Sued by a Debt Buyer (Midland, LVNV, Portfolio Recovery): How to Respond

The complaint names a company you never borrowed from. Midland Funding, LVNV Funding, Portfolio Recovery Associates, or another name you don’t recognize, and it says you owe it money on an old credit card.

That company is a debt buyer, and it can sue you. But it has to prove things the original bank wouldn’t, starting with how it came to own your account, and in DC and Maryland the law spells out exactly what. If you answer the lawsuit, you make it do that work.

What is a debt buyer?

A debt buyer is a company that buys charged-off accounts, meaning debts the original lender has written off as a loss, and then collects them in its own name. Accounts are often sold more than once, so the company suing you may be the second or third owner.

Midland, LVNV and Portfolio Recovery are names I see often in DC Superior Court, the Maryland district courts and the Virginia general district courts. Being sued by one of them says nothing about whether the claim is right or wrong. It means the case turns on paperwork.

What does a debt buyer have to prove?

Three things, and each one can be a weak point.

That the debt existed and was yours. It needs records from the original creditor showing the account, that you were the account holder, and how the balance built up.

That it owns your account. It has to trace ownership from the original creditor, through every sale, to itself. In DC and Maryland, the law requires proof tied to your specific account, not just a bill of sale for a batch of accounts.

How much you owe. It has to show the balance when the account was charged off and every charge or credit since, including interest and fees it claims the contract allows.

What does DC law require?

DC spells out in detail what a debt buyer has to file.

The complaint. A collector suing on a consumer debt in DC has to attach a copy of the signed contract, signed application or other documents. The complaint has to list every prior owner of the debt and the date of each transfer, state the basis for any interest and fees, and allege that the suit is within the statute of limitations.

Proof before any judgment. Before the court can enter judgment, a debt buyer has to file an account-specific affidavit from the original creditor establishing the debt, affidavits for each sale, and an affidavit showing the chain of title. Even if you don’t respond, the debt has to be proven with business records authenticated by someone who knows how they were made and kept.

What happens if it can’t. The court can dismiss a case that doesn’t comply, and for substantial or willful noncompliance the dismissal has to be with prejudice, meaning the case can’t be filed again.

What does Maryland law require?

Maryland bars a debt buyer from even filing a consumer debt lawsuit unless it already has a specific set of documents in hand.

Those include proof that the debt exists, the terms and conditions that governed it, and a chronological list of every owner since the original creditor. The debt buyer also needs a copy of each bill of sale that specifically refers to your debt, plus the charge-off date and balance, an itemization of everything added since, and the date of your last payment.

Unless the case is decided on affidavit, the court can’t enter judgment for the debt buyer unless those documents come into evidence. That applies in small claims cases too.

What about Virginia?

In Virginia, a debt buyer usually sues with a warrant in debt in general district court, a short form that says little about the claim. If you show up on the return date and deny the debt, the plaintiff has to prove ownership and the amount with evidence the court will accept.

You can also ask the court to order a bill of particulars, a written statement of what the plaintiff claims and why. How a Virginia warrant in debt works covers the return date and the procedure.

Is the debt too old to sue on?

It may be. Debt buyers often buy accounts years after default, and in DC and Maryland most consumer debt has a three-year deadline to sue, with three or five years in Virginia.

A federal rule bars debt collectors, which can include debt buyers, from suing or threatening to sue on a time-barred debt, and DC law separately bars any collector from filing suit when it knows or should know the deadline has passed. But the court won’t apply the deadline unless you raise it, so a default judgment can be entered on a debt that was too old. Here is how the deadlines work in each jurisdiction.

What are my options?

Answer and defend. Your response deadline is printed on the papers, and it is short.

Answering forces the debt buyer to produce its documents, and some plaintiffs dismiss when they can’t. Why you shouldn’t defend it alone.

Settle. If the debt is yours and the paperwork holds up, a settlement for less than the balance is often possible, and it usually goes better after you answer. How settlement works once you have been sued.

File bankruptcy. If this lawsuit is one of several debts you can’t pay, a bankruptcy filing stops the lawsuit the day it is filed, and Chapter 7 discharges most credit card debt.

What shouldn’t I do?

Don’t ignore it. A default judgment can lead to wage and bank garnishment.

Don’t admit the debt or the amount to the plaintiff’s lawyer before you know what the plaintiff can prove.

Don’t pay or sign anything on an old debt until you know where the statute of limitations stands. Read any settlement paper closely, because some are agreed judgments against you.

If you already have a lawyer in this case, take your questions to that lawyer.

What should I do right now?

If a debt buyer has sued you, find the response date on the papers and call me at (202) 448-5136 before it passes. Bring the complaint or warrant in debt and any letters the company sent.

The consultation is free. I will tell you what the plaintiff has to prove, whether the debt is time-barred, and whether to defend, settle or file bankruptcy.

I defend collection lawsuits in DC Superior Court and the Virginia general district courts in Arlington, Alexandria and Fairfax, and I handle bankruptcy in DC, Maryland and the Eastern District of Virginia. Don’t wait. The documents only matter if you make the plaintiff produce them.