Debt Collection Lawsuits for “Phantom Debts” Result in Real Harassment

Debt buyers may not have any evidence to support their collection lawsuits, but that does not stop them from harassing consumers. According to yesterday’s lead story in the Star Tribune, debt buyers bring lawsuits with nothing but a row of numbers passed along by the previous owner of the debt, then support them with bogus “proof.”

Some debt buyers take more extreme measures. Thomas Labeaux, owner of Debt Equities, apparently trapped a consumer in her driveway, pretending he was a sheriff and threatening to take her newborn into protective custody if she did not pay a debt.

Others are not so aggressive, but still egregious. For example, Ivan Jiminez, an employee for one of the largest debt buyers in the country—Midland Funding—recently got in trouble for signing affidavits without knowing anything about what he was signing. And as we already reported, Portfolio Recovery Associates and CACV were signing a dead woman’s name to affidavits.

Unfortunately, the courts are not doing much to curtail the debt buyers’ activities.

“When consumers make small mistakes, such as failing to answer a lawsuit, the full power of the courts comes down on them,” said Sam Glover, a consumer rights attorney in Minneapolis. “But when a debt buyer flouts the law, it rarely experiences any consequences and keeps collecting as if nothing happened.”

For better or for worse, this is the way the civil justice system works. In order to protect your rights, you must show up in court to assert them. Debt buyers bring their claims by the dozen or hundred, playing the odds that few consumers will challenge them. Few do. Fortunately, a hiring a consumer lawyer or free legal forms can do a lot of good for those few.

Hounded: Minnesotans in debt | Star Tribune