Debt Collectors Pushing To Get Their Day in Court

More aggressive strategies fill court dockets, result in mistaken identities
Chicago Tribune:

Cook County Circuit Court has been turned into a frenetic debt collections machine, a reflection of easy credit gone sour and a collections industry determined to get paid.

More than 119,000 civil lawsuits against alleged debtors are clogging courtrooms, and at least half will result in judgments that debt collectors will use to dock wages, seize bank accounts and file liens against homes, compounding the woes of troubled borrowers.

But because debt collectors operate on volume--pushing through lawsuits based on little more than lists of names, addresses and alleged amounts due--there are also plenty of instances of mistaken identities, cases where debts are alleged when the bills have been paid and even situations where people have fallen behind and tried to work out repayments only to be hauled in to court.

"The system is out of control," said Michelle Weinberg, a supervisory attorney at the Legal Assistance Foundation of Metropolitan Chicago. "It's one thing to call a debtor on the phone. It's another thing to file a lawsuit in court."

The cases that bother the judges the most are those where people have simply fallen behind because of illness or job loss or inability to keep up with escalating bills, a situation that is expected to worsen as a result of rising food, gasoline and housing costs.

"These people aren't deadbeats," said Cook County Circuit Judge Daniel Gillespie, whose docket contains 12,000 debtor suits, about double from two years ago. He also supervises seven courtrooms on the Daley Center's 11th floor where such cases are brought. "These are real people with real problems," he said.

Down slippery slope
Geraldine Wandall is an example. When her health began failing about four years ago the retired bookkeeper, who lives on Social Security, fell behind on bills.

Wandall said she wrote letters to the department store that issued the credit card to see if it would reduce or eliminate some of the interest charges and late fees on her account. She said she never got a response. MORE

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Lawyer makes dirty debt collectors payThe Avenger: Pete Barry goes after those "who live off the misery of others"

We are a nation in debt and the bill has come due. The average American consumer has four credit cards, owes nearly $10,000 in non-mortgage debt, and can no longer rely on his home equity as a safety net. With spiking fuel prices, stagnant wages, and bankruptcy costlier than ever, more people are falling behind on their bills--and getting dragged into ruin.

All of which makes now a good time to be a debt collector. Awash in fresh accounts, the business is also expanding into new areas: In the last decade, years-old consumer debt has become a commodity to be bought and sold on the free market. "Buy it now! Buy it all!" screams the six-page ad in a recent issue of Collections & Credit Risk, an industry trade publication that offers a smorgasbord of unpaid tabs for sale: credit cards, car loans, hospital expenses, mortgages, even gas bills.

When a debtor won't pay, collectors use a variety of techniques--some legal, some not--to extract the money. They might threaten to ruin your credit score, garnish your wages, and, in extreme cases, even cuss out your child. Last year, the Federal Trade Commission reported receiving 71,000 complaints about debt collectors behaving badly--more than any other industry monitored, and the highest total in the 30 years that the authority has been keeping track.

If debt collectors thrive on intimidation, there's one man who strikes fear into them: Pete Barry. In the decade he's been suing dirty debt collectors, Barry has pried loose millions of dollars in damages. MORE