Recently, in an amazing display of hubris, a debt collection agency in Pennsylvania set up essentially a fake legal system to intimidate debtors into paying them. The audacious scam started with service of false but official-looking subpoenas on debtors, which required the debtors to appear at a “debt resolution center”. When the debtors reached the address on the subpoena, they found a fake but realistic courtroom with a bench, witness stand, phony ‘judge’ in a black robe, and people dressed to resemble police officers.
The scam was so convincing that some debtors gave the company access to their checking accounts and turned over the titles to their vehicles (in some cases for debts they believed they did not owe). Not surprisingly, the attorney general is filing charges against the company in question, Unicredit America, Inc.
As outrageous as these debt collector’s actions are, many have done much worse. Relentless debt collectors have shown up unexpectedly at debtors’ places of employment or home, threatened to injure or kill debtors or their families, and even driven debtors to suicide. As a Philadelphia bankruptcy lawyer, I have seen all kinds of egregious actions intended to frighten debtors into paying. One of the more common debt collector scams is to call the debtor impersonating a police officer and threatening to arrest the debtor. Sometimes the caller will tell the debtors that the police are on the way. Debt collectors have been known to impersonate attorneys as well.
Although there are some ethical debt collectors who do not use intimidation, lies, and harassment to collect debts, the industry is rife with depraved characters willing to do anything to get a commission. There are a number of things you should know to protect yourself from unscrupulous debt collection agencies:
First, it is not a crime to be in debt. You cannot be arrested because you owe money to a creditor. (Failure to pay child support is an exception.) As I noted in an earlier post, our country does not have debtors’ prisons. Although a creditor may file a civil lawsuit against you to try to collect a debt, it cannot have you arrested or charged criminally. For a debt collector even to imply that you could be charged with a crime is a serious violation of the law.
Second, federal and state law severely restricts what debt collectors can and cannot do. Debt collectors cannot do whatever they like to collect a debt. In the next post, I will discuss in more detail the restrictions placed on debt collectors by the Federal Fair Debt Collection Practices Act (“FDCPA”). In short, the FDCPA bars debt collectors from taking certain actions, such as making false statements, impersonating the police or government officials, and engaging in other unfair and harassing behavior. In addition, the Pennsylvania Fair Credit Extension Uniformity Act (PA-FCEUA) applies similar restrictions to creditors who collect their own debts. There are serious penalties for debt collectors who violate the federal or related Pennsylvania statutes.
federal and state law severely restricts what debt collectors can and cannot do. Debt collectors cannot do whatever they like to collect a debt
Third, you do not have to talk to debt collectors. If you do not want a debt collector contacting you, you can put a stop to it. Under the FDCPA, if you tell a debt collector in writing to stop contacting you, the debt collector must stop all contact immediately. Although the debt collector or creditor may still file suit, it is prohibited from calling, writing, or engaging in most other collection activity. The only exceptions are that the debt collector may still send you a letter stating (1) that it will cease contact or (2) to let you know of certain actions it is taking, such as filing a lawsuit.
Finally, bankruptcy stops collection action. If it is appropriate for your financial situation, filing for Chapter 7 or Chapter 13 bankruptcy can stop debt collectors and creditors from taking any collection action against you while your case is pending. (This is the “automatic stay” of bankruptcy). However, there are other steps you can take to stop creditor and debt collector harassment that do not involve bankruptcy. An attorney can tell you if a debt collector’s tactics are illegal and advise you on the best course of action.
Philadelphia Bankruptcy Attorney Dan Mueller of Harborstone Law Group, PLLC helps people in the Philadelphia area resolve their debt problems and regain control of their financial lives. You can reach him at 215-248-0989.