Failure To Establish Chain Of Title, Prove Debt Sinks Creditor As Consumer Challenges Credit Card Claim In Collection Lawsuit

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:

• Jenny Vo of South Philadelphia ekes by as a manicurist and single mother raising two sons. So when a debt collector told her in February 2008 she owed $14,237.38 on her credit card, she was stunned. he knew she had charged purchases of food, clothing, and household supplies, and she knew she was behind in payments. But Vo, 37, thought she owed just a "couple of thousand dollars" on the card.

• So she got a lawyer to challenge Unifund CCR Partners' claim in Philadelphia's Court of Common Pleas - and the company could not provide credit card bills itemizing her purchases. The most it was able to document was $5,738.33.

• Frustrated with a lack of evidence presented by Unifund, Judge Idee Fox dismissed the case Feb. 17, which stripped Unifund of the right to demand payment from Vo. Vo's case reflects a problem in the credit card industry as defaults rise during hard economic times. The increasing complexity of lending in recent years has made it more difficult for creditors to document what they say they are owed.

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• Citigroup Inc. and Unifund did not respond to requests for comment. Philadelphia lawyer Frederic Weinberg, representing Unifund, said he had provided 34 pages of documents. But Judge Fox ruled that Unifund failed to establish the chain of ownership, as well as the amount owed. If Vo had not asked for proof, Unifund might have automatically won the right to take a lien against her house. [... W]hen borrowers [...] get legal help, the collectors typically withdraw cases, said Vo's attorney, Peter Schneider of Community Legal Services, adding, "They don't have the proof."(1)

For the story, see Creditors face documentation woes.

(1) According to the story, the Municipal Court of Philadelphia in late February tightened the procedure for filing credit cards claims against consumers. For example, a collection firm can no longer win its claim just because a cardholder fails to show up for a hearing. It still must have adequate proof to support its claim. And in Western Pennsylvania, Blair County formed a Credit Card Court in January that encourages conferences before trial, similar to Philadelphia's mortgage-foreclosure program, created last year during the housing crisis. In the seven months since then, 75 percent of the cases in which the borrowers showed up have been resolved in conference. EpsilonMissingDocsMtg