In most cases, people who receive collection calls accrued the debt themselves and have fallen behind on their payments. In some instances, however, these charges are a result of identity theft. Because people rely on technology to pay bills and make banking transactions, it is important to stay protected against hackers and Internet fraud. The best way to avoid collection agency harassment is to reduce the risk of having your identity stolen in the first place.
Consumers who use debit cards should check their account activity frequently. Every major bank has an online banking option which makes it quick, convenient, and free to monitor checking accounts. Anyone who comes across questionable or suspicious transactions on their statement should contact the bank as soon as possible.
Credit cards are better protected against fraud. Therefore, they should be used for online shopping and other Internet transactions instead of debit cards. Information shared online runs the risk of being stolen by hackers and used without your knowledge or consent. Again, people who suspect their accounts have been used fraudulently should contact the credit card company immediately.
Collection calls only begin once payments have not been made for a significant amount of time. Regular credit checks are a surefire way to stop theft in its tracks. Some criminals can open new cards in the victim’s name; in some cases, the only way a person knows that this new account exists is by seeing it on their credit report. Credit scores are very sensitive to missed payments, and even a fraudulent card can have a negative impact on your score for a while.
It is important to understand why collection calls feel like harassment in order to deal with the stress they create.
Many Americans have fallen behind on their credit card, mortgage, and/or car payments because they have experienced some form of financial difficulty. This causes stress on the individual, as well as family and friends that are affected. To make matters worse, collection agencies are making harassing collection calls about past-due accounts on a daily basis. These agencies use fear tactics on vulnerable people for one purpose: to make money.
When a consumer falls behind on their payments, creditors often retain debt collectors or sell the debt to them for a fraction of the total debt. Now, it is up to the collection company to turn a profit for themselves by collecting as much money as possible. It is typical for these agencies to pitch a “deal” to settle for less than the original debt; in fact, they are still making a profit because they bought the debt for far less. This is when the debt harassment starts.
Debt collectors will often use threats and lie to the consumer to try to force a payment out of them. They will up the ante even further to squeeze as much money out of the person as they can. This causes added stress and anxiety on the consumer who is already overwhelmed by their finances in the first place. Even though some of the tactics they use are unethical, collections companies continue to use them for financial gain.
It is important for people in this situation to remember to stay calm. Many of the intimidation practices used by debt collectors calling the home or office are empty promises. If the threats feel like harassment then an experienced debt collection lawyer can help you learn your rights and stop the deception once and for all. Otherwise, taking positive steps to get out of debt is the best way to stop collection calls.
Across the nation, there is a surge in lawsuits against people who aren’t paying their bills, driven by the debt-buying industry that has surged in the past three years as debt has become cheaper and cheaper to buy amid hard economic times.
On the same day that Midland Funding LLC filed suit against a New York social worker, it filed 109 lawsuits against consumers with delinquent debt in Bronx County Civil Court. The courthouse has handled 4,279 similar cases since the beginning of the year. None of the debtors sued that day had lawyers and only 10% showed in court.
Roughly 94% of collection cases filed against borrowers result in default judgments in favor of the debt buyer, according to industry estimates. The majority of borrowers don’t have a lawyer, some don’t know they are even being sued, and others don’t appear in court, say judges.
The increase in lawsuits creates problems for the legal system and some judges have claimed hearing as many as 400 debt collection cases in a single day. In a number of cases, the debt buyer’s ignore state and federal laws, such as the Fair Debt Collection Practices Act.
A growing number of cases brought by debt buyers are plagued by sloppy, incomplete or even false documentation of debts, according to the 20 judges around the country interviewed by the Journal. According to a deposition filed as part of a lawsuit against Midland Funding, an employee testified that he signs 200 to 400 affidavits a day and very few are checked for accuracy.
Read the entire story here: Boom in Debt Buying Fuels Another Boom—in Lawsuits
The collection agency of Pressler & Pressler has a track record of wrongfully identifying consumers and strings of violations of the Fair Debt Collection Practices Act. In a recent case, Mr. Mark Hoyte was wrongfully identified by Pressler & Pressler as a debtor who owed $919 on a Sears-Citi credit card.
Pressler & Pressler hired a law firm specializing in debt collection to contact Mr. Hoyte about collecting on the debt. When Mr. Hoyte explained to them that he had never owned a Sears-Citi card, the law firm asked for personal information to verify the debt was not his. They asked him about the last 2 digits of his Social Security Number and his Date of Birth for verification. They didn’t match.
Despite this, Pressler & Pressler continued onward and the law firm prepared a lawsuit against Mr. Hoyte, who received a summons to appear in court to defend himself.
Read more on this story here: Hello, Collections? The Worm Has Turned
When Michael Gazzarato took a job that required him to sign hundreds of affidavits in a single day, he had one demand for his employer: a much better pen.
“They tried to get me to do it with a Bic, and I wasn’t going — I wasn’t having it,” he said. “It was bad when I had to use the plastic Papermate-type pen. It was a nightmare.”
The complaint could have come from any of the autograph marathoners in the recent mortgage foreclosure mess. But Mr. Gazzarato was speaking at a deposition in a 2007 lawsuit against Asset Acceptance, a company that buys consumer debts and then tries to collect.
His job was to sign affidavits, swearing that he had personally reviewed and verified the records of debtors — a time-consuming task when done correctly.
Sound familiar?
Banks have been under siege in recent weeks for widespread corner-cutting in the rush to process delinquent mortgages. The accusations have stirred outrage and set off investigations by attorneys general across the country, prompting several leading banks to temporarily cease foreclosures.
But lawyers who defend consumers in debt-collection cases say the banks did not invent the headless, assembly-line approach to financial paperwork. Debt buyers, they say, have been doing it for years.
“The difference is that in the case of debt buyers, the abuses are much worse,” says Richard Rubin, a consumer lawyer in Santa Fe, N.M.
“At least when it comes to mortgages, the banks have the right address, everyone agrees about the interest rate. But with debt buyers, the debt has been passed through so many hands, often over so many years, that a lot of time, these companies are pursuing the wrong person, or the charges have no lawful basis.”
The debt in these cases — typically from credit cards, auto loans, utility bills and so on — is sold by finance companies and banks in a vast secondary market, bundled in huge portfolios, for pennies on the dollar. Debt buyers often hire collectors to commence a campaign of insistent letters and regular phone calls. Or, in a tactic that is becoming increasingly popular, they sue.
Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.
Problems with this torrent of litigation are legion, according to the Federal Trade Commission, led by Jon Leibowitz. The agency issued a report on the subject, “Repairing a Broken System,” in July. In some instances, banks are selling account information that is riddled with errors.
More often, essential background information simply is not acquired by debt buyers, in large part because that data adds to the price of each account. But court rules state that anyone submitting an affidavit to a court against a debtor must have proof of that claim — proper documentation of a debt’s origins, history and amount.
Without that information it is hard to imagine how any company could meet the legal standard of due diligence, particularly while churning out thousands and thousands of affidavits a week.
Analysts say that affidavit-signers at debt-buying companies appear to have little choice but to take at face value the few facts typically provided to them — often little more than basic account information on a computer screen.
That was made vividly clear during the deposition last year of Jay Mills, an employee of a subsidiary of SquareTwo Financial (then known as Collect America), a debt-buying company in Denver.
“So,” asked Dale Irwin, the plaintiff’s lawyer, using shorthand for Collect America, “if you see on the screen that the moon is made of green cheese, you trust that CACH has investigated that and has determined that in fact, the moon is made of green cheese?”
“Yes,” Mr. Mills replied.
Given the volume of affidavits, even perfunctory research seems impossible. Cherie Thomas, who works for Asta Funding, a debt buyer in Englewood Cliffs, N.J., said in a 2007 deposition that she had signed 2,000 affidavits a day. With a half-hour for lunch and two brief breaks, that’s roughly one affidavit every 13 seconds.
Executives at debt-buying firms say they have systems to ensure the accuracy of their affidavits. Robert Michel, chief financial officer at Asta Funding, says his company hires outside lawyers to read over affidavits, then has staff employees check their work.
“The people who work in this area are well trained, and they know that when they sign a statement they have to follow certain procedures,” he said. “They know what they are doing.”
He added that the pace of affidavits filed by Asta had dwindled since 2007 and was now closer to “several hundred” a day, rather than 2,000.
Even if debt buyers purchase the requisite information directly from a bank, it may be flawed. Linda Almonte oversaw a team of advisers, analysts and managers at JPMorgan Chase last year, when the company was preparing the sale of 23,000 delinquent accounts, with a face value of $200 million. With the debt sold at roughly 13 cents on the dollar, the sale was supposed to net $26 million.
As the date of the sale approached, Ms. Almonte and her employees started to notice mistakes and inconsistencies in the accounts.
“We found that with about 5,000 accounts there were incorrect balances, incorrect addresses,” she said. “There were even cases where a consumer had won a judgment against Chase, but it was still part of the package being sold.”
Ms. Almonte flagged the defects with her manager, but he shrugged them off, she says, and he urged her and her colleagues to complete the deal in time for the company’s coming earnings report. Instead, she contacted senior legal counsel at the company. Within days, she was fired. She has since filed a wrongful termination suit against Chase.
A Chase spokesman declined to comment, citing the pending litigation.
The majority of lawsuits filed in debt collection cases go unanswered, which is why most end with default judgments — victories for creditors that allow them to use court officers or sheriffs to garnish wages or freeze bank accounts, among other remedies.
There is a persistent argument about why so few consumers respond in these cases. Consumers often know they owe the debt and conclude that fighting about it is pointless, said Barbara Sinsley, general counsel at DBA International, a trade group of debt buyers.
Lawyers for consumers, on the other hand, contend that few debtors ever learn about the legal action until it is too late, often because the process server charged with alerting them never actually delivered a notification. In those instances when a consumer hires a lawyer, the consumer often prevails.
“I’ve lost four and I’ve taken about 5,000 cases,” said Jerry Jarzombek, a consumer lawyer in Fort Worth. “If the case goes to trial, I say to the judge, ‘Your honor, imagine if someone came in here to give eyewitness testimony in a traffic accident case and they didn’t actually see the crash. They just read about it somewhere. Well, this is the same thing.’ The debt buyers don’t know anything about the debt. They just read about it.”
Every plaintiff’s lawyer and consumer advocate in this field has a theory about why there has been so much fury over mortgage paperwork abuses but so little about debt collections. The stakes in collections cases are smaller, and of course, debt buyers were never given a taxpayer bailout.
“But what people don’t realize,” said Daniel Edelman, a plaintiff’s lawyer in Chicago, “is that the mortgage issue and debt collections are intimately connected. The millions of default judgments out there — you better believe that’s one reason that homeowners can’t afford their homes.”
Article Source: Robo-Signing at Companies that Buy Consumer Debt
Cohen & Slamowitz has only 14 lawyers on staff, but it manages to file about 80,000 lawsuits a year.
The Woodbury, N.Y., firm files debt collection suits, and it uses computer software to help prepare its cases, the New York Times reports. It also hires outside lawyers to appear in court on a per diem basis and has on staff 30 to 40 paralegals and secretaries, as well as about 60 people trying to collect debts, firm partner David Cohen said in a 2009 deposition.
One software program used by law firms, Collection-Master, can generate collection letters, summonses and lawsuits, according to the story. The plaintiffs are often debt buyers who purchased the right to collect debt from credit card companies for as little as 5 cents or less on the dollar. The debt buyers send their databases of consumers in default to law firms, which then feed the information into their software programs.
In a Times interview, Richard Rubin, a New Mexico lawyer who represents consumers in debt collection cases, criticizes the automated suits as “the factory approach to practicing law.” Other critics say the suits are sometimes based on inaccurate or insufficient information, and the huge numbers of cases are straining the court system.
The Federal Trade Commission issued a report on the debt collection system Monday that calls on states to require more information about debts in the lawsuits, according to a press release. The FTC also says states should take steps to make it less likely that collectors will sue after the statute of limitations has run.
Original article here.
A New York judge has determined that a law firm violated the Federal Debt Collections Practices Act (FDCPA) after it mass produced collection letters and litigation documents from it’s computer system without a thorough review of the alleged debt.
The law firm sued Arthur Miller over an alleged debt that they purchased from a previous Lord & Taylor’s account after he failed to respond to a collection letter, but there was never a meaningful review of the alleged debt.
The decision “digs a grave for attorneys” who send letters and then file suit on behalf of debt buyers with “no information, no documents, and no meaningful attorney review,” said Brian L. Bromberg of the Bromberg Law Office, who has represented Miller for the past eight years.
Read the full story here.
1. Stop the Collection Calls: Instruct the debt collector to stop calling you at home or at work. Write them a letter if you can with those instructions and save a copy. If the calls continue, they have violated the Fair Debt Collection Practices Act by harassment. Stopping the calls requires the collector to resort to letters that state the nature of the debt and what is sought. You can take the time to research all the facts to determine if you in fact owe the money or not, and whether you need to consult with others before responding. You are not put on the spot by unexpected calls from rude debt collectors who may make you upset, aggravated or otherwise uncomfortable in your own home or at work.
2. Know the Statute of Limitations: Each state has a term of years, referred to as a statute of limitations, within which the debt collector must file suit or lose the right to do so. Once expired, you may be sued but you not forced to pay if you raise the statute of limitations as a defense. Debt collectors routinely sue on old debt in hopes that the consumer will not know how to respond, however a law suit that seeks payment for a stale debt violates the Fair Debt Collection Practices Act.
3. Keep Records of All Contacts With All Debt Collectors: Save “throw away” letters seeking payment or communications from a debt collector. Keep a log of calls, date, time, originating phone number and caller. If you have an agreement or sent a letter, retain copies. Keep these in a safe place. Often what is resolved or dealt with on one day, can reappear later without any acknowledgment by the collector of the prior events. And debts are routinely rotated between several debt collection agencies, usually without any communication between them regarding your account. Perhaps most importantly, debt collectors benefit by the absence of keeping records, calling and writing over and over again if it will lead to more money being paid. Track your accounts, know your history with debt collectors and don’t trust your memory alone.
Debt Collectors May Not:
- communicate before 8:00 a.m. and after 9:00 p.m. local time
- communicate with consumers at their place of employment after having been advised that the employer does not permit such calls
- misrepresent its identity as a debt collector
- publish the consumer’s name or address
- engage in communication with third parties except to obtain the current address or phone number of a debtor
- threaten to or actually report false credit report information
About CreditLaw.com:
What is CreditLaw.com? We are lawyers who stop abuse by debt collectors in their tracks. A service of Kimmel & Silverman, PC, helping over 50,000 consumers since 1991.
