For a couple of years now, I’ve been warning readers that collection agencies increasingly are using lawsuits to try to force debtors to pay. Collectors know most debtors won’t show up in court, so some sue even when they don’t have the adequate proof the debt is owed or when the debt is technically too old for such an action, knowing they’ll likely get a default judgment. (For more, read “Stop the debt collection sleaze” and “Don’t ignore that debt collector.”)
Turns out consumers are biting back. Collection industry newsletter Inside ARM recently reported that civil lawsuits brought by consumers against debt collectors, debt purchasers and other credit reporting agencies increased by 52.5% in fiscal year 2009. The newsletter reported:
The court statistics show that in the year ended Sept. 30, 2009, 6,463 civil cases filed in U.S. District courts were for redress under consumer credit statutes — specifically, the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA). In FY 2008, there were 4,239 such cases; in FY 2005, there were only 1,192.
Collection agencies can buy lists of consumers who have successfully won such suits, presumably so they’ll know who not to mess with.
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