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.
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A Texas jury has awarded over $1.5 million to a consumer abused by debt collectors working for Advanced Call Center Technologies, LLC. The jury awarded $50,000 in mental anguish and $1.5 million in punitive damages.
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This is old-ish news, but I just got wind of it. Debt buyers and prolific lawsuit-filers CACV and Portfolio Recovery Associates, together with debt collection law firm Johnson, Rodenberg & Lauinger, were supporting their lawsuits with affidavits of Martha Kunkle. Apparently, an employee of Washington Mutual Bank (now bankrupt) told others to sign Martha Kunkle’s names to those affidavits.
The problem was that Martha Kunkle died fifteen years ago, in 1995.
The defendants settled for over one million dollars.
This is not the first time Johnson, Rodenberg & Lauinger has appeared here. Last April, a jury awarded a Montana consumer $311,000 for violations of the Fair Debt Collection Practices Act.
Debtors’ prison was supposedly eliminated in the United States in the 19th century, but in the 21st, people are still being arrested and tossed into jail for debts. It just takes an extra step these days.
This morning, I sat in court and watched a debt collector get six bench warrants for debts under $1,000. I recognized the names of all the plaintiffs: Palisades, LVNV, and Capital One. Palisades and LVNV, and maybe Capital One, probably would not have won their lawsuit if the defendants challenged them. But each defendant defaulted when he or she did not answer the lawsuit, and gave up their right to challenge it.
After getting a default judgment, the debt collector asked the court to issue an order for disclosure. An order for disclosure orders the debtor to disclose his or her assets—where they keep their money. Like any other court order, failure to obey will result in jail time. This makes perfect sense under ordinary circumstances, but debt collectors use the courts like an assembly line leading to jail.
The problem is not necessarily the court rules and Minnesota statutes that the debt collectors are using. Defendants should have to answer a lawsuit to challenge it, and court orders must be enforceable. But in order to do those things, defendants must understand their rights, as well as the documents they receive. Unfortunately, the rules and statutes, along with the court’s forms, are practically incomprehensible to non-lawyers. As a result, non-lawyers, like the defendants who will be tossed in jail as a result of what I saw this morning, probably had no idea how to answer their lawsuit, or that they would go to jail if they did not disclose their assets.
Debt collectors are just taking advantage of a system that is unfriendly and nearly impenetrable to non-lawyers.
New York Attorney General Andrew Cuomo sues some of the most abusive debt collectors. The first consumer did not even owe the debt, but ended up paying $900 just to make the abuse stop!
Embedded video from CNN Video
This kind of behavior is why the Fair Debt Collection Practices Act exists. If you are getting calls from debt collectors who harass and abuse you, you do not have to take it. Call a consumer rights lawyer!
Debt collection is something that everyone has to deal with. Case in point: a debt collector once left a message on my mom’s answering machine, where I had not lived for eleven years. My credit report was squeaky clean—I checked—but apparently there is another Sam Glover out there with worse luck.
Whenever you get a message from someone about “an important business matter,” it is most likely a debt collector trying to get in touch with you. When this happens, you should return the call, but be careful. If the debt is not yours, you want to avoid further calls, not to end up in the debt collector’s Rolodex.
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Minnesota debt buyer and collector Debt Equities, LLC, must pay nearly $32,000 to resolve a Fair Debt Collection Practices Act lawsuit in Minnesota. Earlier this year, Debt Equities offered judgment for $15,000 (PDF). Just today, Magistrate Judge Keyes ordered Debt Equities to pay an additional $16,700.42 as attorney fees and costs (PDF).
Judge Keyes also said some very nice things about me:
Mr. Glover is obviously a skilled practitioner in the field of consumer law and has developed an excellent reputation in his field . . . .
Debt Equities, LLC, ordered to pay nearly $32,000 under the FDCPA | consumerlawyer.mn
More consumers are falling behind in their bills. 6.6% of all credit cards are more than 30 days late, and delinquencies tracked by the American Bankers Association are the highest since it began tracking them in 1974.
The rise in defaults—which is really not news, at this point—will inevitably lead to an increase in debt collection activity, including abuse and harassment, and even more bankruptcies, which are already on the rise (despite a slight dip in June).
In other words, the need for stronger consumer protections is greater than ever. The Fair Debt Collection Practices Act must be strengthened and updated, and Congress should approve the President’s plan for a Consumer Financial Products Administration (CFPA).
Consumers fall behind on loans at record pace | MSNBC
How would you like to get a call like this, just because you are behind on your credit cards?
“Hello, this is Investigator Brook Carlson from the Warrant Division. This is the last time I am going to attempt to contact you,” the caller said in one message. “We have left this message numerous times, and it seems that you are disregarding all means of contacting us back. So, therefore, you are going to be picked up at Hillcrest Hospital. You’ll come in, then the warrant is actually going to be formalized in McLennan County. Make sure you have somewhere for your kids to go, lock up your house, get some clean clothes because you’re not coming home anytime soon.”
Being in debt is not a crime, no matter what the jerk on the phone may say. New York Attorney General Andrew Cuomo put it well: “Just because you’re behind on credit cards doesn’t mean you forfeit all rights.” Which is why the Buffalo, NY, collection office that uttered the above quote will be shut down by order of New York judge.
NY AG Shuts Down Buffalo Debt Collection Operation | WSJ (thanks, Tracy!)