In this bad economy, more and more creditors are selling off their old debt to entities called "factors" (or debt buyers), who then sue to collect. There are a lot of them out there, including New Century Financial Services (often represented by Pressler & Pressler), Midland Funding, Cavalry Portfolio, LVNV Funding, and National Recovery Solutions.

The creditor wins because they get paid money they might not have ever received, while the factor wins because they buy the debt at a discount and then go after you for the full amount. For the factors, it's a numbers game. They forward the claim to an attorney for suit, knowing that in the vast majority of cases, the debtors do not file an answer, and they will win by default, without ever having to go to court.

But what happens if you file an answer? What if you don't let them win by default? There are flaws in this plan that may result in them being unable to collect and you not having to pay! Here are the top three reasons why!

The Debt is Too Old (Statute of Limitations)

First, as I mentioned before, factors often buy old debt. If it is too old, you win because of the New Jersey Statute of Limitations. The time to bring suit in New Jersey on the breach of the terms of a credit card agreement is limited to six (6) years, while a contract strictly for the sale of goods is four (4) years.

Therefore, if enough time has passed without you making any payments, the creditor may not be able to collect at all. There are ways to find out if the debt is too old.

They Can't Prove Their Right to Sue

If you bring suit in a New Jersey court, you have to have a personal right to do so. You have to be the party that was "wronged" and seeking justice. In the law, this is called having "standing."

When factors buy the debt from the creditor, they purchase the right to sue. But they still have to provide the court with sufficient proof of that. Believe it or not, they can't always produce it.

This is because they seldom buy just one debt. They buy them in bulk. So, they may be able to prove that they bought credit card accounts from Chase Bank, but not necessarily yours specifically. If they can't prove standing, then they are dead in the water.

They Can't Prove Their Case in Court

The second flaw is rooted in the reality that although the factor now stands in the legal shoes of the creditor, it still isn't the creditor. In other words, they may have a legal right to bring suit for collection, but they may not be able to prove their case if you force them to try it before a judge.

If you file an answer denying that you owe them anything (or at least the balance they claim is due), their case could fall apart. Remember, it is a numbers game to them, and if you make it tough enough for them, they may move on to easier prey.

What Do I Do?

Call their bluff! File an answer challenging their claim and their right to sue. They may either back down entirely or agree to a token settlement. Either way, it is worth your effort. Just debts should be paid, but that doesn't mean that you shouldn't stand up for your rights.

Want more information on how you can fight back with your creditors? Then download my free book, The Biggest Secrets Your Creditors Don't Want You to Know. Are you a visual learner rather than a reader? Do you enjoy watching YouTube to learn new things? Then check out my 3-part video series on how creditors use lawsuits in New Jersey to collect debts. Just click here for more information on how to get the links! Become empowered and protect your rights!

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.