- Robert Weed
Before bankruptcy: outlaw debt collectors
People who need to file bankruptcy are often abused by debt collectors.
CNN Money reported Saturday that complaints against debt collectors to the Federal Trade Commission are up 50% from 2007 to 2009–and up another 15% this year.
“Harassing phone calls, abusive language and physical violence are becoming a bigger part of business as debt collectors struggle to round up money from people who don’t have it,” CNN reported.
People who need to file bankruptcy sometimes feel too guilty to complain about these illegal threats. My firm sues five or six debt collectors a month. Two of three for harassment before bankruptcies are filed. And another two or three for what they did after bankruptcy. (There are a handful of lawyers nationally who sue debt collectors a dozen times a month, months after month. )
Most of what we sue on are what the collectors call “technical violations.” Usually continuing to call after being told to call the bankruptcy lawyer. Also, sending letters threatening to sue, when they don’t really intend to sue. (We sometimes see otherwise law-abiding companies make seriously illegal threats when they are talking in Spanish to Spanish-speaking consumers.)
When the consumer is obviously reading from instructions given by his bankruptcy lawyer, most callers know to be careful.
Recently a handful of my bankruptcy clients have gotten threats of immediate arrest. These are for payday loans that have been sold to outlaw debt collectors. These outlaws clearly know they are illegal and don’t care.
We sued one of those outfits last falls and got a $10,000 judgment for our client–but there’s no chance to collect it. (Although they had several US addresses, this outfit may not be in America at all.)
Suing to stop violations only helps when you are suing (mostly) honest people. Really abusive collectors are just criminals. Outlaw debt collectors use the telephone to threaten criminal arrest to extort payment. They violate the Federal extortion statute, 41 USC 875(d). They can (and should) be imprisoned for two years.