BofA Continues Feeding Zombie Debt-Buying Sleaze Factories With Purportedly Unpaid Accounts Backed By Unreliable Records

American Banker reports:

• Bank of America has sold collections agencies rights to sue over credit card debts that it has privately noted were potentially inaccurate or already repaid.

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• At Bank of America, records declared unreliable yet sold to CACH were used to file thousands of lawsuits against consumers, according to a review of hundreds of cases in the state courts where collection suits are typically filed. The overwhelming majority of cases end in default judgments, which are awarded to creditors when borrowers don't show up to contest the claims made against them.



• In cases where debtors do challenge collections demands in court, the original bank-creditor must testify about the documentation supporting the claims. In several such instances, people identified as Bank of America employees have submitted affidavits attesting to the validity of debts sold by the bank to collections firms.



• Even though Bank of America previously disavowed "the accuracy of the sums shown as the current balance," the sworn statements vouch for the borrowers' debts down to the penny and declare that the bank's "computerized and hard copy records" back the claims.



• There are other possible discrepancies, as well: the affidavits state that B of A "has no further interest in this account for any purpose," while the sales contracts reference a "revenue sharing plan."



• The prospect that B of A was selling unreliable credit card debts did not deter CACH from buying them. A subsidiary of SquareTwo Financial, CACH does not collect debts itself. Instead, it operates like a restaurant franchiser, acquiring rights to the delinquent debts that are the raw materials of the collections business. It then works with law firms around the country that do the actual collections work, providing them with debt files, court witnesses and other services.



• In thousands of cases in state courts, CACH has appended a single page from its purchase agreements with Bank of America attesting to its ownership of delinquent credit card debt.



• CACH has omitted from many such filings the more than 30 additional pages where Bank of America disclaims the accuracy of its debt records. Even so, attorneys affiliated with CACH have cited the reliability of Bank of America's records as the foundation for their collections lawsuits.(1)

For more, see Bank of America Sold Card Debts to Collectors Despite Faulty Records.

See Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration for a Federal Trade Commission report on dealing with zombie debt.

Go here for other posts on zombie debt.

(1) For related American Banker stories, see:

• Borrower Beware: B of A Customer Repaid Her Bill Yet Faced a Collections Nightmare (MARCH 29, 2012);
• How a Whistleblower Halted JPMorgan Chase's Card Collections (MARCH 16, 2012);
• OCC Probing JPMorgan Chase Credit Card Collections (MARCH 13, 2012);
• 'Robo' Credit Card Suits Menace Banks (JANUARY 31, 2012);
• JPM Chase Quietly Halts Suits Over Consumer Debts (JANUARY 11, 2012).

For more on the problems with zombie debt, see:

• 'Zombie' debt is hard to kill (Companies now buy ancient bad debts for pennies and squeeze you to pay. Here's how to get them off your back),
• Zombie Debt: The Bills That Won't Die,
• How to Deal with Zombie Debt,
• Some Debt Collectors Are Using Illegal Tactics (Hundreds of collection companies now specialize in collecting on 10- to 20-year-old debts called "zombie debts" -- debts so old you can't even be sued over them).