Sued By Midland Funding, LLC? Here's Help.

If you've been sued for a debt by Midland Funding, LLC, your initial reaction might be confusion; after all, you've never borrowed a dime from anyone called Midland. That's because Midland is a debt buyer. It is part of Encore Capital Group, a large public company. Midland's business revolves around buying up old credit card accounts from the original lender and suing consumers that they have no relationship with. Usually the only connection between you and Midland, is that they have your name on a spreadsheet somewhere.

If the letters you've been getting say Midland Credit Management instead of Midland Funding, LLC, that's the same corporate family: Midland Funding holds the account, Midland Credit Management does the collecting, and Encore Capital Group owns them both. Different logos, same spreadsheet.

Getting served with a lawsuit can make you feel as if the verdict is already in — and not in your favor — but rest assured that the reality is far less negative. Being served with the lawsuit is the start of a process, not the end of one. You generally have thirty days to answer, and that's enough time, if you use it. The rest of this page covers what Midland has to prove, what regulators have found about how this business runs, what to do, even if you're pretty sure you owe the money, and what to do with your thirty days.

The paper problem

Midland's model runs on volume. It files enormous numbers of lawsuits — far more than they can competently prosecute. That business model works for them because most people never respond, so cases end in automatic judgments (called default judgments) by the stack, or because people are self-represented and make unnecessary mistakes handing an easy victory to Midland. In a default judgment situation, and effectively in a case against an inexperienced self-represented adversary, the debt collector often doesn't have to prove anything to be handed a judgment.

A well defended case is a different animal. This whole collection litigation industry, and particularly the debt buyer portion of it, is a square peg being forced into a round hole: The square peg is the mass collection practices these companies want to run through the courts, and the round hole is the court system. Court procedures are designed to serve as a barrier preventing unproven allegations from being automatically transformed into judgments. However, those procedures are not self-executing. A defendant who wants the benefit of those procedures has to know what buttons to press and switches to flip. When the right buttons and switches are activated, that square peg gets stuck and no judgment comes out the other side. When you respond, a court has to start looking.

To win a properly defended case, Midland generally has to do at least three things the volume model was never built to do:

• Prove it actually owns your account — the paper trail from the original bank all the way to Midland (lawyers call it chain of title). Without it, they can't show the debt is even theirs to collect.
• Back up the numbers with records a court can lawfully consider. The rules of evidence are not easy for debt buyers to comply with and just because a debt buyer has a piece of paper, does not mean they are legally in a position to use that piece of paper as evidence that the court is allowed to consider.
• Bring a real witness, or follow the strict rules for substituting a sworn statement for one — including making that witness genuinely available. California law (CCP §98) requires it.

Don't take my word for it

Encore Capital Group — Midland's parent — has a public enforcement record with federal and state regulators. A few entries:

• In 2012, the FTC obtained a $2.5 million penalty against Asset Acceptance, a debt buyer Encore later acquired, over allegations about its collection of debts that were too old to sue on.
• In 2015, the CFPB found in a consent order that Encore had bought debts that were potentially inaccurate, lacking documentation, or unenforceable and that affidavit signers were "robo-signing" 200 to 400 sworn statements a day, attesting to "personal knowledge" of accounts they'd never reviewed. The order included up to $42 million in consumer refunds, a $10 million penalty, and a halt to collection on more than $125 million of debt.
• In 2018, a multistate settlement with state attorneys general ($6 million) required Encore to actually possess account documents before filing suit.
• In 2020, the CFPB obtained a $15 million civil penalty over allegations that Encore had violated that same 2015 order — including suing consumers without the required documentation.

None of this decides your case, but it tells you that the paper problem is real enough that the people whose job is to check, keep finding it.

But what if I really owe the money?

Often the unspoken question that stops a lot of people from defending themselves is some version of don't I deserve this?

I always assume, and I think 99.999% of the time it's true, that people aren't "taking advantage" when they default. They found themselves in a position where there was no choice, and they feel bad about it. Don't let an undeserved feeling of guilt do the debt buyer's work for it.

And, look at the other side of the case: Midland is no righteous actor. It bought your account, or claims to have bought that account, for next to nothing, on a bet. ("Claims," because ownership is exactly what they have to prove.) The account was already in default, and Midland was betting that it could take advantage of that situation to buy the account on the cheap, and then use the opacity of the court procedures to reap an easy windfall.

In my view that changes the moral math. You didn't default on a debt to get a windfall; you got here because you had to. But if somebody's going to end up with a windfall either way, should it be you, or should it be the debt buyer? That I think is the crux of it.

Defending yourself isn't a trick or a loophole. The party that sues has to prove its case because that is the way the system is supposed to work. Make them prove it.

I know this company

I've been defending Californians against Midland Funding for years and saved hundreds of consumers from having to pay them. Most of this is unpublished, but some of it does end up in the form of a published decision.

For example I won a published appellate decision against them. Midland tried to prove its case the way the volume model prefers — a sworn statement standing in for a live witness, with account records attached. The Appellate Division held that the witness behind that statement has to be genuinely available for service (that's the CCP §98 rule above), and that the account records Midland got from the original creditor were inadmissible hearsay.

In another case, I initiated an action against Midland Funding (aka Midland Credit Management) on behalf of two clients, for pursuing collection cases that had not been adequately vetted. I later handed that case off to the National Consumer Law Center (NCLC) and a private law firm, and it grew into a broader action that recovered millions of dollars for California consumers.

Past results can't promise you anything about your case — no honest lawyer will tell you otherwise. But here's what that history is worth to you: the paperwork problems the regulators keep describing aren't abstractions to me. Often they are the case.

You have thirty days

The most important fact on this page is also the simplest: once you've been served, you generally have thirty days to file a written response with the court. Not a phone call to the collector. Not a letter. A written response, filed with the court.

If the deadline passes and you haven't responded, Midland can ask the court for an automatic judgment against you (called a default judgment) — no trial, no evidence fight, nobody checking the paperwork. With a judgment in hand, they can levy your bank account, meaning they can take the money directly from your account; garnish your wages if you have a job; and put a lien on your house. Every useful thing on this page assumes you don't let it get there.

Two things worth reading next, tonight if you can:

• How to Calculate Your Deadline for Responding to a Summons — the count is more particular than "thirty days," and getting it wrong is expensive.
• Top 5 Mistakes When Sued by Midland — including a couple that feel responsible in the moment and backfire.

If you'd rather not do this alone

Some people defend themselves using the how-to pages on this site, and that's partly why those pages exist. But if you want this off your plate: the consultation is free, it takes fifteen minutes, and you talk to me directly, with no intake screener, no telemarketer, and nobody that will call you six times afterward.

I can't guarantee an outcome, as no honest lawyer can. But you can offload the process, so you know that whatever can be done is being done while you go about the other things in your life. It's sort of like going to sleep at night knowing your alarm clock is set for the morning: you've got a placeholder your brain trusts. The night takes care of itself. Until then, it's my problem, not yours.

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