Bankruptcy

City of Chicago to Hire Debt Collection Agencies

By meaghano

Well, the city of Chicago really knows how to kick somebody when they’re down.

The City of Chicago is looking into hiring some debt collection agencies - some of them with checkered pasts - to collect outstanding debts owed to the city. This includes unpaid utility bills and parking tickets.

Just a few months ago, the city quadrupled parking meter rates in the middle of massive economic turmoil. Now, they’ll be turning to collection agencies to ratchet up the pressure on financially strapped families.

From the Chicago Tribune’s story:

“A lot of the private companies that are in line for collecting government debt have long histories of hiring people who are abusive toward debtors,” said Joe Ridout, spokesman for Consumer Action in San Francisco. “They impugn the reputation of the government agencies that they are supposed to be helping out.”

Ridout said some collection agencies call people at work to try to embarrass them into paying. In other cases, he alleged, bill collectors have told debtors with Hispanic surnames that they could arrange for them to be deported unless they pay up.

And who will be paying for the “work” these agencies are doing? City taxpayers. This could be a huge deal for collection agencies, who are licking their lips:

The Chicago contract could be a “giant deal,” said Sean Keegan, national marketing director of United Recovery Systems in Houston. He estimated a private company would need about 200 collectors and could keep 18 percent to 30 percent of what it rakes in for the city.

If you’re dealing with collection agencies, you should keep your rights in mind. Each state has their own laws regulating how collection agencies operate. Generally speaking, collection agencies:

• Are allowed to call only between 8 a.m. - 9 p.m. If you’re receiving calls late at night the collection company could be in violation of the law.
• Cannot use profane language.
• Cannot threaten physical harm to your or anyone else or threaten to damage your property.

If you feel your rights have been violated, speak with an attorney right away. And if you want the harassment to stop, remember that when you file bankruptcy the Automatic Stay court order puts a legally-binding halt to all collection actions.

Full post as published by The Bankruptcy Blog on July 08, 2009 (boomark / email).