During the economic downturn, and knowing that no one is really paying much attention, some debt collection agencies are breaking the law. They’re threatening and harassing the folks who have the debt – and sometimes they go after friends and family as well.
Warning: the full story at the link is upsetting and contains some direct quotes that contain racist and abusive language. From Alternet:
From racial epithets to impersonating police officers to trying to collect debts from the wrong people, some debt collectors have become increasingly abusive in recent years—and in the economic downturn of the late 2000s and early 2010s, those abuses are only becoming worse. In March, the Federal Trade Commission (FTC) announced that next to identity theft, complaints about debt collectors were the most common complaints it received in 2010; last year, the FTC said, it received over 144,000 complaints about debt collectors, which was a 17 percent increase from the 119,609 debt collector-related complaints it received in 2009. The FTC said more than 4,100 of the complaints it received about debt collectors in 2010 involved threats of physical violence.
Threats of physical violence?
Debt collection horror stories are not hard to find, and in many cases, those who have been verbally abused have actual recordings of the abuse. Tammy Henshaw of Bellville, Missouri told KMOV-TV (St. Louis’ CBS affiliate) that she was hounded by a Los Angeles-based debt collection agency after the death of her daughter Angie. When Henshaw’s daughter died, she was left with a considerable amount of medical debt; as a result, Henshaw was unable to pay the funeral-related expenses. The funeral home sold the debt to that collection agency, and abusive messages were left on her answering machine. In addition to calling her “white trash” and a “deadbeat piece of crap,” one of the agency’s collectors threatened to dig up her daughter’s dead body and hang it from a tree if she didn’t pay the debt immediately. KMOV-TV played a recording of the collector telling Henshaw, “Are you going to pay this bill or not, or am I going to have to kill you?”
Threatening to dig up her daughter’s body? In the United States, in the 21st century? Over a debt?
Attorney Joseph Mauro was interviewed for this story:
Asked to list some of the most common ways in which abusive debt collectors blatantly violate federal law, Mauro said, “It’s everything. False threats of lawsuits, false threats of freezing bank accounts, false threats of garnishing pay, outright harassment in terms of name-calling and profanities, debt collectors acting like they are lawyers, debt collectors saying or implying that they are law enforcement, persistent telephone calls multiple times in a day.”
Naturally, the debt collection industry says these stories represent a small portion of their (mostly) ethical profession. Based on my own experiences and the anecdotes of other, these sorts of threats and bizarre statements may be far more common than the industry wants to admit to.
It is important for all of us to know our rights. The Fair Trade Commission enforces the FDCPA; the Fair Debt Collection Practices Act. The FTC’s website has a lot of good information, including this Debt Collection FAQ that states clearly what and what is not legal behavior on the part of a collection agency. If you encounter harassing or threatening, please report it immediately to the FTC and to your state’s Attorney General. Keep written records, and record calls if you can. Your state may also have a consumer protection agency that can help you
Tags: debt, predatory economy
Americans are still defaulting on debt. The unemployment numbers are in the double digits, poverty is on the rise, and for most folks, the “economic recovery” we keep hearing about is just a rumor. In an effort to reclaim even more money, debt collection agencies have begun aggressively going after the debts of the dead. The Federal Trade Commission wants to revise the guidelines on who, exactly, is possibly responsible for the debts of the deceased. From the Washington Post:
The federal Fair Debt Collection Practices Act limits the people that collectors can contact to those with authority to pay the debt – typically a spouse or family member, and possibly a third-party executor of an estate. But in a proposed policy statement, the FTC said changes to court procedures have widened the pool of those who may be able to pay to include a host of other legal representatives.
and
Locating those who can pay the debt creates another challenge. Often, collectors may contact several friends or relatives in their attempt to find the right person. Current law allows collectors to only ask for “location information” without revealing that a debt is owed. The FTC is considering relaxing that rule for those who are deceased.
But that could pave the way for collectors to persuade unobligated consumers to pay the debt, consumer groups say. In its investigation of the practice, the FTC listened to thousands of phone calls and found debt collectors often operating in a gray area, Winston said.
That would be the gray area of trying to guilt someone into thinking they’re responsible to pay the debts of someone they loved, who has died.
The FTC proposal states that collectors appealing to consumers’ “moral obligation” to close the debt could violate federal law. In addition, it emphasized that collectors cannot imply that those with authority to pay the debt must do so out of their own pockets. All debts should be paid out of the deceased’s estate.
Instead of making it easier to harass the bereaved, it’s a shame that the FTC isn’t changing the rules to protect those who have lost someone they loved.
I confess to having a personal bias and some experience here. My husband died in 2009, and over the last year, I’ve been harassed by debt collectors, been through a very hasty foreclosure, and I’m still getting letters from lawyers. I don’t worry about it any more. There’s really nothing they can do to me. I’m earning less than the federal poverty guidelines for a single person. I do, however, worry that relaxing these rules will create a great deal of misery for elderly widows and widowers.
The whole proposal is available to read here. You can also comment on the proposed rules changes until Dec. 1.
Tags: debt, foreclosure
Ben Armbruster at Think Progress calls out Republican Senator Jon Kyl as a deficit fraud for wanting to extend the Bush tax cuts for the wealthy without paying for their $678 billion deficit price tag. Kyl, of course, has been a leader of the Republican obstruction of any economic stimulus, including extending unemployment insurance, citing fake deficit concerns.
But today on Fox News Sunday, Kyl threw his concerns about the deficit out the window when discussing tax cuts. Kyl said Congress should not allow the Bush tax cuts to expire, but when host Chris Wallace asked, “How are you going to pay the $678 billion to keep Bush tax cuts for the wealthy?” Kyl wouldn’t answer. And in fact, he went so far as to say tax cuts should never have to be paid for:
WALLACE: We’re running out of time, so how are you going to pay $678 billion just on the tax cuts for people making more than $250,000 a year?
KYL: You should never raise taxes in order to cut taxes. Surely congress has the authority and it would be right, if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending. And that’s what republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.
For all their yammering about deficits and debt, what’s become crystal clear is that Republicans use the deficit issue when they want to block plans to create jobs and improve the economic conditions for working families and the unemployed, but when it comes to propping up the wealthy they’re all for government intervention and deficits be damned.
Still, I would imagine that Kyl will be among the most vocal objectors when the bill to provide emergency funding for extended unemployment insurance finally hits the Senate floor again. Kyl and his fellow deficit frauds have thus far blocked that bill from reaching a floor vote, despite the backing of a clear Senate majority. As a result, more than 2 million jobless workers have had their benefits cut off, a number that could reach 3.2 million by the end of July.
Fighting the deficit fraud gang effectively means exposing their fraud at every turn — something Senate Democrats should be doing more aggressively. But it also means that real, practical policies to improve the economic outlook for Main Street America need to be advanced in the context of how they can actually reduce our long term debt.
And there are a host of progressive policies that would actually improve the deficit. Check out the Deficit Calculator developed by the Center for Economic and Policy Research (CEPR).
Click here or on the image below to go to the interactive calculator.
For example, if the Federal Reserve were to buy and hold $2 trillion of long-term U.S. Treasury securities, it would help provide financing for economic stimulus while reducing the debt by $3.1 trillion.
Reducing the size of U.S. forces in Iraq and Afghanistan to 30,000 by 2013 would reduce the debt by $1 trillion.
Enacting a real public health insurance option, as well as negotiated Medicare drug prices and public-funded drug trials would lower the debt by $2.5 trillion.
And a marginal tax on financial speculation would reduce the debt by $2.1 trillion over ten years, and raise an estimated $140 billion a year in new revenue.
More than two dozen specific policy options are included, along with helpful background descriptions and options for sharing results.
CEPR notes that the Flash program is needed to run the calculator.
Tags: debt, deficit, Jobs, unemployment
Read this while I catch my breath:
It’s not a crime to owe money, and debtors’ prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.
-snip-
Taxpayers foot the bill for arresting and jailing debtors. In many cases, Minnesota judges set bail at the amount owed.
In Minnesota, judges have issued arrest warrants for people who owe as little as $85 — less than half the cost of housing an inmate overnight. Debtors targeted for arrest owed a median of $3,512 in 2009, up from $2,201 five years ago.
It’s a long article worth reading in full, if you can stand to. Basically, debt collection agencies are using the police and courts to collect debts, at—and I know this is in the excerpt above but I’m going to repeat it—at taxpayer expense.
How does this work when we don’t have official debtors prisons? Simple. The collection agency sends you a notice. If you don’t show up in court, you can be arrested for contempt. And then your bail is set at the amount you owe. So the collection agency gets its money, and the costs of police carrying out an arrest and some jail time, those the agency doesn’t worry about. Minnesota’s taxpayers have it covered.
There are so many things wrong with this picture I can’t begin to identify them all.
(h/t commenter Jojo)
Tags: debt, predatory economy
Yet another way the banks have found to prey on people struggling in this economy:
Banks and credit unions have long pitched debit cards as a convenient and prudent way to buy. But a growing number are now allowing consumers to exceed their balances — for a price.
Banks market it as overdraft protection, and the fees it generates have become an important source of income for the banking industry at a time of big losses in other operations. This year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer’s balance.
What does that mean, in practice? It means that you might not know you’re at your limit, and they’re not going to tell you. They’re just going to let the transaction go through without a word, and then charge you up to $35, no matter how small the transaction.
And the banks want consumers to consider this a “service.” Because, according to them, most working people would so much rather pay $35 extra than suffer the embarrassment of having their card declined. But for something they consider such a valuable service, the banks sure make this one hard to get out of: In fact, they’re fighting regulation that would require consumers to have the ability to opt out of this “service,” and are threatening that if the amount they take in in overdraft fees goes down, other fees will go up.
But that’s not all. Not content with charging extortionate fees when people legitimately overspend, the banks might game the system so you pay for three overdrafts instead of the one you should have owed:
Mr. Tornes had $195 in his account when he made two debit purchases for $8 and $13; the bank also processed a bill payment of $256.
He claims that Bank of America took his purchases out of chronological order and ran the biggest one through first. So instead of paying $35 for one overdraft fee, he was stuck with three, for a total of $105.
Once again, of course, it’s for the customer’s own good, because maybe the big bill was the most important to them. That’s what the banks say—but that argument only holds water if they’re trying to decide which charge to decline. If they’re letting them all through, all that matters to the customer is how much the overdraft charges come to.
Not enough that the finance industry and big banks sent the entire economy into crisis, they’re now apparently trying to cause working people crisis, one by one.
Tags: banks, debt, predatory economy
