Why is Velocity suing me for an old car loan?

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Velocity Investments, LLC is a debt buyer (debt collector) who supposedly buys up old car loans, usually after a repossession which leaves a deficiency balance. They are filing more and more suits in Alabama now.

A typical example of a Velocity suit
You buy a car from a local dealership and the loan is immediately assigned to Citi or Capital One Auto. Then maybe a year or two later, it is supposedly sold to Santander.

The car is repossessed, and Santander claims you still owe $12,000.

Four years later, the loan is supposedly sold to Cascade Capital and then a few months later to Velocity Investments.

After Velocity has the debt (or so it claims to have the debt), it will have a collection lawyer out of Mobile contact you — Barry Friedman.

He will tell you that he is collecting this debt and you owe it. He will not tell you that the ownership is questionable (at best) and he will not tell you that he is collecting on a debt that is outside the statute of limitation.

Instead, if you don’t pay anything — and they just want one payment to claim to restart the statute of limitation — then you will be sued for the $12,000.

Danger to you
The biggest danger to you is that you do nothing. Because if you do nothing, then Velocity will ask for and receive a default judgment.

This means it will be able to garnish your wages, garnish your bank accounts, and even force the sale of your property.

The next biggest danger is to assume Velocity has the right to sue you and filed the suit within the statute of limitations and so you pay Velocity instead of looking at your other options.

You have five options when sued by a debt collector like Velocity:

1. File bankruptcy

2. Fight the lawsuit on your own

3. Settle the lawsuit on your own

4. Hire a lawyer to fight the lawsuit for you

5. Hire a lawyer to settle the lawsuit for you
Let’s assume that you are going to fight this lawsuit — what are some problems for Velocity?

Problem one for Velocity — it must prove it owns the debt
This is a problem for all debt buyers.

See they claim to “buy” the debt. But it is one thing to claim and it is another to prove it.

You would think it would be easy to prove it if they really bought the debt. But that’s the kicker — these debt buyers struggle mightily to prove ownership.

So either they do buy the debt but can’t prove it or they never owned the debt in the first place.

Not really important to us because when they sue us, they have to prove ownership of the debt or they lose. Obviously you never did business with Velocity so they better be able to show they bought the debt from Cascade who must show it bought it from Santander who must show it bought it from Citi or Capital One Auto who must show it bought it from the dealer.

Lots of steps, isn’t it?

That’s why Velocity can buy this debt for a penny or two on the dollar because what they are buying is often a vague promise that this might possibly be a debt. But usually the contract where they “buy” the debt says there is no promise that any of the records are remotely accurate….

Problem two for Velocity — it files suit after the statute of limitation expires
There is a big debate in Alabama over the statute of limitations on a credit card debt — is it three (my belief) or is it six (collectors believe this).

With the type of car loans that Velocity buys, to my knowledge only Velocity thinks the statute of limitations is six years. Everyone else seems to know immediately that this is a four year statute of limitation as this is a lawsuit arising out of a sale of a good.

This means the UCC (Uniform Commercial Code) applies and it says four (4) years is the time limit.

I have yet to see a Velocity case brought in less than 4 years from the date of the repossession. The starting point is actually before the repossession but the statute certainly starts running at the time of the repossession.

Problem three for Velocity — it normally can be sued for violating the FDCPA
Velocity has a habit in my opinion of suing people who do not owe Velocity. And suing folks well after the statute of limitations has expired.

We also see Velocity suing after consumers have made a valid dispute under the FDCPA (Fair Debt Collection Practices Act) but instead of responding to the dispute, Velocity simply sues.

All of these issues normally violate the FDCPA (and Alabama state law).

So the key is to win your case and then sue Velocity in Federal Court for money damages.

What to do if you have been sued by Velocity — call us to go through your options
Call us at 205-879-2447 and we can go through your options, including whether you can sue Velocity in Federal Court.

There are a lot of legal issues involved and we need to know the details of your unique circumstance. Once we understand your situation (which we do in a no cost consultation call), we can give you our advice as to your best option.

You can reach us at 205-879-2447 or click the button below and we’ll get right back with you:
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Talk to you soon!

John Watts

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