singular_me
3rd June 2014, 04:16 AM
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Debt Collectors Have Figured Out A Way To Seize Your Wages And Savings
Posted: 06/02/2014
People with overdue bills have long complained of harassment from debt collectors, from late-night phone calls to frightening in-person visits. Now it appears the industry has found far more troubling strategy: Filing lawsuits against debtors -- often, consumer advocates say, on the theory that they won't ever show up to court to defend themselves.
The consequences are dire when the debtors don't appear in court. A judge can put a lien on someone's home, garnish wages, even freeze bank accounts -- all without a person ever getting a chance to fight their case. And at times, collectors file suit in error. Consumers interviewed for this story described cases where they were never told they were being brought to court, or were sued for debts on credit cards they never had.
"Over the years we've heard from thousands of people who've found themselves at the end of one of these default judgments," said Susan Shin, a senior staff attorney at the New Economy Project, a consumer advocacy group. "And most of the people we talk to haven't received any kind of notice that they were going to be sued."
As the debt industry has ballooned over the past decade, collectors' lawsuits against consumers have skyrocketed. A study published last year found there were more than 200,000 cases filed in New York in 2011 alone.
Using litigation to get consumers to pay off old debts has proven a lucrative tool for such firms. For the four debt-buying companies that disclose their earnings to the public, income from legal collections rose from $582 million to more than $1 billion between 2009 and 2012, according to a recent report by the Center for Responsible Lending, a research group that fights predatory lending practices.
Though there is no national data on how often people who are sued by debt collectors show up to court, a Maryland study from 2010 found that collectors often go unchallenged. The study, which looked at thousands of such cases, found that fewer than 2 in 10 borrowers who were served actually responded to their summons.
One of the problems with debt collectors’ appetite for litigation, consumer advocates and attorneys say, is that they may not have all the information they need to prove their claims. As debts get older and are often bought and sold multiple times, crucial information about the borrower gets lost.
“It’s almost like a game of telephone,” said Leslie Parrish, who co-authored the recent Center for Responsible Lending report. "The risk to the consumer is compounded as the debt moves down the chain."
Howard Grodman, a judge in Flagstaff, Arizona, who handles hundreds of credit card debt cases a year, said there are times when collectors will sue without being able to prove the debts they're suing over are valid. "And when the defendant doesn't answer, it's really hard to look into it fully and fairly," he said.
But even when collectors come to court with insufficient or inaccurate documentation, consumer lawyers say, overwhelmed judges aren't always able to thoroughly scrutinize the claims.
“Especially in the big cities, judges don’t have that time to read through two or three inches of documents, or even flip through them,” said Amy Kleinpeter, Wilson's attorney. Doing so “would stop the court,” Kleinpeter said.
full story
http://www.huffingtonpost.com/2014/06/02/debt-collectors-wages-savings_n_5364062.html
Debt Collectors Have Figured Out A Way To Seize Your Wages And Savings
Posted: 06/02/2014
People with overdue bills have long complained of harassment from debt collectors, from late-night phone calls to frightening in-person visits. Now it appears the industry has found far more troubling strategy: Filing lawsuits against debtors -- often, consumer advocates say, on the theory that they won't ever show up to court to defend themselves.
The consequences are dire when the debtors don't appear in court. A judge can put a lien on someone's home, garnish wages, even freeze bank accounts -- all without a person ever getting a chance to fight their case. And at times, collectors file suit in error. Consumers interviewed for this story described cases where they were never told they were being brought to court, or were sued for debts on credit cards they never had.
"Over the years we've heard from thousands of people who've found themselves at the end of one of these default judgments," said Susan Shin, a senior staff attorney at the New Economy Project, a consumer advocacy group. "And most of the people we talk to haven't received any kind of notice that they were going to be sued."
As the debt industry has ballooned over the past decade, collectors' lawsuits against consumers have skyrocketed. A study published last year found there were more than 200,000 cases filed in New York in 2011 alone.
Using litigation to get consumers to pay off old debts has proven a lucrative tool for such firms. For the four debt-buying companies that disclose their earnings to the public, income from legal collections rose from $582 million to more than $1 billion between 2009 and 2012, according to a recent report by the Center for Responsible Lending, a research group that fights predatory lending practices.
Though there is no national data on how often people who are sued by debt collectors show up to court, a Maryland study from 2010 found that collectors often go unchallenged. The study, which looked at thousands of such cases, found that fewer than 2 in 10 borrowers who were served actually responded to their summons.
One of the problems with debt collectors’ appetite for litigation, consumer advocates and attorneys say, is that they may not have all the information they need to prove their claims. As debts get older and are often bought and sold multiple times, crucial information about the borrower gets lost.
“It’s almost like a game of telephone,” said Leslie Parrish, who co-authored the recent Center for Responsible Lending report. "The risk to the consumer is compounded as the debt moves down the chain."
Howard Grodman, a judge in Flagstaff, Arizona, who handles hundreds of credit card debt cases a year, said there are times when collectors will sue without being able to prove the debts they're suing over are valid. "And when the defendant doesn't answer, it's really hard to look into it fully and fairly," he said.
But even when collectors come to court with insufficient or inaccurate documentation, consumer lawyers say, overwhelmed judges aren't always able to thoroughly scrutinize the claims.
“Especially in the big cities, judges don’t have that time to read through two or three inches of documents, or even flip through them,” said Amy Kleinpeter, Wilson's attorney. Doing so “would stop the court,” Kleinpeter said.
full story
http://www.huffingtonpost.com/2014/06/02/debt-collectors-wages-savings_n_5364062.html