Discover Bank sold all credit cards to a Trust

#1 10-07-2004, 02:09 AM

I have been shown an SEC document, filed by Discover Bank, that proves that Discover Bank has sold (conveyed and changed ownership) of ALL DiscoverCard credit card accounts into a Trust by another name.

Question: How can Discover Bank (DiscoverCard, or Discover Financial Services) bring suit against anyone on a credit card receivable that none of these entities no longer own according to their OWN S-3 statement filed with the SEC under the Securities Act of 1933?

Here is the link to official government site:

http://www.sec.gov/Archives/edgar/da.../c80887sv3.htm

rushpat · #2 10-07-2004, 07:09 AM

Hmm... maybe they are acting as a collection agency for that trust now?

vanton57 · #3 10-07-2004, 08:44 AM

In looking at the link, it doesn't look like they sold the debt. It appears to me that they transferred the debt to a trust account which they own.

iamfreeru2 · #4 10-07-2004, 09:09 AM

I am in agreement with Vanton. Looks to me like that is all that was done.

seeker · #5 10-07-2004, 09:30 AM

On the latest CRA report, it states that the Discover account "sold to another Lender" Account balance $0

They are one of the two cards we have in litigation right now. I plan to call the judge's attention to that tomorrow!

Going to check the link now.

ON a similar note -- Citibank has a wholly owned subsidiary -- CSSI -- that is a collection agency -- in our paperwork, it says they "made every effort to collect" or what ever BS they purport, we never heard from them before we saw an affidavit in the court file -- Course we never heard from the DA either!

Seeker

#6 10-07-2004, 02:44 PM

Dnepr,

I am looking into this as well, albeit slowly b/c my plate is always full it seems. But what you are speaking of is called securitization. It is very common and just about every CCC and mortgage Co. does this. All of their Accounts Receivable are sold to a different entity, and the original bank/"alleged lender"/CCC becomes the servicer of the account. In this, it is their duty to continue to make all collection attempts. All this is stated in their very own prospectus to investors that they sell the accounts receivable, as it is required to give full disclosure to investors under the 33 Act. However, where do "collection attempts" end and a lawsuit begins? It seems on its face that if an entity is only a servicer b/c they sold their previous interest in the account to another entity, they are no longer the real party in interest. Does a servicer have standing to sue on a right they previously sold? What ownership interest was sold exactly? 100%? 51%? Or 49%? And depending on what percentage was sold, how could a servicer sue for the full amount if they no longer "own" the full amount of the receivable? I am confused by this right now and looking to talk to an expert in securitization and see how this is normally handled. But this so wrong in that we essentially become the funder of a different entity's bonds without our consent (not a new concept, but new in that it is on a public record!). It seems like fraud to me, but I do not know where the law stands on this issue, b/c there is full disclosure on a public record, although full disclosure was not given to the consumer as to where their account has been transferred to or what the CCC's intent was. On the other hand, if this practice is not approved by the courts and it was so simple as to defend a lawsuit by showing the original CCC is now a servicer with no rights in the account, no lawsuit by them could ever be won, and the entity which bought the account would have to begin to develop their own legal departments to sue on their losses. It seems like too simple of a victory, but maybe the truth was sitting under our noses the entire time, right there, on a public record, b/c greed has finally pushed them over the legal edge. But the simple truth remains: how can someone sell an interest and retain the full rights to sue on something they sold? The pure fact is that to sell something means to transfer an interest in it! Hence, the original CCC cannot be the real party in intersst to the full extent of the amount allegedly owed. Unfortunately, I doubt I will be pursuing this to its full extent b/c the limited amount I am being sued for is not wroth the amount I will have to spend to defend or extend my own energy to do so. You know, time is money thang.

Seeker,

Citibank has a duty to make every to collect before they can transfer that account on their books to a different reserve account for accounting/tax purposes. Looks like they are comitting fraud.

-squirrels

rushpat · #7 10-07-2004, 02:57 PM

Does this mean that DiscoverCard can now be treated as a 3rd party debt collector, instead of the originator of the alleged debt?

#8 10-08-2004, 02:37 AM

rushpat,

If that is the case, our cups runneth over with FDCPA violations! But it unfortunately looks like they would be excluded under the definition of who is not a debt collector, b/c they are still the (yeah, whatever) originator of the loan. See 1692(a)(6)(F).

-squirrels

rushpat · #9 10-08-2004, 07:26 AM

Even if they originated the loan, since they don't "OWN" it anymore, wouldn't that change the situation?

#10 10-09-2004, 06:48 AM

sorry if this is mentioned in the trust dox, but, is Discover a Trustee?

jon