More Examples of Predatory Actions by Collection Agencies

The number of potential violations of law, court procedures, and common human decency that the owners, managers, and employees of collection agencies have been caught engaging in is almost endless. Homeowners facing foreclosure, consumers considering bankruptcy, and even families attempting to pay back loans but who have fallen on hard times should be aware of these tactics in order to recognize them as the violations they are.

A previous article discussed some of these shady practices, including violations of the federal collection laws, seizing bank accounts holding exempt Social Security payments, obtaining judgments fraudulently by failing to serve borrowers with lawsuit paperwork, and others. In general, if a collection agency is involved in pursuing a debt, the main objective will be embarrassing borrowers, not making sure the debt is paid.

Even in the cases of identity theft, collection agencies will keep pursuing a debt once it has been established that the debt is exempt. Instead of giving up on such collection attempts, the account is usually just sold to another debt collector who begin the process all over again. If the borrower sends documentation that the debt is noncollectable due to identity theft, it is just sold to the next agency.

Debt collectors will also take advantage of the fact that most debtors do not know that they can request no more phone calls be made to their work, home, or other phone numbers. Instead, the agency will threaten to keep calling until the borrower is thoroughly embarrassed or has lost his or her job due to the harassment. Although this is against the law, collection agencies know that most borrowers are not aware of their rights.

Collection agencies know two things: they often can not validate a debt, and borrowers do not know how to defend themselves in court. Thus, when a collector is sent request for validation, it often responds by filing a lawsuit against borrowers. However, this is against the law, as a collection agency that can not validate a debt is no longer allowed to pursue any collection attempts until it has the information to validate properly.

The worst action that borrowers may take is agreeing to pay back a debt, in some instances. Collection agencies, once authorized to debit a bank account for periodic payment, will attempt to withdraw as much money as possible from the debtor's account over a very short period of time. This can result in NSF fees, overdrawn account fees, and the closure of the bank account in the end.

In some states, debt collectors are able to dictate to the banks what to do with borrowers' money even without a judgment, court order, or lawsuit. So-called "pocket service" laws state that a bank can be served with a garnishment summons and the bank account must be frozen for the payment of the debt. Again, exempt Social Security payments may be in the account, but borrowers must fight to get those funds back.

It should be noted repeatedly by homeowners and consumers that collection agencies file a large number of lawsuits, regardless of the statute of limitations, identity theft, or being able to find and serve the debtor properly. In almost all of these cases, the collectors use lawyers to file frivolous, fraudulent lawsuits and obtain default judgments, even for debts that are otherwise noncollectable.

Veterans are not protected, either, from the deceptions of collection agencies. A report by the National Consumer Law Center has this to say:

"My client, a soldier in Iraq, gives [Debt Collector] permission to debit his account for $300 on 5/1. They proceed to clean out his account. He called [his bank] and asked that [Debt Collector] be blocked from any further access to the account. [The Bank] tells him that is not enough; that [Debt Collector] is well known to them, and they will simply take further monies under a different name--they do this to soldiers all the time."

Debt collectors usually are not picky about which groups they harass -- everyone is an equal opportunity victim. But obviously, some companies decide to enter niche markets, like taking advantage of veterans based overseas who find it more difficult to defend against such actions.

Thus, every homeowner should be on guard against the fraudulent practices of debt collection companies attempting to embarrass debtors more than have debts repaid. Many of these parasites masquerade as law firms, using their political connections to sue borrowers even when all of the actions they must perform to get a judgment are based on lies and against the law.

Of course, this is not to say that every borrower is being preyed upon or every debt collector is a predator. However, a surprising number of collection agencies have established a pattern of behaving in a manner designed to humiliate borrowers instead of give them opportunities to repay defaulted debts. By gaining an awareness of such practices, hopefully more debtors will be able to avoid being taken advantage of by fraudulent companies and lawyers.

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