The Minnesota interest rate for debts due to overdrawn bank accounts is 6%. Bradstreet & Associates was trying to charge 21.75%. According to Minnesota Attorney General Lori Swanson,
Since 2009, Bradstreet and its predecessor company bought at least $18 million in debt that originated with Wells Fargo and U.S. Bank. This affects, we believe, at least 16,000 Minnesota consumers.
Now that the Pirate Bay has run out of appeals, it owes about €550,000 to various record labels. If the labels ever collect, their plan is not to pay back the artists who lost the profits that, in theory, add up to about €550,000. Nope, “there is an agreement that any recovered funds will be paid to IFPI Sweden and IFPI London for use in future anti-piracy activities.”
Fortunately, the Pirate Bay wasn’t making much money from all that piracy, so there is little chance the judgment will ever be paid:
So far very little has been recovered as the individuals have no traceable assets in Sweden and the Enforcement Agency has no powers to investigate outside Sweden. There seems little realistic prospect of recovering funds
Anyway, it’s not like the labels need any encouragement — financial or otherwise — to keep redirecting artist’s money to lawyers.
Debt settlement is basically debt collection by another name. Out of one side of their mouths, debt settlement companies promise creditors they will help them get paid. Out of the other side of their mouths, debt settlement companies promise consumers great “deals” to resolve their debts. In order to appear more effective (or trustworthy, maybe), many debt settlement companies go to great lengths to appear to be law firms, while putting WE ARE NOT YOUR LAWYER disclaimers in the small print to attempt to avoid violating unauthorized practice of law regulations.
At best, consumers spend a lot of money to get settlements they could easily have gotten themselves with a few phone calls. At worst—and far too often—consumers spend a lot of money and get nothing.
Debt collection agency knew WAY more than it should have about hospital patients’ medical conditions: bit.ly/w4JF6X
— Kashmir Hill (@kashhill) January 20, 2012
Twice now, New York U.S. District Court Judge Jed Rakoff has refused to approve a settlement reached by the Securities & Exchange Commission. In the first case, Bank of America agreed to pay a $33 million fine without admitting it did anything wrong in hiding bonuses of $3.6 billion promised prior to its merger with Merrill Lynch. Judge Rakoff eventually approved a $150 million settlement, calling it “half-baked justice at best.”
I frequently get comments from people looking for help with a legal problem. Inevitably, these comments contain information about the facts of the case from the commenter’s point of view. Usually the commenter admits owing the debt in passing (such comments are usually about debt), but explains a theory of why there he or she ought to win, anyway.
This is a BAD IDEA.
Debt collectors read this website. Lawyers for debt collectors read this website. This website has been cited in at least one Fair Debt Collection Practices Act lawsuit (by the debt collector). Debt collectors use Facebook and other social media to find out about you. If you post information about your legal problems on this website—or any public website—chances are good that the other side will learn about it. That’s why I generally delete any comments that contain information about legal problems.
The secondary debt market—credit cards and mortgages included—has relied on made-up legal terms and suspect justifications for years in order to turn the usually slow-moving court system into a speedy tool of business. It worked, probably because few consumers put up a fight. But more people are fighting back now, which means debt buyers are scrambling for legal footing.
It isn’t working, at least not in Pennsylvania, where the state court of appeals recently said “we reject [the] ‘This is how the industry does it’ mantra.”
It seems impossible for a lawyer to actually examine each lawsuit, make sure it has merit and there is evidence to support it, and sign off on it. This means that the courts end up trying to sift through the cases the law firm has not really bothered to look at, so the courts become the debt collectors’ back room.
I sometimes wonder why debt buyers bother to actually buy anything. Since the paper they purchase is basically worthless:
Debt buyers’ ability to obtain additional documentation from the original creditor is extremely limited: they may purchase the right to request such documentation in a limited number of cases, or they may not have access to any supporting documentation at all. If the debt is resold to another debt buyer, obtaining such documentation becomes even more difficult, as most second and subsequent sales of debt portfolios do not include any direct access to the additional documentation from the original creditor, which means that those debt buyers almost certainly lack the documentation needed to support lawsuits filed against people whose names appear in their portfolios.
When you realize that most debt buyers are filing lawsuits without even the ability to get competent evidence to prove their claims, regulations like the proposed Minnesota bill make more sense. Debt buyers are not special, and they should have to prove their cases like everyone else. Since they are getting away with doing so—regularly, in fact—they should have to meet some basic requirements before they are allowed to take advantage of the courts.
When coupled with Minnesota’s rules on pre-judgment garnishment, this can cause serious problems. A defendant who was never properly served, for example, can end up getting money taken from their bank account without any notice or any chance to respond to the lawsuit.
The moral: if you discover or are even suspicious you may be named in a lawsuit, look into it. And call a lawyer.