More than 1,000 lucky credit users are celebrating today after JP Morgan Chase gave up on debt collection lawsuits in five different states.
The bank wouldn’t disclose why it dismissed the claims, but recently dropped lawsuits in California, Florida, Illinois, New York, and New Jersey.
In those five large states, JP Morgan had been seeking almost $46 billion in unpaid credit card debt, including both delinquent and current accounts.
Consumers who had racked up credit card debt in these states were particularly fortunate, because 94 percent of collection actions against borrowers end in default judgments for lenders. This is why many people hire attorneys to help them fight credit lawsuits.
A state court judge in Illinois allowed the banking giant, which is the second largest bank in the country, to dismiss the cases without prejudice, meaning that JP Morgan could, in theory, bring the actions again.
This, however, is unlikely, as the Wall Street Journal speculates that JP Morgan dismissed the lawsuits because of faulty paperwork.
Specifically, some critics are accusing JP Morgan of engaging in “robo-signing” with its credit card debt collections. This practice involves:
- Robo-signing occurs when a few individuals sign reams of documents without reviewing their content.
- This practice plagued the home foreclosure industry, and several banks are in intense negotiations with federal and state officials to settle on a proper punishment.
- In many credit card collection lawsuits, critics say “attorney liaisons” signed stacks of affidavits without even reading the materials.
Thus, if JP Morgan did engage in “robo-signing” with its credit card debt claims, the company may have simply wanted to escape the legal consequences of pursuing faulty claims.
In a whistleblower complaint filed last year with the Securities and Exchange Commission, a former JP Morgan vice president claimed that the company had engaged in dubious paperwork practices.
She alleged that thousands of complaints against credit card holders incorrectly listed the amount the borrowers owed. She and the company settled out of court, and the federal lawsuit was dismissed.
Sources indicate that the average amount of debt sought in credit collection claims is roughly $1,000. With JP Morgan’s annual billion-dollar profits, the company likely won’t miss the estimated $1,000,000 it’s giving up by not pursuing collection lawsuits in the five states.
The company’s waving of the white flag, however, will have a significant impact on the fortunate consumers who have temporarily escaped the grasp of the lending giant.
Of course, not every person is so lucky. If you are looking for a potential long-term solution to your financial woes, Chapter 7 bankruptcy is one option worth considering to help you eliminate your debt.
Similar Posts:
- Credit Card Debt Collection, A Rising Trend
- The Office of the Comptroller of the Currency takes enforcement action
- PayPal Acquires Mobile Credit Card Payment Company
- I moved to Arizona in the last 2 years. How does this affect my bankruptcy? Are there any other exemption limitations I should be aware of?
- Is It Time to Take on Debt Again?
