Wright v. Portfolio Recovery Associates, LLC
What’s at Stake
The primary issue before the Colorado Supreme Court in this case is the enforcement of a Colorado statute requiring debt collectors to produce specific evidence showing that a debtor legitimately owes the debt, and that the debt collector has the right to collect it before a court can issue a debt-collection judgment.
Summary
Portfolio Recovery Associates, LLC (PRA) filed a debt collection action in Colorado county court against Felicia Wright, seeking to collect $671.29 she allegedly owed on a Comenity credit card. However, PRA failed to attach the documents required by the Colorado statute. In particular, it did not produce any written document showing that Comenity assigned Wright’s debt to PRA—i.e., something to show that PRA “owned” and had the right to collect the debt. Instead, it attached to its complaint two conflicting bills of sale that referenced spreadsheets supposedly showing a list of accounts that PRA purchased from Comenity, and those spreadsheets were blank. Further, the bills of sale referenced another agreement outlining PRA’s rights to the debts, but PRA did not provide those agreements either.
Wright appeared in court to defend herself in the case, and sought to dismiss it because PRA’s complaint did not provide the documentation required under Colorado law. She also made her own counterclaim under Colorado’s fair debt collection practices law, and asked for discovery to prove whether PRA ever obtained her credit agreement from Comenity.
The county court did not permit any discovery and entered judgment that Wright owed PRA $671.29. Wright appealed, and the judgment was affirmed by the district court. She successfully petitioned the Colorado Supreme Court for review.
Core Legal Problem
The Colorado statute provides important protection for the state’s most vulnerable consumers. Debt collection actions are the most common type of court action filed in state courts and frequently result in default judgments that can be devastating for already pressed individuals and families. The notice requirements for these types of cases are already quite low—debt collectors often don’t even have to prove they have the consumer’s current address on file. Many consumers have no idea they were ever sued at all, until it is too late to defend themselves. But a judgment obtained under these circumstances is as real as any, and the consumer still bears the consequences. By requiring certain evidence to be produced before a court can enter judgment, Colorado’s statute aims to ensure that, at a minimum, the consumer being sued actually owes the debt and that the party seeking to collect it is actually allowed to do so—even if the consumer never appears in court.
Unfortunately, this law has not been consistently or faithfully followed by Colorado’s lower courts. We hope to obtain an unequivocal statement from the Colorado Supreme Court that all courts in the state must strictly follow the statute’s requirements. Our amicus brief discusses the practical realities of debt collection litigation, the legislative intent behind the statute, and why consumers need the critical protections the statute provides.