I was interviewed in a news story that aired last night about aggressive debt collection practices. Part of my law practice includes suing debt collectors that violate the law. Examples of illegal conduct include making threats to arrest the debtor, harassing the debtor at work, and discussing the debt with the debtor’s family and neighbors.
Many within the debt-collection industry complain that these lawsuits are brought by greedy lawyers who are just looking for fees. Although there are doubtless some lawyers who fit that description, most consumer lawyers perform a vital public service in bringing these cases.
Connecticut along has over 900 licensed debt collectors who operate in our state. That number does not include the “debt buyers”, who buy defaulted accounts for purposes of trying to collect them. Although state and federal agencies can enforce the laws that prohibit aggressive harassment, the marketplace is just too big for them to tackle the problem: collectors and debt-buyers make over one billion contacts with debtors annually.*
In order to supplement public enforcement by the government, the debt collection laws encourage consumers to bring private lawsuits – and they encourage attorneys to represent the consumers. That way, the consumers can enforce the laws themselves by hiring private attorneys who can get paid by the collectors if a violation is proven. The possibility of these lawsuits provides an incentive for collectors and debt-buyers to play by the rules.
Imagine a scenario where there were no private lawsuits and there was little risk of negative consequences for breaking the rules. A debtor might have $1,000 that could be used to pay her debts. If she owed $2,000 to each of five different creditors, she might pay $200 to each of them. Or, perhaps she’d pay it all to the creditor that charged the highest interest rate. The important thing is that, if all of the collectors play by the rules, then they each have a fair shot at collecting some of the money. But, if one of the collectors starts harassing the debtor and makes her life a living hell, she might decide to give all of the money to the rule-breaker just to stop the harassment. The honest collectors that complied with the law get nothing. These laws don’t just protect consumers; they also protect honest and ethical businesses by preventing the rule-breakers from gaining an unfair advantage.
Yes, people who owe a debt should repay what they owe (although there are many justifications not to pay a debt – perhaps a topic for another day). But, debtors are people, and they should be treated with decency and respect.
*U.S. Government Accountability Office, “Credit Cards: Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology,” GAO-09-748, September 2009, p. 35.