‘Hearsay’, as we know, is exactly what it means; what we hear another person say or what someone hears from another third party. These terms are primarily used in legal parlance at court hearings of evidence and testimony provided by witnesses other than the actual affiant, statements that are cross-examined by attorneys and prosecutors. In such situations, ‘hearsay evidence’ is used to denote an extrajudicial statement made by a person or persons that is introduced in court proceedings to prove the factual truth of a matter under discussion.

The hearsay evidence rule dictates that not all hearsay evidence is admissible as evidence in a court case or legal proceeding, unless a specific exception applies. This is simply because hearsay applies to facts or statements made by people who are actually present in court or under oath to verify the truth of the statements.

In matters of recovery or debt collection, as we know, there are several cases where recovery procedures are handled or resolved through legal proceedings in a court of law. However, this is one area where the hearsay rule applies in that collection agencies sometimes use whatever resources are available to them to recover amounts owed.

Sometimes it happens that collection agencies or “debt buyers” are not in possession of the documents that prove the debtor owes money to the creditor, such as the original loan or contract document. In such cases, agencies take advantage of a debtor’s ignorance of collection laws to enter default judgments so that they can legally access the debtor’s personal information, such as bank accounts, pay stubs, and other personal details. If they are successful in doing so, the debtor’s assets may be frozen and become inaccessible unless amounts owed are repaid.

However, in cases where such legal mandates are not possible, creditors and collection agencies try to use statements from friends and associates to make sworn statements. The hearsay rule means that no witness may give oral or written statements outside of court to provide evidence in a due recovery matter.

We may well wonder why then collection agencies and creditors resort to such activities. The truth is, collection agencies deal with thousands of delinquent accounts and have virtually no real idea of ​​the money owed unless the creditor provides them with the details. In the absence of original documents or statements, it is up to the collection agency to prove that the debtor owes the money to the creditor.

Every claim pursued by the debt collection agency is an essential factor in the debt buyer’s damages; for every dollar recovered your commissions are paid in cents. To boost their claims, they often submit old credit card statements or loan documents to indicate how much money the debtor owes.

Hearsay Evidence Rules apply here. Billing statements are not admissible in court because they are considered material provided by an extrajudicial witness to prove the truth of a disputed matter. Therefore, monthly statements of credit cards or loans are inadmissible evidence, since they are nothing more than hearsay.

Of course, it is ethical to pay on time; However, if financial constraints occur, it is best to re-examine and agree to pay off a reduced debt on terms that make repayment easier. However, many collection agencies have been known to twist arms and use intimidating practices to recover debts, which is strictly illegal and not in accordance with the Fair Debt Collection Practices Act.