Jon Murray, writing for the Indianapolis Star, has an article on debt collection in the courts. I’m not sure if journalists are instructed to go for objectivity these days, but the article opens with fairly charged language:
Creditors dump on the courts, they clog the court system, leaving people desperate on a conveyor belt system where their money and valuables go to collectors. Obviously I have a bias since I work for creditors. I would suggest that they see it differently. They struck a deal with individuals to provide goods and services; they held up their end of the deal but the individuals they are suing have not. And where there are money and valuables available, the unpaid creditors regard it as unfair for them to go unpaid while the individual pays other creditors or uses the money to obtain new goods and services before the old ones have been paid for. Sometimes the existing money is going to necessities like food and shelter, and I think most creditors understand that this is going to take priority; but they lose patience when the money is going to cable bills or cigarettes. And, without “dumping” on the courts and “clogging them up” with their apparently silly insistence that contracts be honored, frequently a letter or other request that the bill be paid has no persuasive effect on the manner in which the debtor chooses to allocate his or her limited resources.
On the second page of the online version of the article, we get a quote from Steven Lerch mentioning something that is (and I credit Mr. Murray for including it) often left out of these stories altogether:
“[The FTC report on consumer debt collection] overlooks the fact that, unfortunately, most of these debts are owed,” said Lerch, a partner in Wright & Lerch and president of the Indiana Collectors Bar Association. “The FTC approach doesn’t comport with reality.”
Yes, I agree that debtors are often at a disadvantage in these proceedings. But an enormous part of that disadvantage is often that they don’t have anything like a meritorious defense to the claims. I can’t speak for everybody’s clients, but I get the sense that, in a perfect world, mine would prefer not to have to pay me. They make an effort to collect these debts without using me and without using the court system. And that works with a lot of unpaid accounts. I get the ones where that route was not successful.
There are basically two steps in debt collection (and, really, any civil) litigation: 1) is the debt owed; and 2) are there assets or income available to satisfy the debt. The courts really aren’t supposed to address #2 until #1 has been resolved. Fortunately for me, most of the claims I handle have been relatively straight forward as to #1. I’ve seen credit card claims where the rules of late fee and interest calculation are byzantine, and that’s probably an area where debtors could use some protection. I have also heard of debt buyers who don’t have any real information on the account. That’s a problem as well. But, mostly, the system is a conveyor belt because the cases are pretty simple: “Did you receive the goods or services? Yes. Have you paid for them? No.” Then, it’s a matter of discovering income and assets. The rules for what can or cannot be attached and used to satisfy the debt against the will of the debtor are fairly cut & dry as well. So, it’s frequently a matter of having the court apply fairly straight forward law to a relatively simple set of facts.
It’s not often that people advocate for more cumbersome legal proceedings, but somehow when it comes to creditors attempting to enforce contracts, more time consuming legal proceedings are usually one of the recommendations.
Here is what debt collection looks like when the courts are unavailable (caution: swear words):
Here would be my question, for starters: Why does the FDCPA require debtors to respond in writing for any dispute or verification within 30 days, yet the collectors face no deadline and often don’t supply that information in a timely manner? If we want to talk fair, then that would be my starting point when establishing what’s actually owed and whether a creditor, collectorm third-party debt buyer, or collection attorney has the authority to collect whatever may be owed.
You can dispute the debt at any time; the 30 days is just the window in which you can compel the debt collector to provide written verification of the debt by doing so. There is no specified time for a response, but under 15 USC 1692g(b), debt collection efforts have to stop until the required verification is provided. The nature of the verification isn’t actually specified by the FDCPA, so it’s possible to comply with the requirement without actually providing much information.
In practice, I find it’s best to lay out the debt as concretely as possible for these disputes. For someone who legitimately questions whether they owe the money, a solid explanation might put their mind at ease and make them more likely to pay. For someone who is just looking to gum up the works because they just don’t want to pay, there’s a good chance litigation is going to be required anyway – might as well get your ducks in a row early.
Thanks for that response, Doug. I’ve found myself in this boat. Where a collection attorney/collector doesn’t respond to my request for verification of the debt and authority. While I may owe something, I want to know they’re legit and that the debt records they have match my own. Then I’m willing to work with them. But I ask for reasonableness – despite the merits of why we’re at this stage and that I do owe an outstanding balance. I want them to get the money that’s owed, but I can’t just produce money that simply doesn’t exist and selling my home or car or dog just isn’t going to suffice as “reasonable” to me. I get they have an argument and bottom line, but so do I. Those who’ve been willing, I make diligent efforts to pay. Otherwise, not. Those are the ones I’ll take to court and argue over the procedural nuances regardless because they didn’t in fact have their ducks in a row from the beginning and tried to just get me to pay. Judges favor efforts to keep this out of court, and when there’s proof, that helps.
I am with you on this, Mr. friendly Lafayette attorney. Whatever was Jon thinking?
The article is a hack job, which is, I think, all too common in recent Star articles. Here’s what I think really prompted this – on July 30, the NY Times published an interesting article on certain abusive (IMO) debt collection practices, such as knowingly filing cases after the statute of limitations has expired, or trying to collect a debt where it’s not clear that the defendant actually owes the money in the first place. (I.e, low-doc collections) The NY Times article was presumably a result of the FTC’s cracking down on these practices.
So the Star decides that it wants to do a similar article as the NY Times article, but neglects to focus at all on abusive collection practices, instead simply focusing on…collection practices. (Which is why the defendants don’t come off too sympathetic, IMO). The article is further muddled by the fact that the FTC comments relate to abusive practices, but this doesn’t really tie into the Star’s story where there aren’t any examples of abusive practices.