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Creditor harassment draws legal scrutiny

In our last few posts, we've explored various aspects of debt collection activities by creditors. Today's posting discusses certain tactics by third-party debt collection firms which have drawn the scrutiny of governmental authorities.

Since 2003, the number of consumers in Tennessee and across the country facing debt collection activity has increased nearly 50%, to an estimated 30 million Americans. With the uncertain real estate market and high unemployment rate, many households already struggling with debt management have been unable to remain current on all of their payments, whether it be mortgages, student loans, medical or credit card debt.

In response, debt collection by third-party companies has grown to a $12-billion-a-year industry. Yet that growth has been accompanies by increasingly aggressive debt collection tactics, such as intimidating phone calls, unfounded threats of arrest, harassment of relatives and neighbors, and civil lawsuits seeking to garnish wages or capture home equity.

One tactic in particular -- using false or faulty affidavits -- has drawn the attention of several state attorneys general, resulting in several pending lawsuits against debt collection firms. States are also revisiting debt collection laws, many of which might be found to be outdated. For example, state laws may not contain adequate safeguards to ensure that creditors have verified the identity of the person against whom they are taking collection actions.

Consumers have also lodged complaints about debt collectors to Federal Trade Commission. Since 2008, the number of such complaints has increased 73%. Last year, the FTC received 180,928 complaints about debt collectors -- more than any other industry.

There are legal limits to the actions that creditors may take against you, as well as various legal options which may help Tennessee consumers better manage their debt. An experienced bankruptcy attorney will be knowledgeable in these areas.

Source: Los Angeles Times, "Aggressive debt collection tactics are drawing federal scrutiny," Jim Puzzanghera, Aug. 20, 2012

  • Our firm handles situations similar to the one discussed in this post. If you would like to learn more about our practice, please visit our Memphis Creditor Harassment Lawyer page.

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