
Sued Over Old Debt, and Blocked from Suing Back - petethomas
http://www.nytimes.com/2015/12/23/business/dealbook/sued-over-old-debt-and-blocked-from-suing-back.html
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peter303
I read a book about the Old Debt Industry called Bad Paper a couple years ago.
Its kind of shady employing ex-cons and Payday Loan types. The core document
is a spreadsheet listing debtors, SS#, last address, dates, etc. The best you
can buy such directly from from lender with mostly recent debt and never
worked before. But these spreadsheets trade from dealer to dealer. You dont
know if its been worked before and there is any extracted debt left. AnNd they
dont have the supporting documents to stand up in a lawsuit.

So how do these guys make money then? They locate the debtor and hound them
untilr they pay up. It doesnt matter if they are past SOL. Some of these
spreadsheets sell for less than a penny on the dollar of debt. So if you can
extract three percent, you've doubled your investment. A problem is that
debtors tend move around a lot (from not paying their rent), so its hard to
locate people, especially with a common surname.

~~~
pc86
Does anyone know if it is illegal to pursue a debt that you know to have
passed its SOL? I don't mean suing the debtor but for a collections agency to
continue calling and writing after the SOL has passed.

~~~
jrs235
I don't believe it is illegal for a collection agency to try to collect on a
debt that is beyond SOL. If you were to not realize the debt was past SOL and
made a partial payment the debt would instantly no longer be past SOL. Which
is why some agencies will try to get a debtor to pay on debts beyond the SOL.

However, if you know that the debt is beyond SOL you may tell the collection
agency to stop contacting you. If the collector continues to call you after
you send them your letter, they may be violating the Fair Debt Collection
Practices Act[1][4] and you may be able to sue the collector for
damages[2][3].

[1] [http://www.consumerfinance.gov/askcfpb/1405/how-can-i-
stop-d...](http://www.consumerfinance.gov/askcfpb/1405/how-can-i-stop-debt-
collectors-contacting-me.html)

[2] [http://www.fair-debt-collection.com/rules/civil-
liability-13...](http://www.fair-debt-collection.com/rules/civil-
liability-13.html)

[3] [http://www.nolo.com/legal-encyclopedia/damages-fdcpa-
violati...](http://www.nolo.com/legal-encyclopedia/damages-fdcpa-
violations.html)

[4] [http://www.nolo.com/legal-encyclopedia/illegal-debt-
collecti...](http://www.nolo.com/legal-encyclopedia/illegal-debt-collection-
practices.html)

~~~
toomuchtodo
Who should I be going to in order to have legislation drafted, sponsored, and
co-sponsored in the US to prohibit the pursuit of debt that is time-barred
(and enforce penalties for attempting to do so)?

This is a problem that needs to be fixed. I would like to find someone who is
willing to help fix it.

~~~
pc86
Can I ask what the damage is by allowing collection agencies who have
purchased a debt to attempt to collect said debt past it's SOL? If you touch a
debt (e.g. make a partial payment) it resets the SOL, so it seems there's
precedent that a debt past its SOL is still a valid debt.

It also seems like a beneficial negotiation tactic for the consumer. Some
states have an SOL well below the ~7-year period where it falls off your
credit report. So if I live in Louisiana with a 3-year SOL on consumer debt
and someone tries to collect a 4-year-old debt, pay-for-delete obviously
becomes a much more likely scenario. My credit goes up a lot with the removal
of a delinquent account, and the collector makes money off something I could
otherwise ignore without penalty.

~~~
toomuchtodo
> Can I ask what the damage is by allowing collection agencies who have
> purchased a debt to attempt to collect said debt past it's SOL? If you touch
> a debt (e.g. make a partial payment) it resets the SOL, so it seems there's
> precedent that a debt past its SOL is still a valid debt.

If the law says you can't collect, you should not be able to ask either.
You're relying on someone's ignorance to collect a debt.

> It also seems like a beneficial negotiation tactic for the consumer. Some
> states have an SOL well below the ~7-year period where it falls off your
> credit report. So if I live in Louisiana with a 3-year SOL on consumer debt
> and someone tries to collect a 4-year-old debt, pay-for-delete obviously
> becomes a much more likely scenario. My credit goes up a lot with the
> removal of a delinquent account, and the collector makes money off something
> I could otherwise ignore without penalty.

Again, you're assuming a shred and educated citizen who is attempting to use a
loophole (pay-to-delete, which violates a collector's agreement with all three
credit reporting agencies).

No. Asking someone to pay after the SOL has passed as the debt is time barred
is tantamount to fraud. I've already placed called to Senator Warren's office,
as well as the Consumer Financial Protection Bureau.

~~~
dragonwriter
> If the law says you can't collect, you should not be able to ask either.

The law doesn't say you can't collect, it says you can't enforce the debt in
court. Its not theoretically impossible that a person who had undertaken a
debt that had become unenforceable might be inclined to pay it off for social
reasons that don't rely on the legal enforceability of the debt, so it
probably shouldn't be illegal to notify and ask.

> You're relying on someone's ignorance to collect a debt, and I will work to
> apply a boot to the neck of collection companies who practice that.

To the extent that an attempt to collect an unenforceable debt relies on false
implications of legal consequences like wage garnishments, seizure of
property, etc., it is already barred by the FDCPA, which prohibits a variety
of types of false representations and implications in the context of debt
collection, and punishes debt collectors who use them.

There may be a good case that this should be tightened and require _explicit_
notice of debts that are beyond the statute of limitations and not legally
enforceable in collections (which would also give the collector a positive
obligation to make this determination.) But I think that prohibiting _asking_
for payment beyond the statute of limitations is probably going to far, for
the reasons above.

~~~
toomuchtodo
> The law doesn't say you can't collect, it says you can't enforce the debt in
> court. Its not theoretically impossible that a person who had undertaken a
> debt that had become unenforceable might be inclined to pay it off for
> social reasons that don't rely on the legal enforceability of the debt, so
> it probably shouldn't be illegal to notify and ask.

Perhaps then, instead of it being illegal, the collection agency (either via
phone or through paper correspondence) should be required to (up front)
disclose that the debt is no longer enforceable and that the debtor is not
required to pay the debt back by law.

> There may be a good case that this should be tightened and require explicit
> notice of debts that are beyond the statute of limitations and not legally
> enforceable in collections (which would also give the collector a positive
> obligation to make this determination.) But I think that prohibiting asking
> for payment beyond the statute of limitations is probably going to far, for
> the reasons above.

I agree that a middle ground can be found between making it illegal and what
we have now. My problem is with the information asymmetry.

------
littletimmy
TL;DR The collections agency can sue you, garnish your bank account without
even informing you, and if you want to challenge that, you can only do so in
private arbitration and you cannot also be a part of a class-action lawsuit.

Despicable. But is anyone surprised anymore? This is a country for the
corporations by the corporations. The common folk are just critters to be
exploited. Is there a way to incorporate yourself, so that you take a loan not
on your person but on your corporate self?

~~~
vijayr
Is there a way to crowd source this thing? Like, is it possible to build a
database of companies and their unethical contract practices? Before signing
any contract, a person can simply check this database for any red flags
(through a website or an app)? I understand this won't save all cases, but it
might help?

~~~
sjg007
sounds like a good idea.

------
peter303
I was skeptical about several things in the article. First its hard to sue for
past SOL debt- most civil courts recognize this and dont want to be clogged up
by it. Second, only four kinds of debt can garnish Social Secuirty: overdue
federal taxes, child support, alimony, and student loans. And only for 15%
max. Where some people run into trouble if they comingle a SS bank account
with other income. A SS-only account is protected by banks.

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srameshc
The question is how would you stay aware of any such debt ? This scares me
because I always paid my bills on time and still one fine day got a call for
few hundred from collection agency, stating some old outstanding bill from
Doctor's office. I was never ever sent any pending bills till I got the call.

~~~
baakss
Pull your credit regularly.

Credit score is a huge scam too. Coming out of college I was in the bottom 5th
percentile in the nation from random medical debts and such, and within a year
I was in the 95th percentile. I spent a lot of time researching and
negotiating on the phone to make that happen, but I paid nearly nothing.

There are so many tricks that can be used to improve the score that are
completely counter intuitive. For instance, you would think it would be a good
thing for your credit to pay a delinquent bill? Almost never. It's
acknowledgement that you owed the debt to begin with, so it hurts you.

In the case of your doctor's office, the best thing to do is NOT pay the debt
collector, and then go a different route through the doctor's office instead.
Generally you can scare them with a potential HIPAA violation into getting the
item removed from your report.

Edit: I should clarify, pulling your credit will only help for things that are
outstanding and have already been reported as delinquent. The important thing
to know is that if you catch it on there, you can negotiate anything. Even if
you have to call back many times until you get the 'right' person, you can
social hack the process.

~~~
pc86
> _Coming out of college I was in the bottom 5th percentile in the nation from
> random medical debts and such, and within a year I was in the 95th
> percentile._

This is only possible by virtue of having little to no actual credit history.
If you're in your 30's with a mortgage, paid off student loans and paid off
vehicles, you're not going to make massive positive changes to your report in
a year without major negative items falling off.

> _For instance, you would think it would be a good thing for your credit to
> pay a delinquent bill? Almost never. It 's acknowledgement that you owed the
> debt to begin with, so it hurts you._

Are you referring to items at collections? Then yes and no. Collection
agencies will usually offer Pay-For-Delete if you ask for it in writing, in
which case you pay the item and it's removed from your report altogether. You
still end up having to pay the bill. The alternative (if it's a valid
delinquency) is to let it sit for 7 years until it falls off.

> _In the case of your doctor 's office, the best thing to do is NOT pay the
> debt collector, and then go a different route through the doctor's office
> instead._

I've never had a medical bill sent to collections, but I did have a
(thankfully small) student loan sent while I was diligently paying the other
loans because the mail was going to the wrong address. However, I can say from
that experience that I could not pay my school at that point. The collector
owned the bill. They had paid the school for it, so the school had already
gotten its money.

But there's no HIPPA violation in sending a medical bill to collections, and
making false accusations like that to get out of paying a legitimate bill (or
getting a legitimately delinquent account removed from your credit report) is
slimy at best.

~~~
baakss
_> I've never had a medical bill sent to collections, but I did have a
(thankfully small) student loan sent while I was diligently paying the other
loans because the mail was going to the wrong address. However, I can say from
that experience that I could not pay my school at that point. The collector
owned the bill. They had paid the school for it, so the school had already
gotten its money. But there's no HIPPA violation in sending a medical bill to
collections, and making false accusations like that to get out of paying a
legitimate bill (or getting a legitimately delinquent account removed from
your credit report) is slimy at best._

One of the accepted methods here goes as follows: Pay the Doctor's Office.
Send a letter saying you refuse them to share any information about the
service provided. Challenge the debt collector through the credit reporting
agency. Collector will then try to get the doctor's office to confirm the
debt, which they no longer have a compelling reason to. CA drops it off your
report because collector can no longer confirm it.

Works almost all the time. There is no false HIPAA accusation here.

 _> B. Are you referring to items at collections? Then yes and no. Collection
agencies will usually offer Pay-For-Delete if you ask for it in writing, in
which case you pay the item and it's removed from your report altogether. You
still end up having to pay the bill. The alternative (if it's a valid
delinquency) is to let it sit for 7 years until it falls off._

Collection agencies do not like to pay-for-delete. They'll say they're legally
bound to report exactly as it happened (also a lie). They will fight you on it
if your debt isn't significantly large enough that they're making enough
profit for it to be worth it. You can get them to do it, it will just take
time and negotiating.

 _> A. This is only possible by virtue of having little to no actual credit
history. If you're in your 30's with a mortgage, paid off student loans and
paid off vehicles, you're not going to make massive positive changes to your
report in a year without major negative items falling off._

I had 12 delinquencies removed. They were of varying difficulty, all different
collectors. Some were easy, some very, very hard. One in particular I had to
go so far as to pull phone records from years ago. Any negative item falling
off your report is huge. Even one small $100 delinquency hurts you a ton,
regardless of your history.

The only thing I didn't deal with was credit card debt. I hear its a lot
harder to get late payments removed, but I've never tackled it.

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jrs235
How can the defendant be bound to arbitration if they never signed an
agreement or contract with Encore Capital agreeing to such?

~~~
peter303
When you buy or borrow you've clicked or signed an agreement to arbitrate. Its
those long documents of legalese on most websites, credit cards applications,
etc. Most have successor owner clauses in there.

------
dredmorbius
I've been making a somewhat meandering study of political themes and populist
reforms of the past few millennia, and am noting some very common patterns.
Among them, who makes _and judges_ the law is crucial. From A.H.M. Jones
biograpy _Augustus_ , a description of 1st centure B.C.E. Rome's two primary
political parties -- a plutonomic obligates, the proletarian populares, and
the swing-voting equites, and the fundamental platforms: strong property
rights and absolute honoring of debt by the obligates, land reform
(democratising the means of production) and grain subsidies (one way to
accomplishing what a living wage would provide), and the interests of each in
either securing more power for themselves, or of weakening the power of the
opposition. Oh, and complete with extrajudicial executions of the unfortunate.
It all sound stunningly contemporary. Frighteningly so.

<quote>

[Gracchus's land distribution bill of 133 B.C.] was the first in a series of
violent clashes between two groups who called themselves the optimates and the
populares. The nucleus of the optimates was the small clique of nobles … who
more or less monopolized the highest offices and dominated the Senate, but
they had wide support among the propertied class, even, as Cicero says,
propserous freedman; otherwise they could not have maintained their unbroken
hold on the higher magistracies. They were conservatives, who regarded the
rights of property as sacred, and therefore resisted bitterly any attempts to
redistribute land or cancel debt. They were upholders of the constitution and
of religion, which could be used to block any revolutionary legislation.
Though at times they had to yield to popular pressure, they always remained
the government.

The populares were a much less well defined group. Their leaders were
individual politicians or very small groups of politicians, who at intervals
attempted to legislate in the interests of the people, by which they meant the
common people.… The populares developed a regular programme of legislation:

First came the distribution of smallholdings to landless citizens.…

The next … was the provision by the state of corn for the proletariat of Rome
at a price that they could afford.

From time to time the populares were interested in the problem of debt, which
frequently meant agricultural indebtedness.

They were early successful in introducing the secret ballot into voting in the
assembly, for legislation, elections and trials.

They also stood up against the execution of Roman citizens without a lawful
trial; the Senate was very prone to ignore this elementary right of the
citizen in what it deemed to be political crises.

Most populares advocated the grant of citizenship to the Italian allies. They
were generally interested in the welfare of the provincials; most of the
extortion laws were promoted by populares.

Finally, they substituted equites (citizens owning 400,000 sesterces who were
not senators) for senators as jurors in the criminal courts.

</quote>

Compare these with the various demands of the American and French revolutions,
the British Chartists, and the revolutions of 1848 (Wikipedia will give you a
good overview of each).

Title: Augustus. Author: A. H. M. Jones. W. W. Norton & Company, Inc., New
York. (c) 1970. SBN 393 04328 2

(The book itself is authoritative and well-researched but exceptionally
densely written, to the point of being difficult to parse. There are other
biographies, which though longer may well be more accessible.)

------
hwstar
An imbalance in access to remedies is how you get situations like that armored
bulldozer in Colorado smashing buildings, or office shootings. The supreme
court justices are too far tilted to the right, hopefully this will change in
a decade or two.

~~~
pc86
Your irrelevant SCOTUS comment aside, we need to make sure we're comparing
apples to oranges.

From the article:

> _the judge ruled that Encore’s lawsuit to collect the debt was separate from
> Ms. Thompson’s case accusing the company of violating the law._

Disregarding the fact that the original judge should not have awarded a debt
that was past SOL, it seems perfectly reasonable to me that Encore taking
action to collect a debt it purchased is a separate legal question from a
claim that Encore is violating the law. I'm not saying they are related of
course, but I have a feeling the arbitration agreement is pretty clear that if
you want to sue Encore you have to use arbitration.

~~~
hwstar
Binding arbitration is an affront on the seventh amendment of the US
constitution. If binding arbitration didn't exist, then this party would have
had recourse in a real court with a jury, not some privately funded
arbitration judge.

The reason that corporations like binding arbitration is that it eliminates
the jury, and gets rid the option of the jury nullifying the law. Sometimes
onerous laws get bought and paid for by corporations, and jury nullification
is one of the few tools left to combat this.

