According to a January 8, 2015 New York Times article, one in seven Americans is currently dealing with a debt collector. In recent years, the debt collection business has created many shoddy lawsuits in which they try to collect money they claim is owed to them. These lawsuits are akin to many of those that lead to foreclosures during the housing crisis just a few years ago. Why are there so many debt collection cases being pursued and what is the effect of these debt collection agencies on New Yorkers?
It is a common practice for lenders to sell bad debt. Bad debt is overdue credit card payments or loans, like old auto loans that lenders sell to debt collection agencies for much less than what the debt is worth. When one agency sells debts to another, the buyer of the debts rarely gets all the information on them. As a result, some of these agencies fabricate statements. In addition, when the New York State Attorney General took deposition from employees one of these companies, the court found out that one employee was signing 2,000 affidavits each day. These affidavits were to explain to the court as an official document of the agency how much debtors owed. Given the fact that in eight hours, with no breaks, one would have to sign one affidavit every 15 seconds to sign 2,000 in eight hours, it is unlikely all of these affidavits were accurate.
When the debt collectors bring a case to court against a consumer debtor, only a small percentage of the debtors come to court. That means that the debt collection company would easily win the right to garnish wages and freeze bank accounts to collect money.
As this practice has become commonplace, and it is unjust, state Attorney Generals and federal agencies are taking action against it. Encore Capital is one of the larger debt collection companies. New York State sued Encore. The state was able to assess a fine and force them to vacate lawsuits. In another lawsuit, PRA Group and Sherman Financial Group were forced to nullify judgments.
If you think that a debt collection agency is taking advantage of you, then you should speak to an experienced attorney. The Fair Debts Collection Practices Act (FDCPA) offers legal recourse for many situations. Jayson Lutzky is a personal bankruptcy attorney with over 31 years of experience practicing law in New York. He has an office in the Bronx and serves clients in the Greater New York Metropolitan Area. He offers free in-person consultations, so call 718-329-9500 to set up a consultation.