As Texas residents may know, debtors who suffered through the recent financial crisis may be seeing the prospect of increased opportunity in the job market. This relief may be coupled with the burden debtors face due to debt collection activities. In New York, the attorney general’s office is investigating such companies.
Debt collection companies buy millions of accounts from a variety of institutions annually for a drastically reduced price. The accounts may lack accurate information, such as payments, the paperwork associated with the loan or any proof that the debt is legitimate. According to data provided in New York, one such company based in California filed 240,000 debtor lawsuits. The debts are often built on a shaky foundation, one that offers rubber-stamped verification of the debt as described in the testimony given by an employee of one such company. Since so many lawsuits are filed every day, the courts lack the workforce to check each affidavit the company employees provide.
Debt collectors, who determine that debtors are unable to pay, often turn to the courts to garnish wages and bank accounts. Debtors are often unaware the lawsuit has been filed or are not clear on what the action means. Many lack the ability to consult with an attorney or appear in court to fight the suit when it comes up.
In the United States, many adults deal with debt collectors. In some cases, the chance to recover from a hard-hit economy and eliminate debt is ruined by such actions. If debtors find themselves in such a position, it might be beneficial to speak to an attorney. The attorney may evaluate whether bankruptcy might help the debtor improve the situation and start over. If so, the attorney may help the debtor file an action in bankruptcy court.
Source: Salon, “Vulture capitalists are picking us dry: Why consumer debt buyers are on the rise,” Jim Hightower, March 22, 2015