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. About collection agency harassment, there are more consumer complaints. Courtrooms are being swamped by law firms using debt collection software. But consumers need to know that they can hire an attorney to sue debt collectors for abusive practices.
Collection agencies – abuse, violence and bogus claims
More collection agencies are trying to pry money from more people who don’t have it. CNN reports 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 info 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 do not owe or for inflated amounts.
Collection agency harassment skyrockets
Complaints of collection agency harassment swelled by 50 percent in 2009, as outlined by the Federal Trade Commission. The CNN article said they’re on track to jump 13 percent more in 2010 based on FTC complaints filed in 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. After somebody answers the phone, they can be abusive. Complaints of collection agencies using obscene or abusive language spiked 35 percent last year. Complaints of debt collectors threatening or resorting to violence more than doubled last year.
Debt collection software now sues indiscriminately
When harassment by collection agencies is increasing, they are also hiring lawyers to sue. As outlined by the New York Times article, a debt buyer sends a law firm a database that contains consumer data including names, home addresses, outstanding balances and the date of default. The law firm runs the data through debt collection software that runs suits through the legal system automatically, including the collection letters, summonses and lawsuits. The consumers who get sued by debt collection software 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 or property garnishment.
Bankruptcy laws fuel debt collection industry
The debt collection industry exploded in 2005 with changes to federal bankruptcy laws that made it harder for people in financial trouble to get a fresh start. Individuals defaulted on loans which then expanded the debt buyers’ market. According to the Post-Bulletin article, 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 total But almost all of the types of charged-off debt, from unpaid cell phone accounts to hospital bills are for sale. Debt buyers base their claims on data up to 15 years old that can be extremely hard to verify, and they are ready to hound people for years.
Suing being done by consumers to get besides collection agencies
Aggressive tactics are now more prevalent. The CNN article explained that 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 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, as well as all of the court and attorney fees.
More info available at these sites
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
