Debt buyer must show more than payments made on account to prove its case
The Michigan Court of Appeals recently overturned a District Court decision granting summary disposition to the Plaintiff in Unifund CCR v Riley. In this case, the Plaintiff sued the Defendant on an Account Stated theory rather than Breach of Contact. I am guessing that Unifund did not have any signed contract with Riley. This is usually the case. As the facts show in this case, it appears that Unifund purchased and was attempting to collect on Zombie Debt.
Zombie Debt is debt that simply refuses to die. in this case, the Defendant was not the person who had originated this debt and yet it has come back to haunt Riley.
Nevertheless, to prove an account stated, Unifund was required to show that the debtor accepted the balance as accurate by making payments on it or by failing to object to it. The District court saw things Unifund’s way and granted summary disposition. The Court of Appeals saw it differently.
The COA held that merely showing that payments were made on the account was insufficient to show that the Defendant, himself, made those payments. Moreover, the Defendant had objected to the credit card account on his credit report. Under the Fair Credit Reporting Act, the credit reporting agency is required to report that dispute to the furnisher of that information. The court has viewed this as as an objection to the account.
The Debtor/Riley protected himself well in this action by asserting his rights under the FCRA.
Moral of the story – Collection Attorneys – Purchased Debt is usually difficult to collect and highly defensible. Most of the time, you don’t have the contract and have to punt with the Account States claim. An account stated claim can be defeated because you have to rely, to a far greater extent, on the debtor’s testimony.
Moral of Story to consumers – You have to be vigilant with your credit report. If there is something on your report that does not belong on it, posit your dispute to the credit reporting agency. It will not only keep your credit report clean, resulting in a higher credit score, it will prevent you from getting stuck with Zombie debt like Unifund attempted to collect from Riley.