There is a significant increase in the number of new personal and business loan creditors who pursue collection and litigation against businesses and consumers alike. Creditors such as Upstart, Upgrade, and Best Egg have become popular companies for consumers and businesses to obtain loans, lines of credit and even credit cards. Although they were virtually unheard of just a few years ago, they have gained popularity along with other creditors such as Bankers Health Group finding a niche in the business loan space at first and then ultimately spreading to consumer loans and another alternative financing. Recently, we have seen many of these loans in the collection process and even more of them in litigation. Interestingly, most of these companies share a common underlying bank underwriting the loans and lines of credit for the brand names above. When defending these lawsuits, we usually see the name Cross River Bank listed on the caption joining the other names above. We also see debt buyer companies who are assigned debt from Cross River Bank such as PCA Acquisitions V and Loan Asset Issuer. Common debt collection law firms such as Portnoy Shneck and Relin Goldstein and Crane are the law firms that we have most frequently seen representing these creditors.
The process for these creditors is similar to that of regular creditors like American Express or Bank of America. They send their defaulted debt into collection and then ultimately sue businesses and consumers to try to recover the amount owed. Many of these lawsuits become default judgments which is a recurring problem in this field. It is importantly to assert affirmative defenses if the lawsuit is received so that the burden remains on creditors like Upgrade and Upstart to prove their case and especially when it is a third-party debt buyer such as PCA Acquisitions or Loan Asset Issuer given that they must prove that they are the rightful owner of the debt. This means that they must produce a proper chain of title and must be able to have their proof introduced into evidence by using a hearsay exception. Businesses and or consumers should move to vacate default judgments immediately after they learn about one as time is limited to vacate the judgment in these cases.
Portnoy Schneck, Relin, Goldstein and Crane, and other debt collection law firms that represent the above creditors are usually willing to negotiate reduced settlements and provide interest-free repayment options that can last anywhere from 12-36 months on average and depending on the overall balance. Settlements with Cross River, PCA and the others can reduce the total balance of debt owed from anywhere between 30%-75% of the amount owed depending on the particular details of the case. It is important for businesses and consumers to defend themselves against PCA, Upgrade, Upstart, Best Egg, and Cross River so that they can prevent judgments and obtain favorable resolutions whether it is the dismissal of an improper case or a settlement that significantly reduces the balance of the debt.