Bankruptcy laws can stop debt collectors cold

diehard2National financial columnist Michelle Singletary today reported on a slew of alleged abuses by a debt collection firm that has led to one of the biggest fines ever levied by the Federal Trade Commission — $3.2M against the collection firm Expert Global Solutions.

Singeltary’s article contains a litany of the most maddening debt collection abuses that are commonly practiced, such as buying ancient debts and trying to scare people in to paying. “Often, as the debt becomes older and is sold over and over, there is limited documentation other than the debtor’s name, last known address, Social Security number, and debt amount.”

“One tactic that debt collectors use is to shame people into paying a debt. They do this by calling a person’s relatives, neighbors, co-workers, or even a boss and then disclosing private details. But the law prohibits debt collectors from sharing a person’s debt information with third parties except under limited exceptions, such as contacting an attorney or a co-debtor.”

Another tactic: calling consumers at home or on their jobs multiple times per day, even after being asked to stop or told that the person’s employer prohibited such calls.

While it’s nice to see the FTC cracking down on the biggest abusers, according to the article they have only filed 15 cases since the economy went down the tubes in 2008.

So who’s going to protect the average debtor buried in bills? Well, the bankruptcy laws are one of the best avenues of support. Debtors whose situation requires bankruptcy relief get immediate protection from collection harassment as soon as they file a case.

And that protection comes with teeth — if there is further contact with a debtor after a bankruptcy case is filed, the collector could well find himself hauled into bankruptcy court to face the judge — and perhaps even having to pay damages to the debtor on account of the abuse.

 

By Doug Beaton

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