One of the most frustrating aspects of collection litigation involves the problems associated with cases that cannot be resolved without the creditor “proving the debt.” This requirement is part of the Plaintiff (creditor) having to demonstrate to the Court (or even a jury) that the money is, in fact, owed. In order to meet this proof requirement, the collection attorney will (in most cases) need a “witness.” The witness needs to have some capacity (meaning personal knowledge of the facts in question) to testify as to the books and records of the creditor so as to demonstrate that the money is, in fact, owed. In many cases, it may be the credit manager or the salesperson who was involved in the subject transaction.

The “most appropriate” witness may vary dependent upon the issues in question. For example, if earned vs. unearned credits are the issue, the credit manager will be the appropriate witness. However, if the issue is failure of the product to satisfy a represented function, it may be necessary to involve the salesperson or other “involved party” to insure the witness is capable of testifying from “personal knowledge.”

As is obvious, this process is extremely inefficient. Inefficiency is greater in cases where the amount in question (the amount of the claim) is not significant enough to justify the time and travel associated with sending a witness to the subject court site. Our experience has been that the centralization of credit departments has made this problem more common. Magnifying the problem is the nagging question regarding actual collectability of the case–you can win the battle (prove the debt is valid) and lose the war (not be able to collect the judgment).

As most creditors are aware, debtor attorneys (and even debtors for that matter) are well aware of the advantages associated with the inefficiency of litigation. Even more and more debtors are using the inefficiency of the legal system as a weapon in dealing with their creditors. Many will use the requirement of a witness as a means to test the creditor’s stomach for pursuing the litigation to its ultimate conclusion.

Because of these inherent practical problems of collection litigation (and specifically with the witness requirement), we train our collectors and encourage our clients to engage in collection practices that can help reduce the need for a witness and minimize the number of cases that actually go to trial. In this regard, consider the following suggestions:

i) Push hard for post-dated checks (irrespective of concern about NSF). Check cases rarely go to trial and if the check is returned NSF, actual litigation resulting out of the NSF check will remove most issues associated with the validity of the debt.

ii) If creditor cannot pay, request an explanation in writing as to why and try to obtain a written admission of the validity of the indebtedness.

iii) Keep all correspondence in debtor’s file. Interestingly, in many cases, correspondence which was deemed unrelated to collection issues may very well be admissable, which would eliminate the necessity of going to trial and, therefore, eliminate the necessity of the “Primary Witness.”

iv) Consider the availability of witnesses and the difficulties associated therewith in considering all settlement offers.

Our legal department is committed to playing an active role in the coordination of witness efforts to collection counsel. Early attention to this issue is necessary and avoids last minute stress. Should you have questions regarding which cases may or may not require a witness, please contact our legal department and they will refer you to the attorney handling the case or deal with the issue themselves. Inasmuch as everyone can be frustrated with collection litigation, it remains an effective tool of last resort in dealing with problem cases of this nature.