Debt Collection Issues Recognized by the American Bar Association
Many Illinois residents
face debt collection companies regularly, and indeed, Americans have seen a rise in
the number of debt collection cases since the recession began. Even as
homeowners face difficulty finding the money to pay their mortgages and other
bills, debt collectors aggressively seek payments. The American Bar
Association (ABA) released an article about harmful debt collection practices in the ABA Journal.
In the article, one consumer attorney referred to modern collection
companies as “scavengers, buzzards picking at the decaying carcass of a debt.”
In many cases, these collection
companies harass consumers and use other deceptive or fraudulent practices. In these situations, it is extremely
important to have an experienced consumer attorney on your side. At the Emerson Law Firm, we know how difficult it can be to deal with relentless debt
collection companies. If you believe you have been the victim of an
unfair collection practice, contact us today to discuss your case.
Debt Collection
Companies and “Third-Party Buyers”
How does debt collection
work, exactly? It’s actually pretty easy to understand. When
creditors, such as a bank, have delinquent debt from borrowers, they sell it to
third-party buyers “for pennies on the dollar,” according to the article in the
ABA Journal. These third-party debt buyers try to recover the old
debts they’ve purchased from banks and other lenders, and they’ll often use
aggressive tactics, including “lawsuits, judgments, arbitration and other
actions.”
These companies tend to
end up with substantial profits, often at the detriment of struggling
consumers. Many Illinois residents are well acquainted with these third-party
buyers, such as Midland Funding, Portfolio Recovery Associates, and LVNV
Funding. But when they’re dealing with these collection companies, many
consumers don’t know that they may be victims of bad debt collection practices.
For instance, Peter
Holland, the head of the Consumer Protection Clinic at the University of
Maryland, explained that many third-party buyers are only able to acquire debts
cheaply because the original lender had made some mistakes with the loan and
wanted to get rid of the debt quickly. In the ABA Journal, he
clarified that primary lenders like Bank of America or Wells Fargo sell debts
“cheap for a very good reason—because they’re very unreliable and very poorly
documented.” The bank could have engaged in robosigning, the debtor may
already have declared bankruptcy, or the debt might even “go beyond the statute
of limitations.” In some cases, even, the borrower might have already
repaid the debt.
Abusive Practices and
“Sewer Service”
In other words, debt
collection abuse can take many different forms and can involve borrowers in a
variety of situations. According to the article in the ABA Journal,
some of these bad practices include harassment by the collection agencies, and
the arrest and jailing of debtors who fail to appear at a court hearing.
In connection to the latter harm, one of the most serious “abuses in the
credit industry” is known as “sewer service.” This terms refers to a
situation in which “defendants are intentionally not served with notice of
actions against them.” In these cases, “a person can get a judgment
against him with no knowledge that he was ever even sued.”
If you or a loved one
has been unfairly targeted by a debt collection company, it’s never too soon to
contact a dedicated Chicago consumer attorney. Contact us today to speak to an experienced lawyer.
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