Debt collection has been a growth industry in the U.S. 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. Collection agencies are coming down much harder on consumers lately. There are numerous more consumer complaints about collection agency harassment. Courtrooms are being swamped by law firms using debt collection software. But consumers should probably know that they can hire an attorney to sue debt collectors for abusive practices.
Numerous collection agencies: abuse, violence and bogus claims
More collection agencies are trying to pry money from more individuals who don’t have it. 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 based on inaccurate or incomplete details supplied by creditors who sold the debt. The Post-Bulletin in Minneapolis reports that accounts are tapped, wages seized and individuals confronted with arrest for debts they don’t owe or for inflated amounts.
Harassment from collection agency skyrockets
Complaints of collection agency harassment increased 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 which is depending on FTC complaints filed in the first six months. Repeated calls is the biggest complaint. It is common for debt collectors to harass consumers with calls for extended periods of time. They could be abusive after someone answers the phone. Complaints of collection agencies using obscene or abusive language spiked 35 percent last year. Complaints of debt collectors threatening or resorting to violence just about doubled last year.
Debt collection software sues indiscriminately
While harassment by collection agencies are certainly increasing, they are also hiring lawyers to sue on a mass scale. 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 legal system automatically, such as the 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 things like wage or property 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 to get a fresh start. People 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 impossible to verify, and they’re ready to hound people for years.
To get even with collection agencies, consumers sue
Aggressive tactics are now more common. 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 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 has to pay for any damages caused by the harassment, as well as all of the court and attorney fees.
Citations
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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