Debt Collectors Are Transforming the Business of State Courts • Hacker News Board

Re: Debt Collectors Are Transforming the Business of State Courts

#111

Post by clairity » Thu, May 07, 2020, 9:55 PM UTC

verylittlemeat wrote: post #107

clairity wrote: post #104

Earlier quoted context omitted.

unless the debtor has the cash ready to pay, most debtors never, ever respond (and shouldn't) to any actions to collect debt by a third-party collector, so that there is no chance at the even tiniest appearance of acknowledgement. often, even if you have the intent to pay the debt, paying to any agency other than the originator of the debt is risky. debt collectors roll over debt en masse to keep them legally fresh a…

Contact from a third party collector? Sure, don't respond. But if you're being summoned by the court under threat of a default judgment then you should probably show up or don't be surprised about the outcome.

for sure, respond to the court.

you can often find low-cost, non-profit defense organizations to help if needed.

Re: Debt Collectors Are Transforming the Business of State Courts

#112

Post by verylittlemeat » Thu, May 07, 2020, 9:56 PM UTC

a1369209993 wrote: post #105

verylittlemeat wrote: post #85

Earlier quoted context omitted.

You're moving the goal posts on me. I'm talking about debt collection enforcement not the morality or circumstances of why people take on debt.

You're the one who put the goalposts on: > the rest of the people have a [legitimate] original debt right? > the narrative of the debtor as victim is a bit oversold. When in fact the narrative of the debtor as victim is significantly under sold, and many (I suspect, but won't assert, most) original debts were incurred due to usurious and predatory lending. I wouldn't argue that debt collection enforcement is outright…

Don't sign the contract and take on the debt if you can't pay it.

If the contracts are usurious and predatory then they probably will not stand up in court if challenged. Most collection agencies settle for 50-70% of the balance of a debt without question anyway.

Debt collectors have to provide proof that you know about your debts and that they are legitimate in order to enforce collection of them. If they can't do that then there is no judgment.

Re: Debt Collectors Are Transforming the Business of State Courts

#113

Post by ensignavenger » Thu, May 07, 2020, 9:58 PM UTC

verylittlemeat wrote: post #102

ensignavenger wrote: post #98

Earlier quoted context omitted.

Fraud in debt collection is rampant. Yes, there are legitimate debtors, but you can't assume than some one who is being sued legitimately owes the debt. Even without fraud, many debt collectors illegally harass the debtors, knowing they can't afford a lawyer to defend themselves.

AFAIK harassment in most states is very illegal now and is a great way to get your debt dismissed. The same goes for fraud in debt collection. As I mentioned in previous comments, tactics like sewer service by debt collectors are a great way to get your debt dismissed. Many people with lapsed unsecured debt know they owe that money, they simply prefer to pretend the debt will go away if they ignore it. If they don't…

Harassment and fraud is illegal, but people do illegal things all the time.

"court they can't get a judgment against you without you knowing about it"

... in theory, but in practice there are several ways to "serve notice" that don't involve the other party actually receiving the notice. Sure, if you can hire an attorney you may be able to get the default judgement overturned if you find out about it later, but again, it isn't all roses.

I'm not an expert on every states laws, but I don't think that the standard of proof for an uncontested claim isn't particularly high in most jurisdictions.

Re: Debt Collectors Are Transforming the Business of State Courts

#114

Post by milesvp » Thu, May 07, 2020, 9:59 PM UTC

briffle wrote: post #53

pmiller2 wrote: post #48

Earlier quoted context omitted.

Not precisely "certified mail," but just "mail." They can choose to use certified mail if they want, but it's not required. You should always use certified mail to communicate with a debt collector, no matter if the debt is legitimate or not.

I have done that twice for family members, along with asking for proof of the debt, and that they are authorized to collect it. Both times, never, ever heard from the collector again.

My understanding with debt collectors, is that they usually purchase a spreadsheet with very limited data, and there is almost never a paper trail for said debt. Which also means debt has a habit of showing up on multiple spreadsheets that keep getting resold. I think planet money did a podcast on this topic.

Patio11 also wrote about talking to debt collectors with regards to identity theft. https://www.kalzumeus.com/2017/09/09/identity-theft-credit-r...

Re: Debt Collectors Are Transforming the Business of State Courts

#115

Post by hash872 » Thu, May 07, 2020, 10:10 PM UTC

I'd be interested to understand how this works in practice, especially small claims court (which is probably where many credit card debts end up at). From my understanding, small claims judgments are very tough to actually enforce, no longer show up on your credit report, and the court system does nothing to help you collect. Without getting into moralizing and just from a pure P&L perspective- how can it make financial sense for a big company to have one of its attorneys spend the day in court, when you're probably not going to collect on the debt....?

Re: Debt Collectors Are Transforming the Business of State Courts

#116

Post by a1369209993 » Thu, May 07, 2020, 10:19 PM UTC

verylittlemeat wrote: post #112

a1369209993 wrote: post #105

Earlier quoted context omitted.

You're the one who put the goalposts on: > the rest of the people have a [legitimate] original debt right? > the narrative of the debtor as victim is a bit oversold. When in fact the narrative of the debtor as victim is significantly under sold, and many (I suspect, but won't assert, most) original debts were incurred due to usurious and predatory lending. I wouldn't argue that debt collection enforcement is outright…

Don't sign the contract and take on the debt if you can't pay it. If the contracts are usurious and predatory then they probably will not stand up in court if challenged. Most collection agencies settle for 50-70% of the balance of a debt without question anyway. Debt collectors have to provide proof that you know about your debts and that they are legitimate in order to enforce collection of them. If they can't do t…

> If the contracts are usurious and predatory then they probably will not stand up in court if challenged.

That's exactly what netcan was saying upthread.

Re: Debt Collectors Are Transforming the Business of State Courts

#117

Post by pnw_hazor » Thu, May 07, 2020, 10:20 PM UTC

verylittlemeat wrote: post #90

netcan wrote: post #88

Earlier quoted context omitted.

Exactly the point. To win, they need to cross all the Ts you mention. OTOH, they can also win if the defendant no-shows. At the bottom end of the debt collection pool, one strategy is to buy debt with a high chance of no-show and win cases that way... no need for meticulous and expensive lawyering. If people aren't answering their phones or opening any official looking mail... It's not the only strategy, but it is on…

In order to have a default judgment against a person they must be served (aware of the situation). If you're being told "show up to court or face a negative outcome" and you do nothing then whose fault is that? You took on the debt. You decided not to show up in court. Are debtors just never accountable for their actions? Also to quote a comment by a lawyer in this thread >I am licensed in California and Texas, and i…

People default all the time because they don't really appreciate what can happen if they ignore a court summons.

And, often people mistakenly rely on the advice of friends or family who suggest the debtor wasn't served properly, the debt is too old, they spelled your middle name wrong, or whatever.

There are tons of legal myths out there, such as, non-competes can't be enforced, it takes months to evict someone, I can pay my rent after the three-day pay or vacate date passes, or the like.

Also, in my experience people unfamiliar with law seem to be susceptible to spinning a story in their head that they think will exonerate them only to find out too late that their imagination doesn't carry much weight in court.

Re: Debt Collectors Are Transforming the Business of State Courts

#118

Post by intopieces » Thu, May 07, 2020, 10:28 PM UTC

sokoloff wrote: post #110

intopieces wrote: post #103

Earlier quoted context omitted.

I contend that the debt, after being sold, is not “real” any longer, and therefore the debtor has no moral obligation to repay it. Legal? Definitely. The original lender has written the debt off, probably gotten a tax break from the government, and moved on. People and companies break contracts all the time. Moralizing over it is just a distraction from the economic and juridical forces at play.

Why would selling debt make you morally not responsible for it? My mortgage has been sold multiple times. IMO, I still 100% have a moral (and obviously legal) obligation to pay it.

Unlike secured loans like mortgages, the cost of default for unsecured loans is already priced in to the interest rate of the debt. Once it gets sold a third party, that's just a bet by that company that they can strong arm you into paying them something above what they paid for it by exploiting your anxiety or misplaced sense of duty. They didn't earn anything -- they didn't create a service or good that you found valuable, didn't invent something that saves you time, didn't make you life easier or more comfortable. They are scavengers. There is no moral obligation to enrich scavengers.

Re: Debt Collectors Are Transforming the Business of State Courts

#119

Post by makomk » Thu, May 07, 2020, 10:45 PM UTC

joshuaheard wrote: post #80

I do commercial collections (B2B). The article states, "Unlike most court rulings, these judgments are issued, as the name indicates, by default and without consideration of the facts of the complaint—and instead are issued in cases where the defendant does not show up to court or respond to the suit." I am licensed in California and Texas, and in both states one must "prove-up" a default before judgment is entered b…

The article specifically mentions later on that California has stricter proof requirements in order for debt collectors to get default judgments. Unfortunately, most other states apparently don't do this.

Re: Debt Collectors Are Transforming the Business of State Courts

#120

Post by pnw_hazor » Thu, May 07, 2020, 10:51 PM UTC

joshuaheard wrote: post #80

I do commercial collections (B2B). The article states, "Unlike most court rulings, these judgments are issued, as the name indicates, by default and without consideration of the facts of the complaint—and instead are issued in cases where the defendant does not show up to court or respond to the suit." I am licensed in California and Texas, and in both states one must "prove-up" a default before judgment is entered b…

Generally you don't have to prove your case, you need to provide enough evidence to meet the prima facie threshold. In some cases, a declaration and blurry copy of an invoice will do depending on the state and the stakes.

Still in consumer debt collection, even if they can prove the debt, predatory/volume collection firms tend to fold if an answer is filed. Not always of course, since as you know many factors may come into play.