How would you react if your wages were garnished to pay a debt that is not your liability? This unfortunate scenario happened two times to a New Mexico woman who had no connection to the Target Bank account or to the collectors employed by Target. Cases like this are becoming more common as the debt buying industry has grown by leaps and bounds since the 1980′s. Now the combination of technology and large debt buyer firms has created a profitable industry that also holds the record for highest industry complaints logged with the Federal Trade Commission. The government does not have the resources to respond to all the complaints it receives but luckily there are consumer protection statutes in the Fair Debt Collection Practices Act that can help consumers fight back against collection bullies.
Lucinda Yazzie had the unfortunate experience of receiving some calls from bill collectors claiming she owed a late balance on a Target card. She told the collectors there was another person living in the same area as her with the same name, and the debt was not hers. Collectors received a garnishment order regardless of her efforts to inform the debt collection agency multiple times. The garnishment was dropped and her employer argued that this was not the same employee. Two years later however the same debt collection firm filed suit again and got another garnishment order against Yazzie. The order was not lifted until the point in time when she filed a lawsuit of her own for violations against the FDCPA rules and guidelines.
By the time everything was over, she had been awarded $1,260,000 in the settlement of her lawsuit. In this particular instance the compensation is definitely worth considering. Lucina Yazzie took action and held the collection agency accountable; however most all Americans don’t defend themselves against an industry that is well funded and comprised of very motivated operators who are always pushed to their maximum on very noisy boiler room floors.
The debt buying industry and 3rd party debt collection had its’ origin during the 1980′s Savings and Loan crisis. After the finished with the Savings and Loan assets, the debt buying and collection industry soon became known by insiders as the “Adjustable Receivables Management” industry. Now they have branched out into credit card and other consumer debts.
Until the recession in 2008 debt buyers and collectors grew slowly but steadily, and then analysts predicted an increase in the business. These estimations end up being true because in 2007 there were approximately 100,000 complaints. By 2009 the number had increased to 130,000 per year. Several factors influencing the rise in complaints include aggressive tactics that ignore legal boundaries, technology to increase calls to consumers and the increasing use of local courts to sue for delinquent credit card debts.
Although a creditor must hire a collection agency with a qualified attorney in the same state as the person who owes the debt, the vague threat of “legal action” is a favorite among bill collectors. This is often an FDCPA violation if the collector does not have the immediate capability and intention to sue on the debt.
Despite the fact that most people do not show up to defend against a creditor lawsuit when summoned to court; a recent study shows that many of the respondents who did show up ended up having the cases dismissed. If sued by a creditor the most important thing a consumer can do is to respond through the court system within the time allowed even if the debt is not theirs, the study shows.
Because many suits are rejected by the courts it’s evident that collectors are often bluffing. But this is a business that has a 58% increase of profits in the year 2010. Even though the laws are not fully followed, just being aggressive can give good results.
Because of the high volume of complaints the Federal Trade Commission urges consumers to use the protection provisions in the Fair Debt Collection Practices Act to defend themselves against non-compliant debt collectors. In much a similar scenario to the intensely partisan legislative scene that exists today, the FDCPA barely passed after a tenuous debate, and was enacted in 1977. However Congress ultimately realized that there was a need to protect people from all parts of society against abusive debt collection practices that were also rampant in the Seventies. Today the nee still exists.
In a CNN Money article the head of a debt collection agency notes that “It’s harder to get rid of debt these days.” Debt is now a fact of life and a burden to manage for many Americans. Certified debt specialists are people who, fortunately, have vast experience dealing with bill collectors. These people are professionals and are aware of the ins and outs of the system. More and more creditors are realizing the necessity for a specialist with technology that is certified to serve as a contact and mediator with large well funded debt collection agencies that just keep get bigger and bigger.
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