Debt-Collection Tactics Under Scrutiny

[Purveyor]

ATLANTA - Debt collector Antangela Pauldo had heard every excuse for why people couldn't pay their auto loans. And like most in her line of work, she instinctively had a skeptical view of every sob story.

Today, however, Ms. Pauldo has a new appreciation for the depths to which some in her profession will go to collect debts, especially ones that are no longer legally owed – or were never owed in the first place.

A nearly 10-year-old credit-card account she claims wasn't hers popped up out of nowhere and led to verbal harassment and voice-mail runarounds. Finally, $900 was garnished from her bank account by a Georgia law firm. The firm is now being investigated by the state Office for Consumer Affairs.

"It's made me look at my job differently," says Pauldo, who complained to the Georgia Better Business Bureau. "There are issues that people bring up that are legitimate, and it's my job to help them – not criticize them."

The story of the debt collector who got burned by her own industry is part of a widening debate about "zombie debt," or debt that never dies. At issue: the tactics used by third-party debt collectors to coerce Americans into waiving a US common-law right: debt forgiveness.

On the heels of a credit-card reform movement in Washington, the Federal Trade Commission (FTC) is now joining a growing number of states to strengthen consumer protections and shed more light on the shadowy tactics of junk debt collectors.

The question, experts say, is whether Congress and regulators have the fortitude to stand up to a $100 billion industry that represents the underbelly of America's recent addiction to easy credit.

MORE...

http://www.csmonitor.com/2009/0610/p02s01-usgn.html

[snappyturtle]

1. K&R Surprised no one has replied.

I have been helping a dear friend who has been harassed by one of these debt monsters! From what I've been able to find out on the web is that many of these debt collectors only succeed through putting the fear of God into their harassing phone call recipients. Many can not produce the original debt records and are only working from a spread sheet. They know they have purchased bad debt that they can't verify. I ran across this website that lists the bottom of the bottom feeders and info on how to proceed with them with forms for cease and desist correspondence and debt validation letters. These ruthless collectors often collect MORE than was due originally because of their tactics. If you are in a bad place with them, may I suggest reading: http://budhibbs.com/index.html

My friend owes some money but not what a rotten collector in the state of Texas, Brachfeld & Associates, says she does. She was never late with her payment to MBNA or failed to pay, usually over the minimum. But, one day, MBNA decided she was a greater risk or at least that's what they told her. Never got clarification on that. When MBNA raised her interest rate to 28%(!) she found herself unable to keep up and the penalities and interest threw her over her credit limit and so on and so on. She tried to settle with MBNA...tried to get them to lower her interest rate to no avail. Now, she is fighting back. But, a word to the wise....learn your rights! It's all there on the linked site.

edit: wording

[napoleon_in_rags]

2. Will congress have the fortitude to protect the public interest? Let me spell this out.

Here's the issue: The collection industry is a for profit endeavor working in collaboration with other businesses. That means, the more bad debt is out there they can collect on, the more they win. The work in collaboration with the credit agencies, who acts as an extra-governmental enforcement body on debt in the sense that they wish to increase the punitive influence they can exert on people with bad credit. They have been successful, and are now blocking people from getting employment:
http://consumerist.com/5284888/dirty-credit-report-scuttles-job-prospects

So the question to ask, is what is the cumulative effect this financial complex on the economy? Their prime interests, between the two of them, is to
1) Increase the amount of uncontrollable debt which pushes people into collections so they pay collectors
2) Limit individuals who have been pushed into collections from contributing products or services to the economy to increase the punitive value of a bad credit report.

To evaluate the effect of these two facts on the public interest, one must only ask: What if they BOTH succeeded fantastically? EVERYBODY would have bad debt, for the maximum profit of collectors. This would mean EVERYBODY would have negative credit reports, so NOBODY would be working. Totally against the public interest.

[yorgatron]

3. K&R

:kick:

[backscatter712]

4. I'm still getting collection notices from some now-zombie debts.

I paid 'em off a few years ago, yet these debts do seem to rise from the dead periodically.

Fortunately, I know exactly how to tell those fucks off if they play these games with me...

[snappyturtle]

5. I'm glad you know how to handle these people but so many don't

and are too easisly intimidated by their threatening tactics. I had my eyes opened when I started helping my friend. I thought debt collectors just handled debts the originator didn't want to handle anymore but they have been able to create their own 'derivatives' if you get my drift. Truly evil especially in going after people like you who has met obligations.

[patriotproud]

6. Idiot debt collectors

A few years ago I fell ill for a protracted time and was unable to keep up with credit card payments. After a few months I began to get the harassing calls. Out of a dozen or so in a one month period, only one guy was really polite. Finally, I got a call from a really aggressive and rude woman who felt it was ok to talk to me like I was dirt and assume everything I said was a lie and to say so. "I can't believe you can afford to have a phone and can't afford to make a payment on this debt!" And I thought, good idea, hung up, turned off my phone and moved. A few months later my I saw my old neighbor in the grocery store and he told me that some woman in a pretend police officer outfit had shown up at 4am and made such a nuisance of herself that he had to threaten to call the real police before she went away.

[napoleon_in_rags]

7. LOL! Great story. Impersonating an officer too! They are so criminal.

I had one talk to my friends, pretending to be somebody I knew. When my friend figured it out she shredded her, totally ripped her a new one. She got her house broken into soon afterward. They are total sleaze.

[Sebastian Doyle]

9. If someone ever showed up at my door pretending to be a cop without proper ID

I'd consider that a threat to my safety, and would make sure they fell inside the doorway, where they would remain until the real cops showed up.

No, not dead (hopefully it wouldn't come to that). But they would definitely know they picked the wrong harassment target.

[GReedDiamond]

8. I had a student loan debt, which I had disputed,..

...in default for around 15 years. I posted a comment about this on another thread about student loans (http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5809752&mesg_id=5811151) which explained the situation a little bit if you're interested. (The debt was eventually forgiven/dismissed, which, like I say, you can read about on the other thread.)

My comment here is regarding the collection agencies which hounded me for fifteen years. Early on into default, "Collection Agency A" started harassing me on a regular basis. After a year or so, the calls stopped for a time, then the letters and calls started again, now from "Collection Agency B." This pattern went on for, literally, fifteen years, with different collection agencies from all over, until, finally, the LAST Collection Agency that contacted me did so at the point in time when I was about to prove my case and get the loan dismissed (unbeknown to the collection agency), and it turned out they were the FIRST one that had come after me over a decade earlier. There were probably ten different collection agencies who came after me through the years. Most of them I simply ignored entirely, and they never followed up on any of their threats.

One trick they tried on me was to say they would settle for a lesser amount than being demanded, but when I said, "sure, I'll pay the reduced amount when you put this offer in writing," they failed to provide a written agreement, so I never sent the payoff (which I was on the verge of doing). Shortly after that, I found an honest and helpful person at the Federal level (EdFund), who helped to prove the case in my favor, leading to the complete dismissal of the loan and full refunds of all tax garnishments.

So, beware the Collection Agency goons - they will definitely lie or say anything to you to get some cash outta you! Without a binding agreement from them, I know if I HAD paid the reduced amount, they would have come right back for the rest ten minutes after cashing my check.

Another thing to keep in mind: at least in my case, any money which had been taken from me (i.e., tax refunds which were garnished), were year-to-year legitimate tax deductions, according to my tax guy, so I took advantage of those deductions, as he advised. You may want to get some advice from a tax professional if you're in a similar situation.

I was also self-employed (still am), so they could not garnish wages from my employer, since I did not have one. That's another tactic to consider.

Lastly, after the last time I moved, over a decade ago, I got an unpublished telephone number, and they were left with the only option of mailing in their threats. That removed the stress factor of rude, vile phone calls from the collection agency goons.

Edited to add a missing "the."

[Trekologer]

10. Well you know the reason why

The collection agency doesn't get paid unless they collect. So they will do whatever it takes to wring some money out of you. Of course, if they don't think they will, you won't see much effort (as you experienced with a couple agencies that never followed up).

A couple months ago, I got a collection agency off my back. My previous car insurance company (which jerked me around several times in the past) kept billing me for a policy I told them to cancel (and obtained coverage from a different company). Collection agency comes around demanding payment for several months. I dispute the alleged debt, in writing and via certified mail and provide the documentation that I obtained insurance from another company and other documents I had. Their response of the "proof" the alleged debt was valid? A typewritten page with my name and a dollar amount on it. I sent the company another letter, certified mail, stating that their verification was not accepted and that the alleged debt remained in dispute. I also reminded the collection agency that I had provided them indisputable proof that the alleged debt was invalid and that I referred the matter to state and federal regulators. I'm not sure if it was the state AG's office or the state insurance regulators were the ones who made the (probably uncomfortable) call but the insurance agency eventually dropped the matter.

[GReedDiamond]

11. Congratulations!

There's nothing like beating these a-holes. They truly do treat their victims like shit. Even IF a person DOES owe, they should not be treated the way these goons treat people.

I wish I could have seen the look on the face of the last collection agency creep I dealt with, when they informed him that my loan had been dismissed...

And, yeah, the buying and selling of these "bad debts" is an industry unto itself. My original loan amount was $4000.00, but by the Collection Agencies "holding onto it," and passing it around for over a decade, it became more than 400% more valuable by the time I finally won my case. If I had not won, and continued to refuse to pay, year to year, with the annual percentage rate penalty at 23%, in a decade or two, it'd be $100,000+.

[Hepburn]

12. Ga law firm = Mann Bracken and their stooges the National Arbitration Forum

I have no personal dealings with them, but I have had professional dealings with some of their victims.

They are the worst.

JHMO

[bluesmail]

13. Zero Tolerance. eom

[flvegan]

14. The article linked in the OP should be a must read.

Never agree to any payment or admit that any debt is valid until you force the people making the demand prove up their claim.

Congress really does need to address this.

[Wednesdays]

15. K&R

:kick:

[inna]

16. usury is evil

:grr:

and these guys go BEYOND usury.

:grr:

:mad:

[prolesunited]

17. Had this happen to me once

A case of stolen identity. Had to spend hours clearing it all up. Luckily, I saved the paper work. Three years later, a new agency was hounding me. Told them I would send all the proof that it wasn't my debt.

They said they understood it wasn't mine, but wouldn't it be better to send them a couple hundred dollars to make it all go away. They said it would be such a shame to tarnish my sterling credit score. Who knows how long it would take to straighten out.

I think there's a word for that: EXTORTION.