-off accounts contain information that is either incomplete or incorrect, and 10 percent to 20 percent of individuals who are sued by these debt-buying agencies are either misidentified or not notified of the impending action. In one case, a woman from Buffalo, New York claimed that she was not aware that she faced a lawsuit until she received a garnishment order. After the woman filed suit to have the judgment vacated, the courts discovered that the collection company had sued the wrong person.

In another case, a man from Elgin, Texas was sued for a debt that was associated with a MasterCard account. The man filed his own lawsuit against the collection agency because he never opened an account with MasterCard. Later, he discovered that the account was actually a Best Buy credit card and that he was liable for the balance. However, during the proceedings, the debt had increased to $3,500, forcing the man to sell his mother's home to pay off the account.

Arkansas residents facing a credit card lawsuit may need to take certain steps to verify the debt. If the account is valid, like in the case of the Texas man, the debtor may benefit from discussing debt-relief options with a bankruptcy attorney. By filing for bankruptcy, a person could be able to avoid harassment and legal action from creditors, and some forms of bankruptcy allow an individual to maintain ownership of certain assets, including a home and a car.

Source: Go Banking Rates, "Chase Debt Collector Garnishes $10,000 of Woman’s Wages for Debt that Wasn’t Hers", Jessica Bosari, June 02, 2014

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