Peter A. Holland, a professor, and attorney who specializes in consumer law, recently wrote some comments on Public Citizen critical of the lack of warranties in contracts between buyers and sellers of debt portfolios.
It is part of a larger narrative in which academics and legal professionals have little knowledge of how businesses, contracts, and debt sales work. Debt buyers WANT good documentation and tend to do the best they can.
Also, contractual obligations are not always reliant on just a signed piece of paper – with modern online agreements and the general idea that usage of debt is an active agreement to a contract, inadequate documentation should not hinder that pro-consumer advocates insist it is. One point can be agreed upon – originators DO need to perform better in maintaining account information and original documentation. Banks are hurting themselves, their portfolio values, and the debt sales industry as a whole by maintaining poor documentation standards for charged-off debt. Too often, buyers receive imperfect copies of faxes, illegible contracts, and poor accounting, which prohibit them from recovering properly owed money into the economy. Michael Lamm makes several good points in his response regarding Peter A. Holland's blog.
Of particular note is the idea that consumer advocates rarely – if ever – state anything about the idea that the consumer bears some responsibility or that the CFPB should do anything to ensure reasonable faith efforts from consumers to resolve their contractual obligations. Holland's remarks, as many consumer advocates, fall short of the bigger picture. Debts are owed and need to be repaid. Collection groups are being stifled by consumer advocates who practically believe that contracts should not be honored between debtors and creditors and are somehow inherently unjust. Insufficient data nullifies all other notions of the obligations consumers are under.
Conclusion: The article you just read is a discussion of the complicated world of debt sales by Peter A. Holland, a professor and attorney who specializes in consumer law. It’s part of a larger narrative that academics and legal professionals have little knowledge about how businesses work or contracts are created between buyers and sellers. One thing to keep in mind is that these experts don’t always know what they talk about – it may be because it takes years to learn all this information! And even then, there will still be things we can get wrong on occasion (like Mr. Holland).