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Comments of the Day: Illegal Tactics by Bad-Debt Collectors


These comments refer to an article in the NYT disclosing a prima facie illegal tactic by debt collecting companies: preventing class action suits against them for taking people’s money by lawsuit without allowing them anything other than arbitration.  The article can be found here.  The comments section provides further intelligence on the subject, giving more than I could ever come up with.  The most popular comments follow:

Sequel of Boston on Dec. 22:

This is so blatant a violation of the 5th, 6th, and 7th Amendments. We need a federal law to prevent private debt collectors from seizing bank assets or placing liens on property without proof of hand-delivered service to the target. It should also disallow any suit unless the collector waives the right to invoke arbitration or mediation clauses against the target.

1045 Recommend

Winthropo Muchacho of Durham NC:

I don’t understand why Mr. Cain’s lawyer brought a class action to help recover the $4,500 stolen from him by Midland if he were never served with the law suit. Any judgment obtained on “sewer service” is a nullity and void in any state of the union. And I certainly don’t understand why he would have to arbitrate the fact he was never served and for recovery of the garnished money instead of addressing it in the original suit filed by Midland.

A motion to vacate the judgment based on lack of service of process would be filed in the original proceeding Midland brought. This would avoid any issues of arbitration given that a plaintiff/debt collector filing suit in court could not be heard to say that any defenses to the suit must be arbitrated like insufficient service or the debt being uncollectable because of the statute of limitations.

In Mr. Cain’s case, having never been served, in most jurisdictions he could still a file a motion to vacate the judgment because the judgment under such circumstances is void. Also he could file a motion in the proceeding against him for Midland to disgorge the garnished monies.

He would also have a suit that lies in tort against Midland for conversion of his property under the hallowed common law concept that a thief takes no title to the property he has stolen. Any suit in tort can cover not only monetary damages but non monetary as well for things like pain and emotional distress.

If I were Mr. Cain I’d get another lawyer.

460 Recommend

Kevin of NY, NY:

A Constitutional amendment is direly needed that will establish a short list of inalienable rights that no contract can nullify. One of these would be the right to due process, regardless of the written terms of the “agreed upon” contract. The fact is, most corporate contracts with consumers today are contracts of adhesion and contain unconscionable terms and conditions—clauses and provisions that clearly violate the spirit of a free and fair exchange. The great consolidation of our vital goods and services into mega-corporations, combined with increasingly devious legal tactics and the general decline of business ethics since the 1970’s has made such an amendment necessary to defend the population against tyranny and oppression. The founders imagined such threats would come from governmental abuse, foreign states or militant insurgencies, but in fact they are coming from the world of business. I implore the voters of this country to make this a key issue in the upcoming election debates. We, as a people, are entitled to certain inalienable rights…

652 Recommend

Sheldon Bunin of Jackson Heights, NY:

The arbitration clause is a bilateral contract between the debtor and creditor. It is consiable [sic] that when the creditor sells the debt and saves arbitration costs that the arbitration provision benefits the new creditor who seeks to collect that debt. The question is why if there are defenses to payment that the new creditor should receive the debt as an asset free of those defenses and why a collection agency should receive an asset free of defenses without consideration to the debtor.

We need legislation. First outlawing mandatary arbitration clauses without the right to opt out. Second we need statute of limitation on the enforcement of debt by arbitration by the debtor and once a transfer is made all defenses to payment are preserved to be litigated the the courts with jurisdiction.

What we have now is corporate overreach which cannot be tolerate[d].

352 Recommend

DMany of NY:

Here’s the rub. As an attorney with an extensive collection background I can tell you that each and everyone of these cases the Times cited are winnable by the Defendant IF they went into arbitration (after the Court ruled against them in the court system). Arbitration provides for attorney fees and costs to be reimbursed to the prevailing party. The problem is it’s hard to find an attorney that will take a case up front for these “small potato” case. There are no punitive damages allowed in arbitration and the filing fee alone for an arbitration can cost upwards of $1000.00 (or more). (I love the “it’s cheaper than a court” argument). Plus arbitration is paperwork intensive, both parties have to select an arbitrator from an approved list, submit their choices, agree to scheduling, submit documentation, etc.. Bottom line is that 99.9% of these folks can’t pay the arbitration fee and the attorney fees, if they could they wouldn’t be in this situation. So, although they could win and recover their money on the backend,(including filing and attorney fees) having to pay on the front end is cost prohibitive and that’s what these companies know and what they are counting on. It’s easier for them to take the money and wait for the consumer to come after them knowing that in almost all situations they won’t and more importantly, can’t.

909 Recommend

Ben on Dec. 22:

I am a lawyer, and I have handled consumer-debt cases pro bono. I can promise you the arbitration issue is just the tip of the iceberg. As bad as it is, arbitration just goes to the *forum*. It doesn’t have anything to do with the merits of the suits these debt collectors bring. And I can promise you that an enormous number of these suits are meritless. I have seen debt collectors try to pass off affidavits authenticating one set of documents as if they related to another set of documents from a different case. The truth is, 90% of the defendants just never show up, and they don’t know what to say even if they do. A decent lawyer can win a lot of these cases. There just aren’t many lawyers around who will take them on.

629 Recommend

Nat Colley of Minnesota:

Is the problem here the debt collector’s tactics, or the judges’ refusal to interpret and apply the law in a just and equitable fashion? If the plaintiff’s case is lacking fundamental documentation, it should not mean he/she gets an automatic win if the defendant doesn’t show up. The judge still has an independent duty to make sure the plaintiff meets the minimum legal prerequisites for relief. If that were not true, I could file a fake claim against then NYT, and when you don’t show up – because I never served you with process despite lying to the court and saying I did – I could bankrupt this paper tomorrow. But we all know that wouldn’t happen, because no judge would let it happen. They would ask questions, questions they obviously aren’t asking and don’t care about in these cases with poor, unsophisticated defendants. After all, plaintiffs are big companies with high priced lawyers, and all they’re trying to do is make these deadbeats accountable, right?

368 Recommend

As always, the NYT comments are a rich vein of sense, nonsense, wisdom, and sometimes silliness.  Perhaps the $15 a month subscription fee scares away most of the trolls.

Finally, Joe N of Detroit:

The scariest thing about this article is that I would have no idea of the existence of such behavior without this type of reporting. That this is left to newspapers to expose, with the newspaper business model in the precarious state that it is at the moment, should leave everyone feeling very insecure.

806 Recommend

But wait!  There’s one more, the second most popular comment but not one “recommended” by the NYT editorial staff:

Romaine Johnson of Dallas, TX:

This is what political decay looks like. When the rule of law no longer applies equitably and instead becomes just another bludgeon that rent-seeking elites use to extract as much wealth as they can from the masses.

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