NH Couple Beats Back Debt Scavenger's Attempt To Collect On Zombie Debt From Old Foreclosed Mortgage

In Manchester, New Hampshire, the New Hampshire Sunday News reports:

• [S]even years after they lost their home to foreclosure in 1994 -- during the last recession -- Daniel and Diane Lessard started getting calls from a company they'd never heard of, telling them they owed thousands of dollars. "I thought it was a scam," said Diane Lessard, who said she hung up each time.

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• Over the years, the calls from Cadle representatives continued sporadically, according to the Lessards. "They would call maybe once a year and harass us, and we would tell them we didn't owe them any money," Diane Lessard, Dan's wife of 21 years, said. Then, in mid-2001, they got a letter from the company, stating they owed approximately $28,000. That led them to call St. Mary's Bank, where they had taken out their 1989 mortgage, but they were told they didn't owe the bank anything.

• Then in 2007 came the lawsuit from Cadle Company, which 13 years earlier had purchased a bundle of bad debts from St. Mary's, including the Lessards' loan deficiency, according to court documents.

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• It turned out that Cadle had purchased the original note from St. Mary's Bank in 1994, but had not been assigned the mortgage until 2006. As a result, [director of clinical programs at Franklin Pierce Law Center Peter] Wright successfully argued that the loan was unsecured debt and thus the pertinent statute of limitations was only six years, not 20 years as is the case with mortgage debt. [...] In addition to dismissing the case against the Lessards, Judge Gillian Abramson also awarded them legal fees and $1,200 in damages.

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• The judge also agreed with Wright's argument, under a legal doctrine known as a "Laches" defense, that Cadle had waited to try to collect the debt so that interest and late fees would pile up. The original loan deficiency on the Lessards' note was about $14,000, but Cadle was trying to collect nearly $30,000 by the time the lawsuit was filed.

For more, see NH foreclosure victims may still face trouble.

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