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Debtors beware of false lawsuits filed by creditors

Oregon consumers and their counterparts around the country can often feel taken advantage of or threatened by debt collectors. When debt mounts to the point that repossession of a vehicle, wage garnishment or other actions are feared, situations can appear grim. It can be difficult to know how to stop creditor harassment and how to determine the best course of action.

Threats of repossession or garnishment are not the only worries that consumers face. Creditors are also known to file lawsuits against debtors—and they are allowed to achieve default judgments if those debtors do not respond or appear in court. Reports indicate that many such lawsuits that are filed are not actually legitimate nor are all debtors properly notified of claims.

One part of the problem is the buying and selling of debts. When this happens, some data about the debtor or the debt can be lost, leading to inappropriate information. A 2013 study by the Federal Trade Commission indicates that as many as 94 percent of debt sales do not include critical account terms and data. Revenue from legal collections rose to over $1 billion from just under $600 million between 2009 and 2012 for four agencies that report such earnings. When home liens, frozen assets and garnished wages are possible consequences, debtors should take this risk seriously.

Creditors have a right to receive payment for debts but debtors have the right to fair treatment. The need for fair debt collection practices is important. Anyone who has been subject to unfair creditor actions may want to get input from an attorney.

Source: Huffington Post, “Debt Collectors Have Figured Out A Way To Seize Your Wages And Savings,” Hunter Stuart, June 2, 2014

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