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NEW YORK (TheStreet) -- A dirty little secret in banking has been splattered all over the front pages recently: the entire home-foreclosure process is FUBAR.

But this isn't new. A great judge in Queens, N.Y., named

Arthur Schack

was writing scathing legal opinions on skuzzy foreclosures years ago, long before he gained notoriety for tossing foreclosures out of court.

If you put your head down on the tracks, you can hear another legal rumbling. Only this time, the approaching express isn't screwed-up foreclosures but screwed-up credit card collection lawsuits. Tied to the tracks, metaphorically speaking, are every major bank that has significant credit card exposure:


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Bank of America

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Capital One

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American Express

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and so on. It's a rumble of consumers fighting back, and judges refusing to be an extension of the big banks' collection departments. It's a lovely sound.

You can see evidence of it on the Internet, on consumer- and debtor-oriented Web sites -- such as

this one

that's not too fond of Bank of America. Delinquent credit card customers, who are often subjected to thuggish

collection tactics

and fraudulent "

sewer service

," are finding that credit card companies have the same Achilles heel as the mortgage bankers. The paperwork that accompanies credit card collection lawsuits can be as screwed-up and deficient as the famously loosey-goosey foreclosure documents.

I'm not saying there are phony signatures and stuff like that out there (though it wouldn't surprise me). Like mortgages in foreclosure, defaulted credit card accounts are often pushed into court without proper paperwork. This is especially so when credit card receivables are sold to collection agencies for pennies on the dollar, often -- as in the secondary mortgage market -- without proper paperwork being forwarded, so there isn't always evidence that the money is actually owed.

Courts are getting so picky that even the heinous mandatory arbitration system -- in which cardholders, like brokerage customers, are dragged into "kangaroo court" proceedings -- is being thwarted by conscientious jurists. To which I can only say, "Bravo!" The playing field has tilted too far in favor of the banks, and this can help counter that trend. It's also a kind of rough justice -- the price that bankers pay for sending credit cards to anyone with a heartbeat. When the customers they try to screw with the "sweat box" and other

usurious tactics

fight back -- well, what can I say? My heart goes out to those poor, downtrodden bankers.

Here's one example of the kind of nightmare credit card issuers (sniff) face when cardholders fight back -- or even when cardholders don't fight back, and when the bankers' lawyers appear before the wrong judge. That is to say, a conscientious judge. For example, a

credit card lawsuit

was thrown out in New York last year because of sloppy paperwork, even though there was an arbitration award and the cardholder didn't even contest the claim. FIA Card Services was trying to collect on a $20,000 judgment that was awarded in an arbitration ruling against the holder of an MBNA credit card.

Fortunately, a wide-awake judge named F. Dana Winslow was assigned to what is usually a routine case. FIA wanted the judge to confirm the arbitration award. But the judge wouldn't just sign the form and move on to the next case. Legal standards, she said, required a sharp look at the papers. "In view of the recent credit crisis, the urgency of such scrutiny is apparent."

So she went over the papers with a fine-tooth comb. She didn't much care for the way the papers were served, so that made her look at the lawsuit documents even closer. FIA was successor to MBNA, and Winslow wasn't quibbling with that. But she didn't like the fact that FIA filed as an exhibit a "credit card agreement" that was undated and unsigned. Ditto for the fact that credit card statements weren't attached to the suit, and there wasn't any other proof of the amount owed. That was, she said, a "fatal deficiency." Thus, she said, she couldn't rule on whether the arbitration award was rational -- the ultra-low standard banks must leap to get their kangaroo-court judgments affirmed. The suit was tossed out of court, without the cardholder even showing up and putting on a defense.

When a buyer of defaulted credit card receivables (such as a collection agency) is involved, there's the added element of proving that the debt even exists. The result is court cases like this other

unpublished decision

, also in New York, in which a collection agency sought to collect on a Providian National Bank credit card account. The court found that there was no proof that the collection agency had standing to bring the suit. The suers had sought "summary judgment" to get a quick victory. Not only was that denied, but the judge threw the entire case out of court on his own initiative. Way to go, New York State Supreme Court Justice Melvyn Tanenbaum!

This kind of thing isn't necessarily going to cause the kind of havoc that the foreclosure mess is causing for the banks. It means that the banks' uncollectable receivables are prone to increase and that -- oh dear, what a tragedy! -- the vultures that buy defaulted debts, including the sleazeballs who try to collect ancient

"zombie" debt

, are more likely to lose in court.

This could fizzle out, or it could become a big problem for the banks. Either way, it's going to be fun to watch.

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Gary Weiss has covered Wall Street wrongdoing for almost a quarter century. His coverage of stock fraud at BusinessWeek won many awards, and included a cover story, �The Mob on Wall Street,� which exposed mob infiltration of brokerages. He uncovered the Salomon Brothers bond-trading scandal, and wrote extensively on the dangers posed by hedge funds, Internet fraud and out-of-control leverage. He was a contributing editor at Conde Nast Porfolio, writing about the people most intimately involved in the financial crisis, from Timothy Geithner to Bernard Madoff. His book "Born to Steal" (Warner Books: 2003), described the Mafia's takeover of brokerage houses in the 1990s. "Wall Street Versus America" (Portfolio: 2006) was an account of investor rip-offs. He blogs at