Debt collection has been a growth industry within the U.S. thanks to the Great Recession. Creditors are unloading debt to collection agencies for pennies on the dollar. Collection agencies are coming down much harder on consumers lately. About collection agency harassment, there have been more consumer complaints. 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.
A few collection agencies – abuse, violence and bogus claims
More collection agencies are trying to get money out of individuals. 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 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
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 which is depending 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. They can be abusive after someone answers the phone. Complaints of collection agencies using obscene language spiked 35 percent last year. Complaints of debt collectors threatening or resorting to violence just about doubled last year.
Debt collection software will now sue indiscriminately
When harassment by collection agencies are surely increasing, they’re 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 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. 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 or property garnishment.
All of the 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. People defaulted on loans which then expanded the debt buyers’ market. 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 almost all of the total But almost every type of charged-off debt, from unpaid cell phone accounts to hospital bills is for sale. Debt buyers base their claims on data up to 15 years old that can be extremely hard to verify and are very ready to hound individuals for years.
To try and get besides collection agencies, consumer try to sue
Aggressive tactics are becoming 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 third party or threatening “dire consequences” like prosecution, jail time, property seizure or job loss. These practices are really illegal under the FTC’s Fair Debt Collection Practices Act. Consumers can take a collector to 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.
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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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