Protecting Mainers from unscrupulous debt collectors

June 29, 2015 by

The phone rings at 3:00 a.m. The caller identifies himself as a Florida police officer. He says that a blue American Motors Gremlin registered in your name is at the bottom of a Florida lake. Groggily the person taking the call responds, “No, we don’t own that car anymore.” The next day a collection agency calls. “No,” he repeats, “We originally bought the used Gremlin for cash, but traded it last summer.” Thus began a chorus of calls and letters from a private debt collector trying to get my father to pay a debt that was not his on a car he no longer owned. Maine’s legislature has voted to rein in such abusive practices but must override a veto from Governor LePage in order to make its changes law.

There has been an explosion of debt collection companies known as debt buyers in recent years. Debt-buyers buy old debt that creditors have written off as uncollectable. These can include auto loans, credit card balances, hospital bills, or even phone and electricity bills. Debt buyers speculate that they will be able to collect the old debt where the original creditor failed. They pay pennies on the dollar for the notes and make their profit by suing consumers for repayment.

According to the Center for Responsible Lending, debt buyers will use legal means to extract more than $7 million from 91,000 Maine consumers through the courts. For nearly 20,000 of these hard-working Mainers, the courts will garnish their wages in order to enforce the repayment of old loans. Some of these Mainers like my father will not even owe the debt.

Debt buyer 6-29-2015 blogThe older the debt, the less accurate the information about it or its borrower is likely to be. Debt buyers frequently get only a name. Sometimes, they have the right name, but they’ve targeted the wrong person who happens to have the same name. The unscrupulous debt buyers don’t bother to determine if they have found the right person or if the person still owes the debt. They frequently refuse to honor payment plans negotiated with the original lender.

Most egregious of all, they trick consumers into reactivating debt already extinguished under Maine law.

It works like this. Maine law prohibits civil suits on actions more than six years old. This means debt buyers cannot sue a Maine consumer for debt that is more than six years old. To get around the law, debt buyers will badger consumers into making a payment on old debt promising to stop the harassment or they will tell them that their credit scores will improve in order to convince them to pay some portion of the old debt. The minute the consumer makes a payment on time-barred debt, often unbeknown to them, the six-year statute of limitations resets and the legal clock starts over giving debt buyers the green light to double down on their threats and abuse.

Unscrupulous debt buyers prey particularly on the elderly and veterans and our deployed military personnel. The federal Consumer Financial Protection Bureau reports that seniors complain most about debt collectors’ tactics on debt they do not owe, including using abusive language, threatening arrest, and attempting to collect debts of deceased spouses. Active duty service members also cite deceptive tactics including threats to have them reduced in rank or to revoke their security clearance to coerce payment on nonexistent debt.

Unfortunately for Maine consumers, Governor LePage vetoed a bill that would have taken the first step to protect us from some of the worse abusive debt buying practices. The legislature enacted a bill that would have required written payment agreements between consumers and debt buyers and stipulating that the consumer does not need to make any payment until they have the written agreement. The proposed legislation clarifies that a debt collector cannot sue if the statute of limitations period on the debt has expired and also provides that a consumer’s payment on a debt that’s beyond the statute of limitations does not reset the statute of limitations. The legislature will vote as early as tomorrow on overriding the governor’s veto.

Maine consumers ― especially our seniors, military service members, and veterans ― deserve these protections. The legislature should pass this bill over the governor’s veto. No Mainer should be held responsible for a debt they don’t owe.

And, no, we don’t know how our family’s Gremlin ended up under water in Florida. We do know that debt buyers got their hands on the debt owed by whoever bought and financed it after us, and somehow they had my father’s name from the motor vehicles registrar. Apparently, that’s all they thought they needed to target my dad for unwarranted, unjust harassment.

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