In many cases debt collectors have been caught seeking payment for money not owed. Attorney John Compton was recently featured in the Policygenius blog regarding the proper way in which to (or not to) respond to these debt collection attempts:
- Document the call
- Don’t admit anything & don’t pay immediately
- Request debt verification
- Tell them to stop contacting you (if necessary)
- Decide how to handle the debt
- Check your credit report
The debt collection field is deceptively complex and rife with abuse, mistakes and (frankly) lazy grist-mill collection law firms which count on consumers’ ignorance when facing collection actions. Their margins depend on default judgments. Even time-barred or Bankruptcy-discharged accounts are purchased by debt buyers, then the industry methodically attempts collection. The unwitting consumer, if induced to make a payment, thus refreshes a noncollectable or discharged debt. Worse still, phantom debt that is not legally collectible on either statute of limitations or bankruptcy discharge grounds, can be converted into collectible debt should the debt buyer initiate litigation, and consumers ignorant of their rights ignore the matter, and default. Then the debt buyer, or debt collector obtains a default judgment, which is then enforceable not only by further collection efforts, but also by levy against real property, possible garnishment, or further legal process known as “Supplementary Proceedings.” The latter are particularly obnoxious, as a judgment creditor can haul a consumer into court to examine what assets they hold – and can use subpoenas to require production of private information from bank records, investment records, and tax returns, among other things.
In some cases, and in some states, if one does not pay for medical services provided at the local level (say a ride to the hospital in an ambulance), and when health insurance doesn’t cover the whole amount, these bills can be forgotten about (especially with elderly people), and the State can seize tax refunds without going to court.
Consumer ignorance and lack of follow up is what the industry counts on. And, in some cases, defaults are obtained illegally, as the consumer debtor is never properly served, or notified under relevant consumer protection statutes prior to litigation: they end up getting subpoenaed into a supplementary proceeding and are confused, angry, scared.
The debt collection industry is full of mistakes and relies on consumers not exercising their rights.
The industry cuts corners, creates fraudulent records, improperly sworn affidavits, improper communications before a lawsuit is filed (if it actually communicates at all in advance) and results in many different Federal and State Consumer Protection violations, in almost 100% of collection cases which result in litigation. This is due to their business models, and the tight margins involved.
No consumer should ever ignore any “Dunning,” or other collection letter, call, or other communication. Further, Federal and State Consumer Protection statutes are stacked against debt collectors, but not many lawyers even know this, much less what to do when a person calls complaining of abuses. The damage done to consumers in this industry is profound and life-altering at times.
We are in a financially precarious season, with the pandemic causing so much economic dislocation for the middle class, and the poor. Having good information and knowing the right lawyer to turn to when one is faced with debt collection is vital.
The worst thing a consumer to do is ignore collection efforts. The best thing they can do is know their rights, keep good records, and never pay just because a debt collector gets ugly, makes threats, harasses, communicates improperly, doesn’t follow required consumer law procedure, and on and on. Consumer Law is truly a snake pit for creditors, and consumer abuse can result in large recoveries for the consumer in such cases. Best of all, consumer protection laws (Federal and State) contain low burdens of proof for the consumer to make a case of abuse, and almost universally provide “Fee Shifting” clauses, meaning that a consumer who counter-sues, or brings litigation for consumer law violations as a Plaintiff – once they meet their burden and show a violation of the law – the creditor or debt collector is compelled to pay the consumers’ reasonable attorney’s fees.
Every case is unique and your debt-related issues should be discussed with a professional like us! We work to protect you from unlawful debt collection practices and relieve you of those troubles.
Consumer ignorance and lack of follow up is what the industry counts on.
Follow-up here: Request a Consultation Regarding Debt Collection