If you’ve been sued by a creditor, you may have noticed that the plaintiff is a company you’ve never heard of or a bank you’ve never taken a credit card from – or any money for that matter. So why is that? There are a few reasons:
- A company purchased your debt. It is not uncommon for credit card companies to sell your debt to other companies, who in turn sue you. Such common companies that I’ve seen are LVNV Funding, LLC and Midland Funding, LLC.
- Know that these companies must prove their debt early on. According to the Illinois Agency Collection Act, 225 ILCS 425/8b, an assignment of debt must be manifested by a written agreement. Illinois courts have further held that a plaintiff must attach the assignment to its complaint or recite the language of the assignment in its complaint pursuant to 735 ILCS 5/2-606. See Candice Company, Inc. v. Rickets, 281 Ill. App. 3d 359, 362 (1st. Dist. 1996). If the company does not, then it is grounds for dismissal of the lawsuit.
- Your creditor was in a private label agreement with another lending institution.
- Recently I had a client who opened up a credit card through Sears. Her monthly payments were due to Sears, she would manage her account through a sears.com website, the credit card agreement had Sears written all over it, and her monthly bills stated it was from Sears. But Citibank sued her because it was in an agreement with Sears to lend credit to Sears who in turn lends money to its customers. Because Citibank’s role in this arrangement was not clear, we actually won at trial.
- Your lending institution was taken over by another company.
- It’s not uncommon for banks to go under and get bought out. When one company acquires or mergers with another company, it becomes the owner of its assets, and for banks, that includes its customers credit card debt. This may be harder to defeat if the plaintiff properly pleads this, but if it does not, it certainly leaves for a defendant to be confused. When unsure, you can ask the judge for the plaintiff to show how they own the debt and why they are suing you.
Remember, in any case, a plaintiff must show ‘standing,’ which means it must show on what basis it can sue you. The above 3 examples speak directly to standing. You have every right to know why any entity is suing you and certainly, in the event of a judgment, you would definitely want to be paying the correct creditor.