New Georgia CoA Opinion re: Assignment of Credit Card Debt

Debt collection is a nasty business. We get calls at our law firm regularly from folks who find themselves on the wrong side of a dispute—generally a lawsuit—with a debt collector. The callers are often very confused because the company suing them is not one they recognize. It’s typically not “Chase Bank,” “Citibank USA,” or another lender; it’s a company that generally purports to either be collecting the debt on the original lender’s behalf. Of course, there’s nothing wrong with a lender assigning its rights in and to a consumer’s debt to another company, but, for the consumer’s protection, the new, unfamiliar company must produce proof that it received such an assignment from the original lender.

In Georgia, “[a] party may assign to another a contractual right to collect payment, including the right to sue to enforce the right. But an assignment must be in writing in order for the contractual right to be enforceable by the assignee. ” Wirth v. Cach, LLC, 300 Ga. App. 488, 489 (2009). But if the acquiring company (called the assignee) can’t produce proof of an assignment, then its lawsuit against the consumer must fail. After all, without the assignment, there’s no proof that the assignee has a legal right to pursue the original lender’s rights in and to the consumer’s debt.

A recent case from the Georgia Court of Appeals displays how this requirement can play out in the consumer’s favor. There, CitiBank South Dakota, N.A., issued credit to a consumer named Sandra Benson. After Ms. Benson allegedly defaulted on the account, a third-party called Asset Acceptance, LLC, sued her to recover the debt. But Asset Acceptance had a problem. Although it had evidence that CitiBank South Dakota extended credit to Ms. Benson and that another lender, CitiBank USA, assigned its right to Ms. Benson’s debt to Asset, it did not have any proof that CitiBank South Dakota had assigned its rights to CitiBank USA. In other words, the chain from CitiBank South Dakota to Asset Acceptance was missing a link: an assignment from CitiBank South Dakota to CitiBank USA. Without proof of that assignment, the consumer was entitled to summary judgment, and the judgment against her and in Asset’s favor was reversed. Click here for the full opinion.