Countersuits are acceptable losses for debt collectors
Speaking of screwing consumers, California consumer lawyer Jonathan Stein has an instructive story on what happens when corporations and debt collectors try to bully consumers into paying debts—even debts they do not owe.
His client sold a car that was later involved in an auto accident. Because the buyer did not register the title or obtain insurance, Allstate decided to go after Stein’s client for the damage. Neither Allstate nor its debt collector accepted her transfer of title documents, and ended up suing her for $3,500. She hired Stein, who helped her win a motion for sanctions for $1,200 and, later, settled a lawsuit for malicious prosecution for $5,000.
Should this be an instructive lesson for the debt collection industry? Maybe. I think cases like this fall well within the range of acceptable losses for collection agencies. So what if they lost $6,200 to Stein’s client. Just one debt collector—Unifund—is suing 5,500 people a year in California.
Stein’s win is a drop in the bucket. The money debt collectors can earn by bullying consumers more than makes up for the loss.
Related: Fake Debt Collectors Terrify Consumers,Debt collectors on the rampage,Debt collectors figure out how to close the circle,
Tags: accident, agency, Allstate, auto, California, collection, debt collection, debt collector, insurance, Jonathan Stein, Unifund
Filed under: Consumer Lawsuits, Coping With Credit & Debt
Sam -
Drop in the bucket? Not to my client. To my client, it works out to about a $10,000 difference. She would have paid $3,500 without an attorney and ended up recovering $6,200. For most of my clients, that is a lot of money and definitely not a drop in the bucket.
Is it a drop in the bucket for the debt collectors? Sure. But, you have to start somewhere. No one is going to jump in and make a debt collector go away. But, little by little individuals can have an influence on the entire industry and clean up the practice. People need to be encouraged to assert their rights, even if it is a drop in the bucket for any one debt collector.
Jonathan
I wholeheartedly agree.