At Bell Law, LLC, our founding principle has always been standing up for the little guy (or gal) against powerful corporations and financial institutions. We’re committed to protecting consumers in Kansas City and beyond from unfair, deceptive, and abusive practices by debt collectors including wrongful debt collection lawsuits. Unfortunately, identity theft victims often face an uphill battle when debt collectors pursue them for fraudulent debts they never incurred. Our firm recently took on such a case, defending a client against Portfolio Recovery Associates, LLC for a debt resulting from identity theft.
What Happens When You’re Sued for Someone Else’s Debt?
Being sued for a debt you don’t owe can be terrifying, especially when you’ve already been victimized by identity theft. You might receive a summons and other court papers demanding payment for accounts you never opened or charges you never made. This situation can lead to:
- Damaged credit scores
- Emotional distress and anxiety
- Potential wage garnishment or bank account freezes if a judgment is entered against you
- Ongoing harassment from debt collectors
Many consumers don’t realize they have legal rights in this situation and powerful federal and state laws that protect them.
The Reality of Debt Collection and Identity Theft
Debt buyers like Portfolio Recovery Associates purchase defaulted debts from original creditors for pennies on the dollar. They then attempt to collect the full amount from consumers. While this business model is legal, problems arise when debt buyers fail to properly verify the legitimacy of the debts they purchase and pursue innocent consumers.
In our client’s case, Portfolio Recovery Associates continued collection efforts despite:
- Multiple disputes filed with credit reporting agencies
- An FTC identity theft affidavit submitted by our client
- Complaints filed with the Consumer Financial Protection Bureau (CFPB)
- Direct communication from our client explaining the fraud
- Confirmation from a previous creditor that the account was fraudulent
In this case, even after Ally Bank (a previous owner of the debt) had determined the account was fraudulently opened and not our client’s responsibility, Portfolio Recovery proceeded with their lawsuit.
Legal Protections for Identity Theft Victims
If you’re being sued for a debt that resulted from identity theft, several laws provide important protections:
The Fair Debt Collection Practices Act (FDCPA)
The FDCPA prohibits debt collectors from using unfair, deceptive, or abusive practices when collecting debts. This includes:
- Attempting to collect debts not owed by the consumer
- Misrepresenting the amount or legal status of a debt
- Continuing collection efforts after receiving a dispute without proper verification
Violations can entitle consumers to actual damages, statutory damages of up to $1,000, and attorney’s fees.
The Fair Credit Reporting Act (FCRA)
The FCRA governs how consumer credit information is collected, accessed, and used. When debt collectors report fraudulent debts to credit bureaus, they may be violating the FCRA by:
- Failing to conduct reasonable investigations of disputed information
- Continuing to report inaccurate information after receiving notice of a dispute
- Not maintaining reasonable procedures to ensure accuracy of information
Consumers can recover actual damages, statutory damages, and attorney’s fees for FCRA violations.
The Kansas Consumer Protection Act (KCPA)
The KCPA provides additional state-level protections against unfair and deceptive business practices. Under this law, debt collectors can be liable for:
- Making false representations about debts
- Taking advantage of consumers unable to protect their interests
- Willfully misrepresenting material facts
The KCPA allows for recovery of actual damages or civil penalties of up to $10,000 per violation, plus attorney’s fees.
What to Do If You’re Sued for a Fraudulent Debt
If you receive a lawsuit for a debt that isn’t yours due to identity theft:
1. Do Not Ignore the Lawsuit
Many consumers make the critical mistake of ignoring legal papers, which can result in a default judgment. No matter how unfair it seems, you must respond to the lawsuit within the time limit specified in the summons (typically 20-30 days).
2. Gather Your Documentation
Collect all evidence showing the debt isn’t yours, including:
- Identity theft reports filed with the FTC or police
- Previous dispute letters sent to creditors or credit bureaus
- Communications with the original creditor about the fraud
- Credit reports showing the disputed accounts
- Your own financial records showing you never made payments on the account
3. Respond to the Lawsuit
File a formal Answer with the court denying the debt collector’s allegations. In Kansas, you can also assert affirmative defenses such as:
- The debt is not yours due to identity theft
- The debt collector lacks proper documentation to prove ownership of the debt
- The debt collector failed to verify the debt after receiving disputes
4. Consider Filing Counterclaims
In many cases, a debt collector’s actions may violate various consumer protection laws. Working with an attorney, you may be able to file counterclaims for:
- FDCPA violations
- FCRA violations
- KCPA violations
- Negligence
- Abuse of process
5. Consult with a Consumer Protection Attorney
The laws governing debt collection and identity theft are complex. An experienced consumer protection attorney can help you:
- Properly respond to the lawsuit
- Assert all available defenses and counterclaims
- Negotiate with the debt collector
- Represent you in court
- Potentially recover damages and attorney’s fees
Our Recent Case: Fighting Back Against Portfolio Recovery Associates
In our client’s recent case against Portfolio Recovery Associates, we filed an Answer denying liability for the debt and asserting numerous counterclaims, including:
- Violations of the Kansas Consumer Protection Act
- Negligence
- Abuse of Process
- Violations of the Fair Debt Collection Practices Act
- Violations of the Fair Credit Reporting Act
Our client had submitted multiple disputes about this fraudulent debt, including an FTC identity theft affidavit. Despite this, Portfolio Recovery continued its collection efforts and eventually filed a lawsuit. What made this case particularly egregious was that Ally Bank, a previous owner of the debt, had already investigated and determined our client was not responsible for the fraudulent account.
We’re seeking not only dismissal of the debt collector’s claims but also:
- Declaratory judgment that our client does not owe the debt
- Removal of the fraudulent debt from credit reports
- Actual and statutory damages
- Civil penalties under the KCPA
- Attorney’s fees and costs
How Bell Law, LLC Can Help
If you’re facing a similar situation, Bell Law, LLC is here to help. Since our founding, we’ve dedicated ourselves to standing up for the little guy against powerful financial institutions and debt collectors. This core principle drives everything we do. Our firm specializes in:
- Defending consumers against unwarranted debt collection lawsuits
- Pursuing counterclaims against debt collectors who violate consumer protection laws
- Helping identity theft victims clear fraudulent debts
- Stopping harassment from debt collectors
- Repairing damage to credit reports
We understand the stress and anxiety caused by being pursued for debts you don’t owe. Our attorneys have extensive experience fighting debt collectors and standing up for consumers’ rights. We recognize the power imbalance between everyday consumers and large debt collection firms, and we’re committed to leveling the playing field.
Don’t Face Debt Collectors Alone
Identity theft can have devastating consequences for your financial well-being and peace of mind. When debt collectors add to this burden by pursuing fraudulent debts, you need an advocate who understands the law and will fight for your rights.
At Bell Law, we believe that ordinary people deserve extraordinary representation. Our passion for standing up for the little guy drives us to take on powerful debt collectors like Portfolio Recovery Associates. The legal system can be intimidating, but you don’t have to navigate it alone.
If you’re being sued for a debt you don’t owe due to identity theft, contact Bell Law, LLC for a consultation. We’ll review your case, explain your options, and help you develop a strategy to defend against the debt collector’s claims and potentially recover damages for any legal violations.
Call us at 816-886-8206 or visit our website at https://bell-law-kc.com to learn more about how we can help you fight back against unfair debt collection practices.
This blog post is for informational purposes only and is not legal advice. Each case is unique, and the outcome depends on specific facts and circumstances.
