Debt collection lawsuits in South Carolina: What you need to know

If you have been sued for a debt in South Carolina, it is important to understand who is suing you, whether you have defenses, and what happens next.  This article explores lawsuits filed by debt buyers.

Have you been sued by a debt buyer?

Portfolio Recovery Associates, CACH, LLC, Midland Funding, or LVNV Funding may have sued you in South Carolina for a debt. These companies are debt buyers and often use the court system to obtain judgment against consumers. In fact, in many court systems, these collection cases amount more than 50% of all civil actions filed.

What is a debt buyer?

Debt buyers purchase a large amount of debts at huge discounts from credit card companies.Next, they attempt to collect the full amount from you, the consumer. If a debt buyer can buy a $100 debt for $5 and then collect the full $100- well, that is a good profit.  A debt buyer may even try to collect interest and attorney fees on top of that.  Though, whether or not a debt collector can legally collect interest is a fascinating issue.


5 Reasons to Defend a Collection Lawsuit

1. You may have valid defenses to the lawsuit.

Because of the way debts are assigned, bought, and sold, the information debt buyers get from the credit card company may be inaccurate. Sometimes the debt buyers sue the wrong person, for the wrong amount, past the statute of limitations, without a copy of the contact, or without proof that they even own your debt.  Unfortunately, most consumers never hire an attorney to fight for them.

2. You can help prevent debt buyers from profiting at your expense.

According to a recent FTC report, debt buyers paid an average of .04 on the dollar for credit card debts.  That means that the average debt of $3,000 was purchase for only $120.  The following excerpt from a Judge in New York summarizes the business nicely:

The Court is aware of how the market for the sale of debt currently works, where large sums of defaulted debt are purchased, by a small number of firms, for between .04 and .06 cents on the dollar.  The entire industry is a game of odds. Why is this debt sold for such a cheap price?….the simple fact that the proof required to obtain a judgment in the creditor’s favor is lacking, usually as a result of poor record keeping on the part of the creditor.

Buyers paid an average of 4.0 cents per dollar of debt face value. An analysis of the prices debt buyers paid for debt purchased in more than 3,400 portfolios showed that the average price was 4.0 cents per dollar of debt face value.  See The Structure and Practices of the Debt Buying Industry.   

3. You may have actions or counterclaims against the debt collector.

If a debt buyer has sued you without adequate documentation, for the wrong amount, in the wrong county, or past the statute of limitations, then you may have claims against the debt collector under the Fair Debt Collection Practices Act or South Carolina Consumer Protection Code.  This is separate from the cause of action the debt buyer filed against you and may be filed against the debt buyer in a separate action or counter claim.  Generally, a separate action helps to separate the issues and avoid any confusion.  If a debt buyer sued you past the statute of limitations or the wrong person, you should be able to get the state court case dismissed before proceeding with your separate cause of action.

4. Keep a collection judgment off your record.

Most credit reporting agencies will pick up information from public records, such as court judgments.  This will place the court judgment on your credit report.  Although your credit report may have already been damaged from a charge off or late payment, this could further hurt your credit and make it more difficult to obtain loans or financing (such as a car or home loan).

5. Alleviate emotional distress and protect assets.

Nobody likes litigation, well except maybe lawyers. The stress of wondering what is going to happen to you, what assets are protected, and having a judgment entered against you can be stressful.  If you are able to resolve the case, you don’t have to worry about a judgment hanging over your head, be brought in for debtor examinations, or be requested to provide information or testimony about your assets. In reality, few people have assets which are not exempted by state laws- but it is still a stressful process. Moreover, if you move to another state, the judgment may be transferred and enforced in a state with lessor consumer protections.

Defenses to a collection lawsuit

1. Amount

You may have a defense as to the amount or liability of the debt.  There may a discrepancy as to the amount due.  If there was a misapplication of payments, the account was already paid or settled, the account belongs to someone else, there are unauthorized charges, or the debt is a result of identity theft, it should be used as a defense to the lawsuit.  Generally, the debt collector will not have account history and communications to demonstrate whether or not the amount is correct.

2. Standing

The debt buyer did not provide you credit. The debt buyer has no cause of action unless it can show that it is the proper plaintiff in the matter, that is that it was actually assigned your debt by the original creditor.  Rule 17(a) of the South Carolina Rules of Civil Procedure requires that every action be prosecuted “in the name of the real party in interest” . . . The South Carolina rule with respect to the real party in interest requirement is patterned after the comparable federal rule, which has been regarded as embodying the concept that an action shall be prosecuted “in the name of the party who, by the substantive law, has the right sought to be enforced.”  Rule 17 SCRCP.  To do so, the plaintiff should be required to provide a full chain of title.

3. Proof of Claims/ Documentation

Debt buyers generally lack the documentation to prove a claim in Court.  Instead, they rely on default judgments and robo-signed affidavits.   Midland Funding LLC v Brent (describing robo-signing process). An 2013 FTC report showed that debt buyers receive few underlying documents about debts. Although buyers received some other information about the debts, they obtained very few documents related to the purchased debts at the time of sale or after purchase. For most portfolios, buyers did not receive any documents at the time of purchase. Only a small percentage of portfolios included documents, such as account statements or the terms and conditions of credit.

4. Inaccurate Information

In many purchase and sale agreements, the original creditors disclaimed all warranties and representations regarding the accuracy of the information they provided to the debt buyer. Essentially selling the debts as-is and without warranting the accuracy of the information provided. Debt buyers often do ot receive the information needed to break down outstanding balances on accounts into principal, interest, and fees.

The FTC report in debt buying cited above found that debt buyers reported receiving only three types of documents: account statements, received for 6% of accounts, terms and conditions documents, also received for 6% of accounts, and account applications documents, received for less than 1% of accounts.

Additional documents may be purchased by the debt buyer, though subject to availability, usually no more than 3 years later.  Although, disputes as to purchases, balances, interests, and fees is almost never provided to the debt buyer.

5. Account Stated

Because debt buyers cannot demonstrate a breach of contract claim, without the contract, terms and conditions, and proof of balance, they generally proceed on an account stated claim.  The essential elements of an account stated are (1) that the account is actually stated; and (2) that the parties either expressly or impliedly agreed that it is a true statement and is due to be paid then or at some other specified time.  Whether this is even a valid claim for these matters deserves scrutiny, as outlined in this article.  Even assuming it is valid; proving that you had an agreement to be liable for the debt should first presented, with the last account used to show the current balance.  Otherwise, I could simply start sending statements to the debt buyer and collecting judgments against them when they fail to respond-without any proof of the underlying balance.  Debt buyers will still often have issues proving the necessary elements of an account stated claim.

6. Statute of Limitations

Courts require that lawsuits must be filed within a certain amount of time. This is to ensure that evidence, documents, and memories are still available and reliable. In South Carolina, the statute of limitations is generally 3 years for written and oral contracts.  For a breach of contract claim, the statute of limitations begins running from the date of default.  Default is usually the defined as the date you failed to make a payment when due. The statute of limitations may be tolled or restarted through partial payments.Therefore, a small payment on the debt could allow the debt buyer additional time to file suit.

If you are sued past the statute of limitations, you may have an affirmative defense that the case was filed too late. Additionally, there may be claim under the FDCPA against the debt buyer for threatening to sue or actually filing suit on a time barred debt.

What To Do When You Receive the Summons and Complaint

As soon as you are served with a debt collection lawsuit, you need to take action.

  1. Write down the date you served with the papers(summons and complaint)
  2. Count 30 days from the date you served. 30 days is the deadline to reply, or Answer, the complaint. (It’s best to have an attorney write and file the Answer for you.)
  3. Contact a consumer lawyer for help. If you live and were sued in South Carolina, you can schedule an appointment with our office.  Most consumer attorneys offer a free consultation to review your lawsuit.

If you ignore the lawsuit or fail to answer the complaint within the prescribed time, the debt collector might obtain a default judgment against you.  It is best to talk with a Consumer Lawyer right after receiving your summons and complaint. As discussed above, you may have defenses to the lawsuit that should be addressed in the Answer.


How a Case Progresses

If no Answer is filed, the creditor may file a motion for default judgment.  Since you didn’t answer the complaint, it is assumed the plaintiff’s (creditor) allegations are true and a judgment entered against you. While I wish judges would require more information before entering judgment, that rarely occurs.

If you answer the complaint.  Deepening on how you answer the complaint, the parties may engage in Discovery or move for judgment on the pleadings.

Judgment on the Pleadings is simply looking at the the Complaint and the Answer to determine whether there is any factual dispute. If not, a judge could determine the matter at the time.  For example, a common occurrence is for a person to write in their Answer: I admit I owe debt buyer x amount of money, but can’t pay right now. Since there are no issues, outside of your ability to pay (which is not an issue for the judge to decide), the court may issue a judgment against you.

Discovery is the formal process of exchanging information.  Requesting documents, interrogatories, admissions, or even depositions.  Written discovery requests generally have to be answered or objected to within 30 days of service thereof. If more time required, you should write to the creditor to request additional time to answer discovery.

Summary Judgment If after discovery, there is no factual dispute, but only a question of law, a party may ask the court for summary judgment.  The jury is in charge of deciding facts and who is telling the truth, the judge decides matters of law. If there is no issue as to the facts, the judge can decide the case as a matter of law.

Trial If the case is not yet resolved, the case may go to trial. If a jury trial was demanded by either party, there will be a jury trial. If a bench trial was requested, the judge will try the case and decide the matter.

Need Help?

If you have been sued, please schedule a free consultation for us to review your case. There is no fee and no obligation.We realize that you are being sued for a debt and don’t have tons of money to throw around.  We try to offer affordable payment options that work for you.  Moreover, you may have counterclaims against the debt collector.  If so, we may take your case on a contingency basis.


Our office is located in Greenwood, SC.  We handle debt defense cases in the Greenville, Greenwood, and Upstate area. We may handle cases across the entire state of South Carolina (depending on the amount of the debt). 

Disclaimers* This is for general information purposes only.  This should be construed as legal advice. We are not your attorney unless we both agree in writing.