Consumer Law

What Will Debt Collectors Do In 2009 Given The Economic Crisis?

By M. Stan Herring

The short answer is no one truly knows the future but our best judgment is that we will see a marked increase in the amount of violations of both the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. The reason is simple - consumers have less money to spend on everything. So when faced with a choice of spending money on paying collection agencies (particularly debt buyers who have bought old debts for pennies on the dollar and can't prove they own the debt anyway) or paying for food, gas, heating, etc. the collectors come out on the short end of the stick.

Therefore, debt collectors will most likely increase the pressure on consumers to get the attention (and dollars) of the consumer. Given the fewer dollars to spend, the ready access to voicemail and caller id, the way that abusive collectors will get the attention and money of a consumer is by serious violations of the law.

Calling neighbors to have a so-called "block party" to embarrass you. Calling co-workers (an "office party") to frighten you into payment. Calling family members - nothing like your mother asking you if you are ok and if you are going to be arrested because a debt collector has threatened you through her....

The second primary way to get your attention and money is by putting false information on your credit reports. Even if you don't owe the account, having a collection or debt buyer account can trash your credit score. I know a lawyer (who sues companies) who was told by a collector "Yeah its false but it will take you a year to get it off your report so why don't you pay the $5000 and you'll be able to close on your new house". The lawyer paid it. The collector was lucky because this lawyer could have (and should have) sued the company after disputing this false debt but he chose not to. For most of us, though, we can't just ignore false things and then later pay $5,000 to make them go away. Suing after disputing the false items with the credit reporting agencies is the best choice normally.

Finally, the debt collectors will be suing even more often in Alabama than ever before. If you get any hint that you have been sued, protect yourself by calling the court where you live to see if there is a suit pending against you. Or contact us and we can check in the Alabama court system to see if a lawsuit is pending against you. The critical thing is to answer (and normally deny) the complaint. Make the debt buyer prove it owns the debt (we have never seen this happen yet) and that you owe the debt to the debt buyer (haven't seen this either). These debt buyers base their whole business model on getting default judgments. Oddly, when you beat them they don't seem to understand what a judgement against them means as they normally will not correct your credit reports. If this happens, sue them.

There are other ways abusive debt collectors will attack you but these three (third party contacts, false credit reporting, and filing frivolous lawsuits) will be the most common tactics you will face in the coming year. Gain knowledge. Protect yourself. Contact us for a free consultation for any questions you have. We are here to help you.

Full post as published by Alabama Consumer Blog on January 01, 2009 (boomark / email).