I have a hearing for a debt with a Bank. I never have done any business with this Bank. What should I do?
This is an interesting issue and a question that I have gotten on a few occasions. Here’s how I usually respond:
It is quite possible that the Bank simply sued the wrong person. If this was the case it would most likely be because the attorney representing the Bank had a file on you (perhaps to collect for another debt that you owe) and got the two files confused. This is not inconceivable. However, it is equally possible that the Bank did, in fact, sue the right person.
Banks often sell their assets (a loan owed to a Bank is an asset.) They can sell bad debt to debt collectors. They can also sell good debt to other banks. If a Bank sells your debt to another entity then the purchasing entity (ie, the new bank or debt collector) can legally pursue you for the debt. However, it must prove that it is the current owner of the debt. In other words, the Bank that is suing you must show that it purchased the debt from a Bank that you actually owe or from some other entity that purchased from the Bank you owe and then sold to the Bank that is suing you. This “chain of title” can get convoluted.
If the Bank cannot prove that it is the current owner of the debt then the Court cannot rule in its favor. The burden of proof is on the Bank; however, if you do not contest the matter the Court may enter a judgment against you based on the Bank’s assertions. Litigation can become very complicated very quickly and so it is always a good idea to speak with an attorney when you have been sued. Deadlines can also come and go and impact your case, so it’s a good idea to contact one soon after being served with a lawsuit.
If you have multiple debts then you should consider bankruptcy as an option. It would almost certainly be cheaper than litigation and could potentially resolve this issue with the Bank without you having to litigate it.