If you’ve been sued by Midland Funding LLC or have been contacted by Midland via letter, telephone call, or had other correspondence with a junk debt buyer- we want to help you get through this ordeal.
Any time someone gets involved with a collection agency it is unpleasant and the stress can be overwhelming. The most important thing you can do is to try and calm down and not overreact. Next, you need to come up with a strategy before discussing your situation with the junk debt buyers.
First, please understand that this site is based on my personal experiences with Junk Debt Buyers (JDB), my personal research, and case law from around the country.
I’m not an attorney and this is just my opinion, and how I would or have done things, It does not mean you should do things this way.
How Does Your Experience With Midland Funding Relate To Mine?
That is a fair question to ask. The main reason is that Midland, like other junk debt buyers, process is the same across the country when they purchase any debt. Most of their employee’s are simply reading down an itemized script and trying to get you to commit to paying them directly.
Obviously I can’t cover everything and a lot of this deals with the law, so of course there are going to be some exceptions to just about everything here. There is also going to be a lot of highlights from other debt relief forums and sites. We value user feedback so please feel free to contribute.
Junk Debt Buying 101
First Midland is a junk debt buyer (JDB). A JDB is a company, party, or agency that buys charged off debt for pennies on the dollar. Generally speaking, it will go something like this. You have a credit card with, we will use Chase, and you can’t pay and default. After Chase tries to collect from you, sometimes for years, they decide not to sue and sell your account/debt.
A junk debt buyer will then step in and offer to pay a few cents on the dollar. It can be anywhere from one cent to ten cents (depending on the age of the debt, if the debt is being sold for the first time, and the records that are available with the purchase, and who the original creditor selling the debt is).
It is common that the junk debt buyer will also buy the debt outside the statute of limitations to legally sue a consumer on that debt.
Here is what commonly happens. Chase will have lets say 25,000 accounts with an average balance of $3k in default. Midland will buy all those accounts in a bundle. Let’s say they pay four cents on the dollar. So in this example, Midland would pay approximately $3,000,000.00 for $75,000,000.00 in charged off defaulted debt.
These are made up numbers, use any figures you want, it all works the same, the amounts are irrelevant. So, with interest being tacked on everyday, that is a ton of profit potential. How this is still legal I’m not sure, but consumers are beginning to fight back so don’t be afraid to stand up to the debt collectors.
What Happens After Midland Funding Buys Your Debt?
After they buy your account, they start trying to collect the full amount due. Again, it’s important to keep in mind that this process is legal.
The credit card contract states your account can be sold. So, Midland Funding buys all the rights, but they also buy the whole account, even the arbitration agreement, if any, and they still have to prove their case in court, should they decide to sue, just as the seller of the account would have to prove their case.
Using the defense of lack of privity is generally a losing argument when dealing with a junk debt buyer. If you are thinking about using affirmative defenses, I’m not saying don’t use them (well yes I am), just understand the defenses.
Okay back to Midland or any JDB. As you can see there is a ton of potential for much profit. As usual, anytime there is that kind of profit potential, there is going to be a lot of aggressive efforts to cash in on that profit.
Generally this is what will happen. Midland will get an account out of the 25,000 they bought from a Mr. Smith, in Little Rock, Arkansas. Mr. Smith’s last known address and phone number will be given to Midland on a huge spreadsheet. Generally speaking, this is all Midland will have, at this time. They will have just a name, amount allegedly due, and last known contact information.
Midland, after receiving the account will try to locate Mr. Smith. Let’s say they locate Mr. Smith in Little Rock, Arkansas. Midland, generally speaking, will send Mr. Smith a letter and advise Mr. Smith Midland now owns the debt and you now owe Midland the money you owed Cap One, plus a ton of interest and fees.
You are usually talking a default interest rate of around 30-35%. So it’s not uncommon for the amount Midland will attempt to collect will be over double what the charged off, defaulted balance was.
Mr. Smith gets Midland’s letter and will usually do one of four things;
– Ignore the letter (This is by far the most popular choice)
– Get scared and call Midland and work out a settlement.
– Send Midland a dispute letter and/or DV letter
– Turn around and sue Midland for some type of violation of a consumer protection law (usually the FDCPA).
Option 1 – Ignore The Letter
Midland, after Mr. Smith ignores the letter, will continue to send letters or call, give up, sell the debt, or sue Mr. Smith. If Midland sues Mr. Smith, Midland, assuming the comply with the law which is no given, will hire a local attorney in Little Rock to sue Mr. Smith. Mr. Smith will be served with the lawsuit and will be given a summons instructing Mr. Smith he has been sued and he must answer the suit or get a default judgement.
Mr. Smith, generally speaking, will ignore the summons and Midland will get a default award. Then Mr. Smith has problems, becuase now Midland does not have to prove the debt is valid or prove they even own the debt, they now have a legal judgemnet against Mr. Smith. Now Midland can start looking Mr. Smith’s money, property and start garnishing wages. It is very important to note that legally, Midland can not garnish Mr. Smith’s wages without a judgement and order from the court.
The above is what usually happens and now Mr. Smith has very limited options. If Mr. Smith gets scared and calls Midland to settle, that pretty much speaks for itself.
If Mr. Smith sends Midland a DV and/or dispute letter, Midland now has some choices to make. They now have a consumer disputing and that is not good for profits. Let’s assume Midland answers the DV letter and properly validates (this means confirming the original creditor and confirms the records from the original creditor show Mr. Smith owes the amount being alleged, THAT IS ALL THAT IS LEGALLY REQUIRED).
Mr. Smith can now sit around and do nothing, after receiving the DV, and see what move Midland makes next.
If Midland now sues Mr. Smith, Mr. Smith will need to answer the suit, and the process starts. It’s time to again look at the affirmative defenses posted above. The one that Mr. Smith will really need to concentrate on is the stuate of limitations.
Since Midland buys debt that is usually years old, there is a good chance the debt is past the statute of limitations. The statute of limitations varies with each state but is usually around four to six years from the date of the last payment on the account. Those are averages only.
Let’s say the debt is inside the statute of limitations. Mr. Smith will now or can discovery with Midland. Mr. Smith will need to, in my opinion only, concentrate on Midlands standing to even be suing him. Not the defense of lack of privity.
Please check back soon for more information on defending yourself from junk debt buyers like Midland…