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. Consumer complaints about collection agency harassment are skyrocketing. Law firms using debt collection software are swamping courtrooms. But consumers should know that they can hire an attorney to sue debt collectors for abusive practices.
A couple of collection agencies – abuse, violence and bogus claims
There have been a growing number of collection agencies trying to take money from people who don’t have it right now. 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. According to the Post-Bulletin in Minneapolis, accounts have been tapped, wages seized and people threatened with arrest for debts they don’t owe or for inflated amounts.
Collection agency harassment goes up
Complaints of collection agency harassment swelled by 50 percent in 2009, according to the Federal Trade Commission. The CNN article said they are on track to jump 13 percent more in 2010 which is 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 days, weeks, months and even years. After someone answers the phone, they can be abusive. Complaints of collection agencies using 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
While harassment by collection agencies is increasing, they’re 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 then will run suits through the entire legal system automatically, including collection letters, summonses and lawsuits. Most 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 garnishment.
Bankruptcy laws fuel debt collection industry
The debt collection industry exploded starting in 2005 with sweeping changes to federal bankruptcy laws that made it harder for people in financial trouble to get a fresh start. The debt buyers’ market expanded while people defaulted on loans. As outlined by 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 Every type 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 could be extremely hard to verify and are very ready to hound individuals for years.
To get besides collection agencies, consumers sue
Aggressive tactics are now more common. As outlined by the CNN article, collection agencies calling before 8 a.m. or after 9 p.m., demanding additional 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 considered 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. .
More information available at these websites
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
