Consumer Law

Dead Woman Is A Debt Collector?

By M. Stan Herring

The Wall Street Journal has posted an article about a bizarre case of a dead woman's name appearing on thousands of affidavits by one of the country's largest debt collection companies.

Ms. Martha Kunkle died in 1995 yet her signature has miraculously appeared on many debt collection documents for Portfolio Recovery Associates Inc. After being sued for fraud in 2008, Portfolio Recovery Associates then decided that any documentation with Ms. Kunkle's name had "defects" and was invalid when being used to collect on debts.

Last July, though, lawyers for Portfolio Recovery Associates sought a court judgment in a lawsuit against a Seattle woman for $2,892.10 in credit-card debt and interest that she allegedly owed. It was a cookie-cutter case, except for one thing: To vouch for the debt's validity, the Norfolk, Va., company included an affidavit signed by Martha Kunkle.

The spokeswoman said the document was "inadvertently used by our outside counsel" because of "human error," adding that the suit was dropped later "upon review of the case."

The company said Ms. Kunkle's name isn't on any other affidavits submitted to judges since early 2008 by Portfolio Recovery Associates or outside lawyers who handle most of its debt-collection cases.

Regulators cite Ms. Kunkle's name being used as evidence of falsifying affidavits and haphazard documentation that seem to be an epidemic in the debt collection industry. Some judges say that robo-signing, where affidavits are signed without anyone actually looking at the case, is much more common in debt collection than in foreclosures. The FTC has advised state regulators to require disclosure of more documentation from debt collectors to ensure that the paperwork they have is reliable and accurate.

Large debt collection companies, like Portfolio Recovery Associates, often buy delinquent accounts in bulk quantities. Sometimes very little information is available about the debt, usually it's just a person's name and the amount owed. When bought in bulk with little background information, it's easy for debt collection companies to just go with the information they have and begin collecting as many debts as they can, even if the information is wrong.

In 2008, Judy Montoya, an employee at Portfolio Recovery Associates, testified in a debt-collection suit filed by the company that its "legal specialists" sign as many as 200 affidavits a day. The company's spokeswoman said such employees sign an average of 100 affidavits a day and are guided by "a very rigorous set of policies and procedures." Ms. Montoya couldn't be reached to comment.

Portfolio Recovery Associates has since said that any affidavits bearing Ms. Kunkle's signature are unreliable and shouldn't be used to collect debts, but even so, this instance is just another example of the chaos that surrounds the debt collection industry.

If you have had problems with debt collectors, or have been harassed by one, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Full post as published by Alabama Consumer Blog on January 30, 2011 (boomark / email).