What You Need To Know About Debt Collectors


By Robert Stitt

Despite the plight of between 5 and 20 percent (depending on your demographic) of un- and under-employed Americans, debt collectors are going after the money of those who are least likely to be able to afford to fight back or don’t have the information on how to do it.

Over the last couple of years, debt collectors have found increased success in the courts, making them increasingly bold in their tactics, even to the point of harassing consumers about bills they don’t owe or that are past the statute of limitations.

Just how successful are they? According to EurWeb, “Encore Capital Group, the largest debt collector in the country has often filed between 245,000 and 470,000 new lawsuits in a single year…in 2014, Encore and one of its closest competitors, Portfolio Recovery Associates, together collected more than $1 billion through hundreds of thousands of lawsuits.”

Most of the lawsuits never even go to court. Tens of thousands of summary judgments are awarded to the debt collectors every year without the presence of the consumer. Since there is no contestation, the judge simply “rubber stamps” the case and the collection agency wins. They can now legally go after your paycheck, house, etc.

According to Human Rights Watch, “When debt [collector] lawsuits result in unjust and financially disastrous outcomes for poor families, the courts’ own failures and shortcomings are often directly responsible. Fundamental problems with debt [collector] lawsuits often come to light only after the companies have already won judgments they were never entitled to, in courts that never asked them to present any meaningful evidence in support of their claims.”

The Fair Debt Collections Practices Act of 1978 was supposed to “eliminate abusive, deceptive, and unfair debt collection practices.” Sadly, it only applies to debt incurred by a consumer for personal, family, or household purposes. Further, the only ones who really know about the act are people who are wealthier, better educated, and less likely to be sued by the debt collectors in the first place. It is the ones who do not know their rights who are being targeted.

The Alliance for a Just Society is proposing changes to debt collection rules. Predominately, they want to see “penalties that are sufficient to act as a meaningful deterrent against future violations and a halt to abusive practices related to medical debt.” Lisa Stifler, a senior policy counsel with the Center for Responsible Lending added, “When people are being wrongly pursued for debts they do not owe, it is time for action and reforms.”



Personal Finance