Abusive Tactics by Debt Collectors
26 August 2006Via Pinko Feminist Hellcat, I came across a series in the Boston Globe on the various aggressive collection practices that collection agencies have often employed against people who start to fall behind on their debts. You can view it here: Part One, Part Two, Part Three, and Part Four. There’s one of those annoying online registration things, but I think it’s worth it here.
Some of this is pretty scary - the article points to a woman who had her car siezed on a five year old debt that had been paid off:
Dimanche is one of thousands of Massachusetts residents who have had their cars seized and lives upended by a pair of debt collection companies, Commonwealth Receivables Inc. of Watertown and Norfolk Financial Corp. of West Roxbury. Run by two brothers, one of whom was disbarred this year for his business practices, Norfolk and Commonwealth have become two of the state’s most litigious and aggressive collectors, a Globe Spotlight Team investigation of the debt industry has found.
The problem appears to be caused by a small subset of collectors - but they’re so aggressive that they can cause a severe set of problems. Some of the other problems come when the people who seize the cars charge outrageous fees:
LoConte is disabled as a result of lupus and Crohn’s Disease. She lost her cleaning business more than a decade ago, and, by 2000, had stopped making payments on a $430 Providian credit card balance. She wound up paying $1,758, draining her savings and borrowing from a friend, to erase the debt and get her car back.
Of that, $158 went to the tow lot, which kept her car for a day, and $800 to the constables, dispatched by Sorenson’s firm. To ransom the car, LoConte had to drive 70 miles to Sorenson’s office in Chelmsford to pay her bill, then another 55 miles to a Bridgewater tow lot.
For Jeanmarie Fitzpatrick, the constable’s visit was even more costly. An $800 constable’s fee would have seemed a bargain to her.
When Dorsey, the former bar manager turned constable, arrived at her door last Dec. 14, he demanded $1,250 in fees for seizing her 2000 Dodge Neon.
It’s a very informative article and I recommend reading the whole thing even if you’ve managed to get yourself out of debt entirely. The point of it is that you can’t guarantee your stuff is safe if there are aggressive collectors running around who don’t care whether you’ve actually paid the debt off or not. So even if you are 100% debt free, if you’ve got old debt this could end up happening to you.
So what do you do about it? The problem with trying to answer this is that the law varies so much from state to state that it’s very difficult to tell you what’s correct. One thing you might want to check out is this guide on how to deal with people trying to repossess your car.
You should also monitor your credit report regularly if you’ve had any past problems. It’s pretty cheap to do - and even if you think you’re square with a company, you can find out that they report you or send you to collection anyway. The credit report will often tip you off beforehand.
Paying off all your debt is obviously a good thing to do - as is making sure that you’ve got a forwarding order in on any old addresses. One of the tactics the article mentions the collectors using is sending notice of a lawsuit to an old address. If you get a notice like that and think it’s in error, above all else DON’T IGNORE IT. You have to deal with it even if it’s wrong.
And finally, I’ve mentioned his blog before, but I’ll plug it again - go read Debt Collection Lawyer if you think you might be in this situation. A lot of good, insider tips on dealing with this kind of thing.
Discuss this in the Free the Drones Personal Finance Forums here.
2 Responses to “Abusive Tactics by Debt Collectors”
August 28th, 2006 at 1:04 am
[...] Free the Drones reports on the ancillary headaches of being in debt — abusive practices by debt collectors. [...]
August 28th, 2006 at 5:01 am
[...] Free The Drones, a personal finance blog I’ve only recently become aware of, has a post titled, Abusive Tactics by Debt Collectors. The post is inspired by an article in the Boston Globe. [...]