Debt Collector’s Say So is Not Enough

This is an excerpt from a Credit Slips post, full post at the link below:

Affidavits Are Not a Substitute for Evidence of Debt Ownership

posted by Bob Lawless

The Tennessee Court of Appeals has issued a decision that highlights the problems facing credit card debt collectors in a post-robosigning world (see here and here). The decision reaffirms what should be a simple principle in a debt-collection lawsuit. The burden is on the debt collector to show it owns the debt and to show the consumer is liable for the amount the debt collector asserts. The debt collector’s say-so is not enough.

. . .

It is not exactly clear what did happen but nothing more than a bare list of account names and balances was apparently transferred. The custodian of records for LVNV Funding testified that she was familiar with LVNV’s business records, and that $15,000 was the amount due based on what was told to LVNV.

Of course, testimony about what someone else said is hearsay. LVNV sought to admit its custodian testimony under the business records exception to the hearsay rule. Judge Kirby, writing for the Tennessee Court of Appeals, correctly pointed out one major flaw with LVNV’s positon. Its custodian may be familiar with its business records, but she was not familiar with the  business records of Sears or Citibank. The business records exception does not create a documentary record where one does not exist. The result was that LVNV’s suit failed for lack of evidence.

The case is interesting not because it is extraordinary but because it is typical. The documentation problems identified in LVNV Funding are pervasive throughout the debt collection industry.

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