Over one thousand U.S. debt collection lawsuits have been dropped by J.P. Morgan & Chase. Some borrowers with credit card debt will not need to take second jobs or payday loans to repay it.
The bank is staying mum about exactly how many cases were dismissed or why. J.P. Morgan is the second largest bank in the country by assets, with credit card accounts totaling over $100 billion.
According to state judges, lawsuits have been dropped that target New York, New Jersey, Illinois, Florida, and California borrowers. As of March 31, $45.9 billion in current and delinquent outstanding credit was owed in those five states alone. J.P. Morgan is not even telling state court judges its reason for withdrawal.
Some judges are allowing the dismissal without prejudice so the cases can be refilled later.
Paul Hartwick, a J.P. Morgan spokesperson, would not confirm or deny the dismissals. One lawyer handling J.P. Morgan debt collection cases on a contract basis said he was informed that Florida lawsuits were dropped due to “irregularities” contained in paperwork that verifies the validity of the debt.
Some judges say that lawsuits filed by credit card issuers include sloppy and sometimes fraudulent documentation regarding debts.
In a mortgage industry practice called “robo-signing,” bank employees sign documents without first reviewing them. The volume can reach hundreds of documents daily. J.P. Morgan is being investigated as part of this issue.
One judge who previously dismissed credit card collection lawsuits for the bank said the paperwork seemed to have been signed by only a few people.
Several judges involved in credit card lawsuits claim the average amount sought is about $1,000. Rather than contracting with outside firms for debt collection, J.P. Morgan mainly uses in-house lawyers.
Some say they were informed that the collections offices will close by early 2012 but J.P. Morgan would not comment.
