CA taking me to court on debt they purchased from lender...

Contracts for a debt are considered negotiable intruments... much like a check that you might write. For example, you make a check out to John Smith for $100.00. John Smith owes Jane Doe $100.00, so John simply endorses the back of your check and gives it to Jane Doe. Now Jane Doe can cash your check, even though you originally made it out to John Smith.

Debts are the same way, they can be "assigned" to anyone. Your promise to pay wasn't exclusively to HSBC; rather, your promise was to pay the account holder. HSBC assigned the account to New Century, and now they are the account holder. Your legal obligation is now due to them, not HSBC.

New Century does have an obligation to prove that you owe them money. Namely, they should be able to produce 1) The original agreement that you signed with HSBC; 2) A ledger showing all the account charges and payment history; and 3) an assignment notice transferring ownership of the debt from HSBC to New Century.

If they can't provide those three things, then they can't prove you owe them. If they can, then they will win in court.

Do not blow off your court date, or they can get a default judgment against you without having to prove that you in fact owe money. Rather, you should show up to court and make them prove, with a preponderance of the evidence, that you owe the debt.

Another thing to consider, if New Century is charging you interest from the time they bought it...

HSBC is chartered as a bank, and therefore is allowed to charge interest under federal/state laws. For the time HSBC owned the account, they could charge interest as spelled out in the contract. If New Century buys your account, and wants to continue charging interest after they buy it, then they need to be licensed as a sales finance agency in order to charge and collect interest.

In the absence of a finance license, they are only allowed to collect the principal balance that HSBC sold to them.

No, they can collect the entire balance that was sold to them, including any interest HSBC tacked on before the sale. A lot of states will also allow them pre-judgment interest at a statutory rate (usually between 6 and 10%) up until the time a judgment is entered.

When I said "In the absence of a finance license, they are only allowed to collect the principal balance that HSBC sold to them", I didn't mean New Century cannot collect interest that HSBC charged. The principal balance that HSBC sells includes all the interest that has compounded onto the balance.

You are correct as to the statutory rate. My argument mainly referred to the apr disclosed on the cardholder agreement. If HSBC sold a credit account that HSBC could charge 29% on, New Century cannot charge 29%, they can only charge the statutory rate, unless they have a finance license.

This really stinks that someone can come along after the original lender has written off the debt and then buy the debt and be able to collect on it. My friends father (of course what does he know...) was pretty sure that the CA has to have some type of proof of a contract signed by me engaging in a commitment to pay them as a 3rd party. My account wasn't assigned to them, they purchased it, they chose to take on a debt that wasnt getting paid.

So what can happen to me in court? I plan on going, they said its for mediation. The amount they're requesting is with a LOT of interest and fees. The card only had a limit of $500 and the balance is $817. Is this negotiable?

I Appreciate all your help!

If they purchased this default account,they do fall under the laws of the fdcpa. First,make sure you go to all court dates to avoid a default judgement.They do have to prove it is your debt and that they are the valid owner of it. Make them prove their case.

Debtcruncher,

Thanks for your posts. That is something that I did not know about CA's and finance charges. I'm sure this will help a lot of people out.