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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsDebt Collectors Have Figured Out A Way To Seize Your Wages And Savings
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."
Willie Wilson, a 69-year-old retired veteran from Elgin, Texas, lost his late mothers home because he never received notice that a debt collector had sued him. Wilson learned when he had the house appraised in 2009 that a collection agency had filed suit against him earlier that year over an unpaid $2,500 MasterCard bill.
Wilson was troubled on two accounts: While normally Wilson would have been "served" a summons to appear in court, he said he never got one. And, he said, he never had a MasterCard.
But since he had been found liable in court, it was too late. He didn't have the $3,500 he now owed. The law in Texas allows a debt collector to force the sale of a home if it's not someone's primary house. Wilson, who inherited the three-bedroom bungalow from his mother, figured he would sell it himself first.
I really didnt want to sell it, Wilson said. I was gonna fix it up and eventually pass it on to my kids.
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.
http://www.huffingtonpost.com/2014/06/02/debt-collectors-wages-savings_n_5364062.html
Leme
(1,092 posts)to court.
maddiemom
(5,106 posts)a collection company my original debt, plus more than reasonable interest. I got disgusted and just stopped paying. I heard nothing, had no threats. Years later (and years past the supposed statute of limitations for even bankruptsy) I applied for a professional organization credit card (very fair one) and learned that I had judgements filed by my ORIGINAL debtors, NOT the collection agency. Meanwhile , like most of us, I've received many "pre-approved" offers from rip off credit cards. How exactly does this work?
yeoman6987
(14,449 posts)When my Mom died. The lawyer sent a letter to every creditor giving then 60-90 days to close accounts and send final bill. We could not get a penny until every bill was paid including medical costs. After that money was dispersed minus taxes too. So something is out of wack with his story.
malokvale77
(4,879 posts)I got a notice from a JP in the mail one day saying I had a judgment against me. Apparently because I failed to show up in court the judgment was automatically granted.
A couple of days later I got a very official looking letter from an attorney demanding I send them a complete listing of all my assets.
I have no clue what the debt is for who I am supposed to owe it to.
By the way, this is in Texas also. It looks like some "under the table" deals going on in some of these Texas courts.
Adrahil
(13,340 posts)malokvale77
(4,879 posts)That collector was convicted of fraud and shut down. Those same attorneys are operating under a new name now. The judgment was thrown out as invalid.
I really wasn't too concerned though, I'm what is known as "judgment proof".
Adrahil
(13,340 posts)I assume that means you have nothing worth taking?
malokvale77
(4,879 posts)I have nothing they can take by Texas law. I own my residence and a 25 year old car. I don't have a bank account and my personal properties' value comes in under the amount allowed. So yes, "nothing worth taking".
LOL
Ilsa
(61,675 posts)A charity, spouse/partner, or your children, please make certain your affairs are in order through a lawyer.
malokvale77
(4,879 posts)Thank you. That's how I knew I was judgment proof.
maddiemom
(5,106 posts)such as an auto loan?
JDPriestly
(57,936 posts)Shrike47
(6,913 posts)from the court clerk. That will tell you and the lawyer what the alleged debt is for and how you were purportedly served with a summons. Time is of the essence; get on this now.
Edited to add: Written before your reply above was posted.
moriah
(8,311 posts)I'm lucky I saw the filing before they attempted to have me "constructively served" -- aka, putting an ad in the paper. They deliberately filed the lawsuit with an address on my credit report that I hadn't lived at in six years, and I'm sure this was a pattern for them.
I defended the case and got the case dismissed, but it was a lot of time and effort.
lark
(23,003 posts)Hmm, I've never heard of that. I know that's not allowed in FL. except for civil litigation and it wasn't allowed in CA when I lived there 25 years ago. What state are you in?
moriah
(8,311 posts)So constructive service would be an option.
http://media.iadsnetwork.com/edition/1228/21647/f03e852b-ea9c-4ebf-9e27-4027bf5142a8.pdf
There's an example of a Warning Order as published by a collection attorney in my state, in the tiniest podunk paper that hardly anyone reads. It is the only paper in the county, but... yeah.
dballance
(5,756 posts)The irony is that, after over two years without a job I have no, home, no savings, no longer any retirement. Very little in the way of assets. Just a car that is over 12 years old but is, thankfully, paid for. So when I have to go live in it, it will not be repossessed.
I got notices from law firms that they were garnishing my bank account where I used to have my home loan before I had to give it up due to foreclosure. There was NOTHING, literally NOTHING for them to take because I live like a pauper and had already lost my home.
Yet, they harassed me anyway until they figured out there was nothing for them to gain.
catrose
(5,050 posts)hamsterjill
(15,214 posts)I have no unpaid debts, but an ex-husband of mine (who I divorced in 1986) does and I used to get calls from his bill collectors all the time.
Yes, I do all of the standard things. I tell them not to call, and when necessary, send certified letters. I've spent a small fortune on postal charges. I give them his current contact information, too.
They don't give a shit who they harass. They want to harass to the point of where someone - ANYONE - will pay the debt just to get them to quit calling.
The BEST thing that I ever did for this issue was to get rid of my land line. They've not discovered my cell phone number yet.
Flatulo
(5,005 posts)They managed to get mine, my wife's and my sons and proceeded to harass all of us for months over a debt that was in error. Thankfully I had all the documentation to prove I had paid the debt, but it was sold three or four times and I had to rinse, lather and repeat each time.
hamsterjill
(15,214 posts)There is something very wrong with this industry not being regulated to where they cannot act illegally.
And, as you indicate, this is EXACTLY how they get away with their crappola. They "sell" the debt over and over. So if you send notice to one company, they just change the name on the letterhead and start the process all over again. An attorney told me to address this issue on the letters that I've sent stating that they are not to contact me, and that helped to a small degree.
It's been TWENTY-EIGHT YEARS since I got divorced. If it wasn't so frightening, it would be laughable.
Flatulo
(5,005 posts)little that no one will buy it.
Mine was originally for $200 that I supposedly owed on my auto insurance. I had every cancelled check matched to every invoice to show that the bill had been paid.
Eventually the debt was sold for $50 to an attorney who made exactly one effort to collect before giving up.
eppur_se_muova
(36,227 posts)Most financial corporations produce no product, only transactions. They do nothing to add to the wealth of the country, though, as one financial collapse after another has shown, they can do much to deplete the wealth of the country. They only function as parasites on the real productivity of others. Yet Congress, in its richly-rewarded wisdom, chooses to grant almost unrestrained power to anyone whose business consists only of moving money from one pile to another, with a little off the top "for services rendered" each time. Why should it be that an "industry" with no tangible output, and a long track record of deleterious behavior, is granted such enormous advantages, not only over ordinary (i.e. non-corporate) citizens, but even over other industries with real, tangible outputs ? The answer, of course, is that this "industry" has the ability to reward its minions in Congress as no other can: with wealth changing hands seemingly magically at the stroke of a loosely-regulated pen, it is no great sacrifice, and imminently practical, to divert a little taste of the profits just "earned" to the campaign funds of its Congressional accomplices. As long as the banksters continue to share the loot, they will suffer no shortage of cooperative and capable getaway drivers.
A tax on financial transactions has been suggested many times ... perhaps a tax on debt sales should be made particularly onerous. At present there is no disincentive to purchase bad debts, with the inevitable consequence that all debt eventually falls into the hands of those who are most willing to be unscrupulous in collecting it -- even when it doesn't actually exist.
klook
(12,134 posts)This has been getting steadily worse for the last few decades. As long as money is treated as a natural resource, and its handlers and administrative functionaries are so handsomely rewarded for producing nothing, our whole system is a mirage.
berni_mccoy
(23,018 posts)heaven05
(18,124 posts)system at it best. destroying lives for the filthy lucre that's profit at all costs. people be damned. money is the only thing that matters. damn snakes.
liberalhistorian
(20,809 posts)this shit for years, but mostly under the radar. They're not doing it more overtly and in sufficient numbers to have their illegal and bullshit tactics recognized and fought. Filing and serving suits under old addresses, knowing full well that those are old addresses, so that they can then claim that they "made every attempt" to serve the person when the person doesn't show up, is an old trick that's just gotten dusted off and used much more frequently. And it pisses me off that more judges don't see through this shit and don't require more evidence and documentation from the collectrolls that they did, in fact, have the right address and information.
And debt buyers who go after the wrong people for debts, or who go after debts that have already been paid but, since they're old, people likely no longer have proof of it, is also an old trick that's being used more frequently and overtly. Again, judges need to get more aggressive with these fuckers and start requiring more evidence and documentation instead of just rubber-stamping their shit.
And people need to get educated on the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Act (FDCA) so that they know their rights and can fight back against these fuckers. They count on people not knowing their rights so that they can then scare them and people won't fight back. The more you know, the more you can fight back against these fuckers.
Spitfire of ATJ
(32,723 posts)msongs
(67,199 posts)stone space
(6,498 posts)On Mon Jun 2, 2014, 12:35 PM an alert was sent on the following post:
your scum sucking democrat and republican elected officials make this possible. nt
http://www.democraticunderground.com/?com=view_post&forum=1002&pid=5038383
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seveneyes
(4,631 posts)The bad ones that happen to be Democrats should not be called "Democratic" anything. Shame on the alerter and hiders.
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ctsnowman
(1,903 posts)Contact the Consumer financial protection bureau. They helped me.
1 - This isn't a new practice. Sears & Citibank have been doing this forever, probably a lot of others too.
2 - You have to be personally served with the complaint before the hearing can be filed.
3 - If you show up at the hearing, you can dispute the case and the judge will set a continuance to review new evidence. If you bring sufficient evidence with you, and the plaintiff doesn't dispute the evidence, the court can rule in your favor on the spot.
4 - If you show up at the hearing and present evidence of financial hardship the judges usually reduce the amount due and allow very small payments, even if the creditor disagrees.
If you show up, you often win.
moriah
(8,311 posts)Some states require debt purchasers to be licensed as debt collectors. My state passed a law that said it but hasn't been upheld yet in appeals. I got my case dismissed because they weren't licensed and the local judge liked my argument. They were late in requesting transcripts to appeal my case, they've appealed another to my knowledge and it's ongoing.
Stay strong and don't give up.
Jim Lane
(11,175 posts)You write: "You have to be personally served with the complaint before the hearing can be filed."
More precisely, the court file must include "proof" of proper service. Proper service isn't necessarily personal service. In New York, for example, there are circumstances under which it's proper service if they slip a summons under your door and mail you a copy.
Another catch explains why I put "proof" in scare quotes. A process server may submit an affidavit, signed and notarized and everything, stating that service was effected in a certain way -- even though it actually wasn't. The court personnel can't go out and verify the truth of these affidavits. They'll see that all the papers appear to be in order and they'll put the case on the calendar. The laws in your state will determine what your rights are if you don't appear at the hearing and later want to challenge the judgment against you on the basis that you weren't given proper notice.
lark
(23,003 posts)I thought about including all that but since the circumstances are limited, didn't go that way since it's still under your door and you get mailed the copy. I've worked with process servers in both CA and FL for years nd never had the issue of them falsely signing the affadavits. I've always used very reputable companies so that's probably why we had no late challenges about not really being served.
Jim Lane
(11,175 posts)They might as well have thrown the papers into the sewer, hence "sewer service".
Some process servers are, as you note, reputable, but alas some are not.
I have to suspect that companies that buy up unpaid alleged debts on the cheap are not above getting process "served" on the cheap and are willing to look the other way when a process server submits affidavits showing he personally served 113 people in one day.
lark
(23,003 posts)Don't think there's any corner they won't cut. My company is closing out their old computer system and the CEO wanted to "sell" the debt that was still there. I talked long and hard to convince the execs. that this was not a good move.
hobbit709
(41,694 posts)she started laughing and the clown got upset and made even more useless threats. She told him not in TX. All they can garnish your wages for here is nonpayment of child support, taxes and student loans.
I had one about 20 years ago threaten to put a lien on my house and got mad when I told him the house wasn't in my name.
SomeGuyInEagan
(1,515 posts)I suspect there will be a real attempt to go after family members for debt (real or imagined) soon as well.
Soon we'll all be getting letters regarding the uncollected debt of a third cousin we never met, directing us to pay or report to the closest <insert your favorite corporation here)-owned prison to begin working in their call center for 18 cents a day.
seveneyes
(4,631 posts)Federal laws should protect the consumer and victim first.
Sen. Walter Sobchak
(8,692 posts)We have commercial clients who ended up with default judgements after they were improperly served in various ways. They usually weren't worth fighting. My personal favorites were lawsuits where the plaintiff served a mall kiosk operated by a third-party marketing company and another where they served a gardener outside an office building.
Although this is my debt collection horror story:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x7921993
This eventually got picked up by a producer of a late-night talk show, they were going to try and get Harry Shearer and Fox in on it, but it died because the law in California wouldn't allow them to record the phone calls.
winstars
(4,214 posts)I don't go there a lot these days since I repaired my credit and all of my families and friends but it rocks. Its just people like us here on DU helping each other out with information and methods to fight these fucks. Tons and tons of answers for so many of these tricky issues.
Really. No kidding.
http://www.creditboards.com