Phantom Debts Can Cause Real Problems

Phantom Debts Can Cause Real Problems
Many people have received letters claiming they owe debts and don’t even recognize the name of the supposed creditor. Others get sued or have claims filed against them in arbitration over these debts and don’t realize that doing nothing can result in judgments, garnishments, and economic devastation.
Unfortunately for consumers, many of these debts are not valid debts and the U.S. Consumer Financial Protection Bureau is trying to curb abuses in this arena. The Consumer Protection Bureau filed a lawsuit against a Georgia based debt-collection firm last month, accusing it of violating federal consumer-protection laws.
Marietta, Ga.-based Frederick J. Hanna & Associates was sued by the Consumer Protection Bureau and accused of churning out more than 350,000 credit card collection complaints against consumers, some of whom don’t actually owe the debts alleged or owe significantly less than what the firm alleges.
Often times, these collection suits are filed when the purported creditor has no claim to collect the money, either because the statute of limitations has run on the debt, the amount claimed is incorrect, there is no documentation of the debt, or another creditor has already collected the debt.
The Consumer Protection Bureau alleges that the Hanna & Associates lawyers typically spend less than a minute reviewing each suit. This is not unique and critics, including our law firm, believe this is a wide spread practice. While the firm denies any wrongdoing, the case brings attention to the problems many consumers have – lack of knowledge of the legal system and lack of representation.
About 77 million Americans have debt in collections, according to the Urban Institute. Unfortunately, these high volume firms often target low income consumers who do not contact lawyers to defend the claim or do not show up in court to defend themselves and default judgments are entered. The resulting judgments can be devastating to the consumers, who have their wages garnished, their bank accounts frozen, or liens put on property.
A private suit against the Hanna & Associates firm has been filed by Eduardo Austin, a 34-year-old information technology project manager from Atlanta, who alleges that the Hanna law firm bilked consumers by adding extra interest to paid-off debt. Mr. Austin paid off a $2,400 debt on a Discover card and then discovered that the firm was trying to garnish another $970 in interest.
Christy Crow with Jinks, Crow & Dickson is on the Alabama State Bar Committee organizing the 2014 Pro Bono Month Celebration for the State of Alabama. October is National Pro Bono Celebration month and activities are planned throughout the Country to celebrate the pro bono services lawyers render. Many lawyers throughout the State offer pro bono legal services and will help consumers who receive collection lawsuits or letters alleging debts when the consumers don’t believe the money claimed is owed.
If you have received a notice that you owe a debt and dispute the amount owed or that there is a debt, don’t ignore it. The most important thing consumers can do is to show up for the court date. Go see a lawyer and get representation. If you have paid off a debt and the garnishment is continuing, seek representation. Collection agencies, collection lawyers, and creditors will continue to take advantage of people unless the Consumer Protection Bureau and consumers take a stand. Kudos to the Consumer Protection Bureau for standing up for consumers!

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