Today, I'm going to stand on the shoulders of my colleague Kent Anderson and add to his post on Objecting to Credit Card Claims in Bankruptcy.
You want to do this as a Chapter 13 debtor when you are above median or have unprotected assets. In either situation, you want to kick out as many claims as possible so you can pay 100% of the remaining claims in the shortest time. A Chapter 7 debtor who kicks out enough claims will keep the surplus money after an asset was sold.
The Federal Rules of Evidence (FREs) make it pretty easy to do this.
Let's explore the Rules' requirements. Two Rules apply in particular, (1) Business Records and (2) Authentication.
A debt buyer argues that its business records show that it purchased the debt, or that the original credit card issuer's business records show that the debt was sold to the buyer. Admissable business records must have been made at about the time of the event being recorded, which is the sale of the debt, by a person with personal knowledge of the sale. The testimony introducing the record must be by a person with personal knowledge of this requirement. FRE 803(6).
Ms. Witness takes the stand, or swears out an affidavit, saying that she's the custodian of the records and that "the records were created by a person having personal knowledge of the sale." WRONGO-BONGO !!! Ms. Witness does not personally know this. She's only stated her unsupported conclusion or opinion. INADMISSABLE.
"How did this record of the sale get into your records?" "Who entered it?" "How do you know the person entering it had personal knowledge of the sale?" Get my point? Ms. Witness needs to have her own personal knowledge, not of the sale but of these questions. She can't simply state a conclusion. That's for the court to conclude, based on the detailes provided by a witness.
Authentication is a separate requirement, that the evidence being introduced is what it purports to be. FRE 901(a). The Ninth Circuit Bankruptcy Appellate Panel, in American Express v. Vinhnee, 336 B.R. 437 (2005), translated this in the electronic records world as meaning that the record has not been changed between its original electronic creation and its admission at your trial.
With paper records, there never is a serious question about this. Paper records are so rarely altered that it is insignificant, notwithstanding the accusations of certain predatory mortgage lenders having an "art department" dedicated to alterations.
Electronic records can be hacked or altered more easily. The Vinhnee case recognized this and affirmed the bankruptcy court's denial of a claim when the debt buyer could not prove that the record was authentic, was never altered. Here's what Vinhnee said:
"The logical questions extend beyond the identification of the particular computer equipment and programs used. The entity's policies and procedures for the use of the equipment, database, and programs are important. How access to the pertinent database is controlled and, separately, how access to the specific program is controlled are important questions. How changes in the database are logged or recorded, as well as the structure and implementation of backup systems and audit procedures for assuring the continuing integrity of the database, are pertinent to the question of whether records have been changed since their creation."
Ain't no way, no how, that the debt buyer's witness can testify to this authentication requirement, especialy on top of the business record need to have personal knowledge of how the record was first created.
Debt buying is a huge business with volumes that break records every year. This is how to beat the claims.
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