As Debt Collectors Multiply, So Do Consumer Complaints: "The rise of the debt-buying industry has also led to an increase in complaints about attempts to collect what plaintiff attorneys often call 'zombie debt,' those unpaid bills that are so old the statute of limitations in which a creditor can sue to recover the debt has expired.
It's not illegal to try to collect this debt -- and collection industry officials say there are a lot of consumers who want to pay, even if they are no longer legally obligated to. However, federal rules make it illegal to sue or even threaten to sue to collect it.
That's one of the chief reasons the Federal Trade Commission sued CAMCO. In its court filing, the agency, which had received more than 2,000 consumer complaints about CAMCO, called the Rockford, Ill., firm 'a debt collection company gone wild.'
It alleged that CAMCO harassed thousands of consumers to pay old, unenforceable debts or even debts they didn't owe. CAMCO sometimes tried to find people with the same name in the same geographic area and tried to collect the debt from them, the agency alleged. Even if the consumer was not the actual debtor, CAMCO threatened jail, seizure of property or garnishment of wages unless they paid, the FTC said. CAMCO collected millions every year 'and perhaps as much as 80 percent of the money' came from consumers who never owed the original debt, the agency said in its complaint.
CAMCO closed last December after the FTC filed suit. Its $1.75 billion portfolio of consumer receivables was auctioned off for $6.8 million -- to another debt buyer."
Thursday, July 28, 2005
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2 comments:
"...the statute of limitations -- the amount of time a creditor can sue over an old debt -- expired in the early 1990s. Both her old home state of Texas and her current state of California generally prohibit creditors from suing once a debt is more than four years old."
good info !!!!!
"...some collectors, he said, “will go to any lengths to harass people and defraud them.”
Among the worst practices attorneys have seen:
Suing or threatening to sue over debts even though the statute of limitations has long expired.
Illegally “re-aging” debts on credit reports. The collectors tell credit bureaus that an old debt is, in fact, a new one. The goal: To extend the seven-year limit on reporting negative items and put more pressure on the consumer.
Promising to delete a negative mark from the consumer’s credit report in exchange for a token payment. Not only does the collector fail to follow through, but the payment can revive the statute of limitations and lead to a lawsuit. Even if the collector does back off, the unpaid debt could be sold to another company that might renew collection activity.
Bait-and-switch credit cards. Some credit card companies have offered borrowers low-rate credit cards and then tacked old, charged-off debts -- often purchased from other lenders -- onto the balance. The card issuers typically insist they disclosed that the old debts would come with the cards, Szwak said, but the borrowers say no such disclosure was made.
Verbally abusing and harassing consumers. My readers have reported being cursed, berated and called repeatedly despite requests to stop -- all violations of federal laws."
fascinating info...
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