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Debt Collectors Are Transforming the Business of State Courts

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Re: Debt Collectors Are Transforming the Business of State Courts

#81

Post by verylittlemeat »

intopieces wrote: post #77
verylittlemeat wrote: post #74

Earlier quoted context omitted.

Why would a person who legitimately owes a debt win just by showing up? I had a small unsecured debt that was put into collections and then I was served an order of execution by the marshal to appear in court. I went to court and the judge made me sit down with the debt collectors lawyer and a mediator and we worked out a repayment plan at about 60% of the original balance. I really don't understand what "win" means…

> Why would a person who legitimately owes a debt win just by showing up? Debt collectors often don’t play by the rules, or don’t keep good records that are required to legally collect the debt. Even if they do, it’s not like the lawyers are likely to spend time tracking down the info for a single case to prove it. “Win” means the debt is found invalid due to one of these reasons.

As I mentioned I have been to court for a debt collection.

Before you go to court the debt collector has to send you proof they served you papers for your debt. They have to send you proof of the chain of debt from the original creditor on down. For a $3,000 debt I was sent a packet of at least 80 pages with tabbed chapters and detailed photos confirming service before I had to go to court. I did not request this information, they were required by law to send it to me.

These are not optional. These records are necessary to get a judgement.

Debtors ARE at a disadvantage in the courts if they do not have the money for a lawyer to fight or they don't have the time to show up on their own. This is an injustice. But saying that debt collection is being illegally enforced in the courts I believe is just untrue. If you do not owe a debt and contest it in court you prevail. But if you do owe a debt and through neglect or ignorance you end up with a default judgment or negative consequences that is on you.

Re: Debt Collectors Are Transforming the Business of State Courts

#82

Post by ashtonkem »

momokoko wrote: post #38
ashtonkem wrote: post #30

Earlier quoted context omitted.

Both statements can be true: eliminating debt collection would massively curtail the availability of credit, and excessive credit availability practically any motive to curtail costs.

This is not true based on the amount of money originating lenders get when the sell off bad debt. Generally they receive less than 5%(sometimes less than 1%). To the original lender, 5% of the defaulted debt generally just covers the cost of writing off the debt and maybe a bit more. It does not move the needle at all for loan availability.

That’s true once you get to the point of selling debt off. More effect would be seen if the ability of creditors to pursue debtors earlier in the process was more severely curtailed.

Re: Debt Collectors Are Transforming the Business of State Courts

#83

Post by TheOtherHobbes »

verylittlemeat wrote: post #78
netcan wrote: post #68

Earlier quoted context omitted.

No. This isn't a rhetorical example. Most defendants don't know anything about the case. They've been avoiding collection calls for years as agencies sell and resell their debt. Piles of unopened mail, etc. For their part, the agencies tend towards sloppiness. Some debt sells at Thinking about this is a matter of justice is ridiculous. It's not a justice driven process, it's an economics driven process. The agencies…

>They've been avoiding collection calls for years as agencies sell and resell their debt. Piles of unopened mail, etc. OK but with the exception of fraud and incorrect identity then the rest of the people have a real original debt right? The debt might be sold at a fraction of it's original amount but that's because the debt collector takes a risk to put in time and legwork in exchange for collecting a real legal deb…

No it isn't. Many people become debtors because they have no choice.

If the choice is between clocking up an insane credit card bill at astronomical rates or not having your family thrown out onto the street for another month or two because maybe your job search will finally pay off, what would most people pick?

Some people get into debt because they can't manage money. A lot of people get into debt either because they're not paid enough, or they're not paid regularly enough. or the economy fell apart around them for reasons that are nothing to do with them.

And anyone who freelances will tell you stories of clients who refuse to pay for 3-6-9-12 months past due. (Yes, you can always find better clients - if you have enough of a lead time.)

Debtors are debtors because they're at the bottom of the power pile. Many aren't "guilty" of anything except getting screwed over by a business culture which is driven entirely by inhumane feral greed.

Re: Debt Collectors Are Transforming the Business of State Courts

#84

Post by verylittlemeat »

netcan wrote: post #71
chrisseaton wrote: post #65

Earlier quoted context omitted.

It's pretty fundamental in our society that the court looks at the arguments presented before it. If the claimants make a reasonable case and you have nothing to say about it as the defendant then the court will act on that. The idea is that it stops people coming into the court prejudiced.

This isn't a case where a guy didn't pay his builder and then no-shows at court. These are debts sold at >10% of face, often smallish debts that have accrued massive interest. Some agencies specialise in persistent calling. Some specialise in deal-making. Some specialise in legal proceedings. These are the ones we are talking about. To work, they need to keep legal costs low. They often don't bother to have a case, b…

Most states now have laws against debt collection harassment and have caps on debt collection interest and fees.

There has to be proof in court that a debtor was served papers to get a judgment. There's a term called 'sewer service' where some shady collectors try to fake this service. If you get lucky your debt collector might try this on you, it's a great way to get debt wiped clean by a very angry judge.

Re: Debt Collectors Are Transforming the Business of State Courts

#85

Post by verylittlemeat »

TheOtherHobbes wrote: post #83
verylittlemeat wrote: post #78

Earlier quoted context omitted.

>They've been avoiding collection calls for years as agencies sell and resell their debt. Piles of unopened mail, etc. OK but with the exception of fraud and incorrect identity then the rest of the people have a real original debt right? The debt might be sold at a fraction of it's original amount but that's because the debt collector takes a risk to put in time and legwork in exchange for collecting a real legal deb…

No it isn't. Many people become debtors because they have no choice. If the choice is between clocking up an insane credit card bill at astronomical rates or not having your family thrown out onto the street for another month or two because maybe your job search will finally pay off, what would most people pick? Some people get into debt because they can't manage money. A lot of people get into debt either because th…

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.

Re: Debt Collectors Are Transforming the Business of State Courts

#86

Post by vonmoltke »

x86_64Ubuntu wrote: post #51
larrywright wrote: post #46

Earlier quoted context omitted.

Correlation isn’t causation, but the dramatic rise in college costs began when student loans became easy to get.

They became easy to get because lenders knew their loans were non-dischargeable. That completely changes the risk equation and to act like it doesn't is an exercise in bad-faith.

Federal student loans have been non-dischargeable since the 90s, and this problem has been building since then. Federal student loans also make up over 90% of student loan debt, and since 2010 have been issued solely by the Department of Education. Also, not all private loans are non-dischargeable.

No-dischargeable private loans are such a small portion of the problem that they are effectively irrelevant.

Re: Debt Collectors Are Transforming the Business of State Courts

#87

Post by vkou »

mokus wrote: post #73
vkou wrote: post #29

Earlier quoted context omitted.

We'd have less debt, which is bad for the economy, but good for individuals.

If this is true then that’s a sign that we are measuring the wrong things when we talk about “the economy”. If something is good for the economy but bad for people, then fuck the economy. Find a new way to measure it that better aligned with what is good for people. It seems quite fitting here that Goodheart’s Law came from an economist.

> If this is true then that’s a sign that we are measuring the wrong things when we talk about “the economy”.

Not necessarily.

Consider savings, for example.

Are high savings good for an individual? Well, yes, of course, they are! But every dollar saved is a dollar not spent. If everyone starts saving as much money as they can, this will damage the economy, lower spending, and will make everyone poorer (it's difficult to save money when your income derives from other people spending it.)

Debt is the opposite of savings in this respect. If you go into debt, and spend, it's good for me, as the person deriving income from your spending. Vice versa, if I go ahead, and spend that money, it will eventually be good for you, as your income is another person's expenses.

Does this mean that we should all max out our credit cards tomorrow? Well, obviously not... Just like we should not all become wealth-hoarding Tolkienesque dragons.

It's not clear where exactly the optimal point on the savings-spending axis lies. It certainly lies on different points for different people, depending on your personal wealth, skills, social class, luck, or your personal value system, etc. Some people benefit a lot from a healthy economy. They obviously want everyone else to spend more. Some people benefit very little from a healthy economy. They obviously want to spend less.

It's not a trivial problem to solve. I personally think there are some kinds of debt that are way worse than other kinds of debt. High-interest debt is problematic. High-burden debt (Like mortgages) is also problematic. Debt that inflates asset prices (Like universal student loans) - also problematic. Medium-low interest, medium burden debt (Like most car payments)? It seems less problematic to me.

Re: Debt Collectors Are Transforming the Business of State Courts

#88

Post by netcan »

verylittlemeat wrote: post #81
intopieces wrote: post #77

Earlier quoted context omitted.

> Why would a person who legitimately owes a debt win just by showing up? Debt collectors often don’t play by the rules, or don’t keep good records that are required to legally collect the debt. Even if they do, it’s not like the lawyers are likely to spend time tracking down the info for a single case to prove it. “Win” means the debt is found invalid due to one of these reasons.

As I mentioned I have been to court for a debt collection. Before you go to court the debt collector has to send you proof they served you papers for your debt. They have to send you proof of the chain of debt from the original creditor on down. For a $3,000 debt I was sent a packet of at least 80 pages with tabbed chapters and detailed photos confirming service before I had to go to court. I did not request this inf…

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 one.

I think it's a mistake to look at these things too moralistically though. At an individual case level, maybe you're right. It is on you.

What we're looking at here though is an industry. It is built on knowledge about how certain people behave under stress of debt and exploits it. It's also dirty all the way down. Mostly, by the time these go to court the debt has been resold multiple times at small fractions of face value. Crazy interest has been applied.

Economically, it is really going for the last drop. Companies selling off bad debt... it's a pretty marginal income. On the other side, these collection agency debts basically eject a decent portion of the population from good standing in society. It's harmful, and it is happening in a court.

Scale, circumstance... when it gets this big we need to look at it systemically.

Re: Debt Collectors Are Transforming the Business of State Courts

#89

Post by bergstromm466 »

refurb wrote: post #75
bergstromm466 wrote: post #67

Earlier quoted context omitted.

Favourable (read ‘low’) tax rates for the propertied classes, as well as the neo-liberal nation-state’s tax cuts, are ribbon wrapped gifts

Tax rates are far lower for the poor than the rich. In fact, the wealthiest pay a majority of income taxes.

Dream on.

"This is the age of rentier capitalism; rich countries are becoming rentier economies. A rising share of global income is going to rent, rather than to wages or profits from productive activities. This perpetuates inequalities: It disproportionately favors the wealthy, and accentuates inequality over generations.

Through the spread of trademarks, trade secrets, copyright and, above all, patents, intellectual property has become a key source of rental income. The number of patents registered annually has exploded. Patents are supposed to enable inventors to obtain a return on risky investment, but what qualifies as an invention has been diluted to the point that trivial tweaks designed to block competition can be patented."

[1] http://america.aljazeera.com/opinions/2014/9/the-age-of-rent...

Re: Debt Collectors Are Transforming the Business of State Courts

#90

Post by verylittlemeat »

netcan wrote: post #88
verylittlemeat wrote: post #81

Earlier quoted context omitted.

As I mentioned I have been to court for a debt collection. Before you go to court the debt collector has to send you proof they served you papers for your debt. They have to send you proof of the chain of debt from the original creditor on down. For a $3,000 debt I was sent a packet of at least 80 pages with tabbed chapters and detailed photos confirming service before I had to go to court. I did not request this inf…

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 in both states one must "prove-up" a default before judgment is entered by presenting a "prima facie" case. In other words, you must prove your case before a judgment is entered, even if the defendant does not show up.

So in some circumstances even if you don't show up the debt collector must fight to get a judgment as if you were there. I really suggest you look into the resources available to low income debtors in most states. In my state there are entire systems set up to support people who feel beset by debt collections.

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