Thanks to the recession, debt collection has been a growth industry. Creditors are unloading debt to collection agencies for pennies on the dollar. The collection agencies are coming down harder than ever on hurting consumers. There are many more consumer complaints about collection agency harassment. Courtrooms are being swamped by law firms using debt collection software. But consumers have to know that they can hire an attorney to sue debt collectors for abusive practices. Post resource – Consumers have legal protection from collection agency harassment by Personal Money Store.
A few collection agencies – abuse, violence and bogus claims
There have been more and more collection agencies trying to take money from individuals 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. It was reported by The New York Times 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 threatened with arrest for debts they do not owe or for inflated amounts.
Collection agency harassment goes up dramatically
Complaints of collection agency harassment went up by 50 percent in 2009, as outlined by the Federal Trade Commission. The CNN article explained that they’re on track to jump 13 percent more in 2010 depending on FTC complaints filed in the first six months. The top 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 doubled last year.
Debt collection software will now sue indiscriminately
When harassment by collection agencies is increasing, they’re also hiring lawyers to sue. According to 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 also 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 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.
The 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 individuals to get a fresh start. The debt buyers’ market expanded while people defaulted on loans. 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 almost all of 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 could be difficult to verify, and they’re ready to hound people for years.
Suing being done by consumers to get even with collection agencies
More common are aggressive tactics. According to 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 actually illegal under the FTC’s Fair Debt Collection Practices Act. Consumers can take a collector to state or federal court for harassment. If they win, the collection agency can have to pay for any damages caused by the harassment, as well as court and attorney fees.
More information accessible 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
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