Re: Illinois Law

Posted by Paul (216.127.68.137) on May 14, 2004 at 12:37:41:

In Reply to: Illinois Law posted by casey on May 14, 2004 at 12:10:20:

This was posted on another board by someone claiming to be a lawyer, so take it for what it’s worth. It sounds correct and states debt buyers can’t sue in small claims court in California. Maybe you’ve found a similar law for Illinois.. Keep at em'.

“Even though you buy the debt, you are still an assignee. That’s what you've bought, an "assignment of rights."

I know there is confusion in the credit industry between the industry term "assigned" and the legal term "assignment."

CAs speak of being "assigned" a debt to collect, in which case the CA collects on behalf of the creditor and keeps a percentage of the recovery.

But a legal "assignment" is when another purchases the rights to collect the debt from the creditor. The creditor "assigns" certain of their contractual rights to the CA for consideration (money), and the CA now "owns" those rights.

The creditor still has certain duties and obligations under the contract, particularly with their actions prior to the assignment.

There is another legal term called a "novation." This is when one party is substituted out completely for another in a contractual relationship. Say party A and party B enter into a contract. In order to get party A completely out of the contract and put party C in its place, a novation would have to be made. In order to make a novation, all parties involved need to assent to and sign the novation. i.e. parties A, B and C would have to sign off on it.

So you may "own" the debt, but in court and for all legal purposes you are an "assignee." Theres no way around that short of a novation, and that would require a debtor to sign off on it.

It’s my understanding that in California, an assignee cannot bring a claim in small claims court under an assignment and has to do so in Superior Court. In other words, you can't bring your purchased debts in small claims court in California. If a defendant pushes it, your suit should be dismissed and you'll have to refile in Superior Court.”

Follow Ups:

Post a Followup