Debt collection has been a growth industry thanks to the Great Recession. As millions of Americans struggle to pay any of their bills, creditors are unloading debt to their collection agencies for pennies on the dollar. The collection agencies are coming down harder than ever on hurting consumers. There are numerous more consumer complaints about collection agency harassment. Courtrooms are being swamped by law firms using debt collection software. But consumers should know that they can hire an attorney to sue debt collectors for abusive practices.
Some collection agencies – abuse, violence and bogus claims
There are increasingly more collection agencies trying to take money from individuals who don’t have it right now. It was reported by CNN that harassing phone calls, abusive language and physical violence are becoming a bigger part of the collection agency business. The New York Times reports that a single law firm can use computer software to file thousands of debt collection cases, often depending on inaccurate or incomplete information supplied by creditors who sold the debt. The Post-Bulletin in Minneapolis reports that accounts have been tapped, wages seized and people confronted with arrest for debts they don’t owe or for inflated amounts.
Collection agency harassment goes up dramatically
Complaints of collection agency harassment went up by 50 percent in 2009, the Federal Trade Commission. The CNN article said they are on track to jump 13 percent more in 2010 depending on FTC complaints filed within the first six months. The biggest complaint is repeated calls. It is common for debt collectors to harass consumers with calls for extended periods of time. When they get somebody to answer the phone, they are more likely to be abusive. Complaints of collection agencies using obscene language spiked 35 percent last year. Complaints of debt collectors threatening or resorting to violence doubled last year.
Debt collection software will now sue indiscriminately
While harassment by collection agencies is increasing, they are also hiring lawyers to sue. The New York Times article said a debt buyer sends a law firm a database that contains consumer data including names, home addresses, outstanding balances and also the date of default. The law firm runs the data through debt collection software that runs suits through the entire legal system automatically, including collection letters, summonses and lawsuits. Most consumers who get sued by debt collection software tend to fail to show up in court, and those who do rarely have a lawyer. A court judgment gives debt buyers the ability to collect on the debt through actions like wage garnishment.
Bankruptcy laws fuel debt collection industry
The debt collection industry exploded beginning in 2005 with sweeping changes to federal bankruptcy laws that made it harder for individuals to get a fresh start. The debt buyers’ market expanded while people defaulted on loans. The Post-Bulletin article explained the nation’s five publicly traded debt buyers last year paid $ 835 million to acquire $ 20 billion in old debts. Credit card debt makes up the majority of the total Each type of charged-off debt, from unpaid cell phone accounts to hospital bills are for sale. Debt buyers base their claims on data that is up to 15 years old that could be extremely hard to verify, and they are ready to hound people for years.
To try and get besides collection agencies, consumer try to sue
Aggressive tactics are now more prevalent. The CNN article said collection agencies calling before 8 a.m. or after 9 p.m., demanding more money than what is owed, revealing a consumer’s debt to a 3rd party or threatening “dire consequences” like prosecution, jail time, property seizure or job loss. These practices are really illegal under the FTC’s Fair Debt Collection Practices Act. Consumers can take a collector to state or federal court for harassment because of this. If they win, the collection agency has to pay for any damages caused by the harassment, also as all of the court and attorney fees.
Discover more information
CNN on Yahoo
finance.yahoo.com/news/Debt-collectors-sock-it-to-cnnm-2499699064.html?x=&.v=4
New York Times
nytimes.com/2010/07/13/business/13collection.html?_r=1&emc=eta1
Post Bulletin
postbulletin.com/newsmanager/templates/localnews_story.asp?z=7&a=460512
