The business of buying debt has long been a lucrative practice. Companies like Cavalry SPV I, LLC, Jefferson Capital Systems LLC, Velocity Investments, LLC, CACH, LLC, LVNV Funding, LLC, Midland Funding, LLC, Portfolio Recovery Associates, LLC, Unifund CCR, LLC, Absolute Resolutions Investments, LLC, Credit Corp Solutions, Inc., and Onemain Financial Group, LLC are just a few debt buyers that are buying debt and filing lawsuits against consumers.
In Tennessee there is a law directed specifically at debt buyers that adds some protection for consumers. It’s called the Tennessee Collection Services Act and it can be found a Tennessee Code Annotated §62-20-101 et seq. The first thing that this law does is require that debt buyers hold “a valid collection services license…” (Tenn. Code Ann. §62-20-105). This is good but not the best part about this law. It’s the rules governing assignments that are most helpful.
First the Courts tell us a couple things about assignments of debt. “In an action to collect a debt, the plaintiff creditor bears the burden of proving the existence of the debt and that the debtor is indebted to the creditor in a certain amount (LVNV Funding, LLC v. Mastaw (Ct.App. Apr. 30, 2012, No. M2011-00990-COA-R3-CV) 2012 Tenn. App. LEXIS 282, at *13.). Additionally, Plaintiff must prove by preponderance of the evidence that it is the owner of the debt. (Id. at 13). This means that an assignment agreement must be entered into evidence to prove that the debt buyer is the actual creditor. Additionally, the debt a tissue must be “included in the respective exhibits that listed the accounts being purchased pursuant to the Bill of Sale.” (Converging Capital, LLC v. Matthews (Ct.App. Apr. 3, 2018, No. M2016-02352-COA-R3-CV) 2018 Tenn. App. LEXIS 169, at *7-8.).
Here is where it gets fun. The Tennessee Collection Services Act requires that “[t]he assignment was manifested by a written agreement stating the effective date of the assignment and any consideration given for the assignment.” (Tenn. Code Ann. §62-20-124). Debt buyers hate telling folks what they paid for debt… they seldom comply with this part of the law. This is just one of the many requirements placed on debt buyers when they sue consumers.
Any consumer that is sued by a debt buyer should seek counsel right away. Along with the Tennessee Collection Services Act there are evidentiary rules and requirements that make it challenging for debt buyers to prevail in court. Anyone sued by a debt buyer should have an attorney that can raise the many legal challenges to debt buyers and hopefully either prevail in court or get a good settlement. Most folks just allow themselves to be railroaded…. Don’t be one of those folks