Debt Collection Agencies Meet Their Match


For a little while there, consumer groups began to believe that the courts did nothing more than to turn themselves into an extension of the debt collection industry. In every major and minor city around the country, as people have been falling into impossible credit card debt in their thousands, debt collection agencies and the bill collectors who work for them have been readily dragging them to court, trusting that they will be heard. And courts have been falling over themselves to give them information they have to go on, on whom to go to to recover a debt, to give orders in their thousands against hapless borrowers. Why was this activism needed? When would consumers ever get a little relief from all the punishing hardball tactics that they usually end up on the receiving end of?

Help is here though; in the state of New York, several judges have stood up against the harsh and illegal business methods that debt collection agencies use; and some of the worst of their ire has been directed at the agencies themselves for charging interest at 30% a year, and at lawyers who represent the debt collection agencies. So incredibly abusive are the practices used by debt collection agencies that some judges have been inspired to use extreme sarcasm in their pronouncements. One judge in New York wondered out loud if a particular debt collector was operating in some bizarre land of Oz where everyone was bound to act against the consumer in keeping with the rules of some terrible wizard. One such case for instance was by a collection agency that was suing the wrong person to recover credit card debt.

The judges are outraged at the kind of lack of nerve the justice system has shown so far in leaving things stand this way. Debt collection agencies typically go to credit card companies, ask for all their unrecoverable credit card debts. They’ll buy a whole sheaf of them and pay the credit card company about a penny for every $100 worth of unrecoverable debt. Usually, they’ll get some unreliable information about who owes the debt and where they live; and then they’ll just chase anyone they think might be meek enough to be scared of them. Anyone would be taken aback at how little evidence some of them have to go on to sue a suspected debtor. In one particular unhappy case in New York, the court dismissed a debt collection agency’s lawsuit for lack of evidence; the agency still pursued the alleged debtor, until the court imposed about $14,000 in fines on them for trying to pull every kind of illegal maneuver possible.

The strange thing is, over the last decade, debt collection agencies have grown used to having the courts dance to their tune and throw the book at innocent people who have no idea why they’re being asked to pay someone else’s debt. There is improper conduct in every way; some debt collection agencies will collect on debts that they don’t even legally own. And courts have been permitting this for a whole decade. Take what happened in a case in New York wherein the credit card agreement, it said that the interest charged on an outstanding sum could be raised at will. The Judge wryly noted that in the state of New York, personal bondage and servitude were not enforceable by law.

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