Patt Morrison for August 20, 2012

Debt collection companies take heat for bending the rules

Rich Pedroncelli / AP Images

State Sen. Lou Correa, D-Anaheim, walks into the Senate at the Capitol in Sacramento, Calif., Tuesday, Feb. 17, 2009.

Tough times have meant extreme measures for the debt collection industry. In the aftermath of ‘The Great Recession,’ tactics used to get debtors to pay up have included threats, incessant phone calls and calls at strange hours, lying about arrest or incarceration and others… and some are illegal. California Senator Lou Correa (D-Santa Ana) discovered that he was the victim of a false debt collection pursuit when he noticed that his Senate paycheck was being garnished for a lien on a debt to Sears owed by a different Luis Correa - even though the other Correa had a different first name, address and Social Security number.

The debt collection agency admitted the mistake in Sen. Correa’s case, but aggressive tactics and questionable legal practices are now more commonplace in an economic climate where 50 percent more Americans are in financial hot water than in 2003. The stakes are high and so can be the profits. Even with debt payment returns that can be pennies on the dollar the debt collection industry recovered $55 billion in debts in 2010. To muddy the issue, unpaid debt can be bought and sold so the company that hounds debtors may not be the company that they originally owed.

WEIGH IN:

What can you do if debt collectors are breaking the law? Are you struggling with debt and fighting collection agencies?

Guests

Sen. Lou Correa (D-Santa Ana), Senator Correa was recently the victim of a false collection claim and supports a bill sponsored by California Sen. Mark Leno bill that would to require debt collectors to document that they are pursuing the right person for the correct amount of money.

Brett Weiss, bankruptcy lawyer; Maryland State Chair, National Association of Consumer Bankruptcy Attorneys and partner at Chung & Press, a law firm based in Greenbelt, Maryland

Lloyd Dix, legal advocate, California Association of Collectors, Inc.


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