Lawyers on Both Sides Feel the Sting of Debt Collections
Originally published in the American Bar Association Journal:
Adam Krohn sues debt collectors for unfair practices, but he found himself in a role reversal last year when calling a fellow California lawyer who owed him money on a judgment.
“He told me, ‘Come get it. I want you to know what it’s like to try to collect a debt,’ ” recalls Krohn. So he had a writ of execution served on Scott Carruthers, who Krohn says picked up another $90 in costs for the pleasure of teasing his adversary before paying up on a consumer’s Fair Debt Collection Practices Act claim.
Carruthers did not respond to interview requests.
Their tangle, ongoing with new cases in which Krohn says Carruthers is avoiding service altogether, offers a humorous glimpse into a decidedly unfunny area of the law: debt collection.
With the nation so awash in debt—the Federal Reserve pegs “consumer credit outstanding” at more than $2.4 trillion—getting payment from those who owe money has become a huge business. And a big mess, with plenty of opportunities for lawyers to find work—and get into trouble.
A Federal Trade Commission report released in July said the system for resolving debt disputes needs fixing. No other industry generates as many complaints to the agency. Much of the report, titled Repairing a Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration, jabs a finger at debt collectors, including law firms. A chorus of consumer advocacy groups, too, has been turning out damningly critical studies with more granular specificity.
They point to the perfect storm of sheer numbers, with debt buyers picking up portfolios of receivables for cents on the dollar, computerized automation with little human involvement and courts accepting the word of lawyers bearing scant proof.
And there are the inevitable mistakes where some folks who don’t owe a penny still see their bank accounts frozen or wages garnisheed. They might be victims of identity theft. The debts may be past the statute of limitations or discharged through bankruptcy. Perhaps their name is similar to that of the actual debtor, or the money might have been paid in full.
Still, someone tries to collect on it.
To read this article in full click on the following link: Payback: Lawyers on Both Sides of Collection Are Feeling the Sting.
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