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(Minneapolis Star Tribune)   Debt collectors exploiting legal loophole to jail debtors. Bonus: Bail conveniently set at alleged debt amount. Bonus bonus: Cases usually dropped after bail is posted   (startribune.com) divider line
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20249 clicks; posted to Main » on 09 Jun 2010 at 3:46 PM (10 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



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2010-06-09 11:14:50 AM  
From what I understand, this is increasingly common as consumers become more aware of their rights. File a lawsuit against an alleged debtor, "forget" to properly serve them, courts issue an arrest warrant over the missed hearing, and while the alleged debtor is in prison, "helpfully" agree to drop the case -- and get them released -- if they "just pay $20" on the "debt". This in turn re-starts the statute of limitations, and suddenly that 10-year-old long-dead debt is brought back to life.

What I don't understand is: I didn't think you could be jailed for missing a civil proceeding. I thought the worst that could happen would be a summary judgment against you.

Nonetheless, I cordially invite the debt collector who is trying to collect on my supposedly delinquent Citibank card from 1998 (the result of a billing error on their part, for which I have volumes of documentation), that just happens to be long, long past the statute of limitations anyway, to throw me in jail.

Do it.

Watch what happens.
 
2010-06-09 11:18:36 AM  
Very nice of you Smitty to link to the print page. But I don't want to print it and the dialog is annoying.
 
2010-06-09 11:20:36 AM  
Oh hey, look at that. I've dealt with one of the companies listed in the article. They've received numerous certified letters from me containing copies of canceled checks and billing statements showing that the debt never existed and the account was always paid in full and on-time, but every few years they claim "new information" and try to collect.

No debt = no collection.
 
2010-06-09 11:22:02 AM  

EvilEgg: Very nice of you Smitty to link to the print page. But I don't want to print it and the dialog is annoying.


The original story is slideshow-style and loaded with DHTML ads. But here it is if you want it:

http://www.startribune.com/investigators/95692619.html?elr=KArksUUUyc​a​EacyU
 
2010-06-09 11:23:12 AM  
The next day, Poplawski appeared before a Hennepin County district judge. He told her to fill out the form listing her assets and bank account, and released her. Several weeks later, Debt Equities used this information to seize funds from her bank account.

Uhh, this sounds like creditors paying off people at a bank to let them at a debtor's funds. How much did the judge make?
 
2010-06-09 11:25:46 AM  

kingoomieiii: Uhh, this sounds like creditors paying off people at a bank to let them at a debtor's funds. How much did the judge make?


If there is a judgment entered against you, they can legally raid bank accounts if they find them.
 
2010-06-09 11:29:17 AM  

nekom: kingoomieiii: Uhh, this sounds like creditors paying off people at a bank to let them at a debtor's funds. How much did the judge make?

If there is a judgment entered against you, they can legally raid bank accounts if they find them.


My response to this is abject revulsion. What unbelievable soulless scum. If someone is ever looking for the best possible example of rampant, legalized corruption in our capitalistic economy, this is it. Companies and corporations somehow have MORE rights than the citizenry, including the right to legally steal from you.
 
2010-06-09 11:30:05 AM  
I'm pretty sure pages that automatically attempt to print are even more annoying than debt collectors.

Do the debt collectors somehow collect the bail money?
 
2010-06-09 11:31:41 AM  
museum.tvView Full Size

 
2010-06-09 11:32:44 AM  

kingoomieiii: Uhh, this sounds like creditors paying off people at a bank to let them at a debtor's funds. How much did the judge make?


This really sounds like we're missing part of the story. I suspect the person was responding to discovery and said something like "I don't know what to do with this" to the judge. But that's just a guess.

I'm not a lawyer so I can't speak to how the rest of the world works, but around here, most cases under $7500 will be held at the District Justice, our state's version of small-claims court. The DJ will not allow motions, interrogatories, or any other sue-by-mail methods other than the initial filing. Both parties MUST be physically present to argue their case, period. I'd say 9 times out of 10, the lawyer for the debt collector never shows up.

With this in mind, it is astounding how many people still lose. Not because the collector had a valid claim or paid anyone off, but because people just don't know how to act in court. People show up and tell the judge that they didn't mean to go delinquent because they couldn't afford the payments because their kid was sick and their car was dead and they didn't have the money, etc -- none of which are valid defenses, and all of which effectively admit that the debt is valid.

The tiny handful of defendants who show up and argue that the collector's claims amount to hearsay, or that the added legal fees are excessive, or that the statute of limitations for litigation has passed ... those are the people who stand a chance of winning. And absent the debt collector's lawyer -- who isn't present because s/he filed a few hundred lawsuits all over the country this week -- to argue against the debtor's claims, the judge may very well find in the defendant's favor.

Don't even get me started on how people behave in the court of common pleas.
 
2010-06-09 11:32:52 AM  

kingoomieiii: nekom: kingoomieiii: Uhh, this sounds like creditors paying off people at a bank to let them at a debtor's funds. How much did the judge make?

If there is a judgment entered against you, they can legally raid bank accounts if they find them.

My response to this is abject revulsion. What unbelievable soulless scum. If someone is ever looking for the best possible example of rampant, legalized corruption in our capitalistic economy, this is it. Companies and corporations somehow have MORE rights than the citizenry, including the right to legally steal from you.


Just be glad you don't owe money to Jackie Treehorn.
 
2010-06-09 11:35:25 AM  

kingoomieiii: My response to this is abject revulsion. What unbelievable soulless scum. If someone is ever looking for the best possible example of rampant, legalized corruption in our capitalistic economy, this is it. Companies and corporations somehow have MORE rights than the citizenry, including the right to legally steal from you.


I don't want to sound like I'm defending debt collection companies...far from it. However, it would be the same if you (as a private individual) sue someone and win a judgment against them for monetary damages but the defendant stops or does not pay. You can then have court proceedings against them to find assets that will provide recompense and/or garnish their wages (varies by State).
 
2010-06-09 11:36:25 AM  

kingoomieiii: My response to this is abject revulsion. What unbelievable soulless scum. If someone is ever looking for the best possible example of rampant, legalized corruption in our capitalistic economy, this is it. Companies and corporations somehow have MORE rights than the citizenry, including the right to legally steal from you.


Playing devil's advocate here, this only happens after you have -- supposedly -- been given notice that you're being sued and had a chance to show up in court to defend yourself. The system can be manipulated, but learning your legal rights goes a long, long, long way towards stopping that. Every single citizen needs to have at least a passing familiarity with their local rules of civil procedure, so that when nonsense like this crops up, at least they know how to win / delay / stop / get help for the proceedings.
 
2010-06-09 11:39:04 AM  
In related news:

If you are ever sued for anything, no matter how ridiculous, inaccurate, barred, or flat-out wrong their claim is, GO TO COURT AND DEFEND YOURSELF.

There are no circumstances under which you should blow off a court date, ever. Even if the other party is lying, time-barred, and not licensed to practice in your state, you are 100% guaranteed to lose if you don't go.
 
2010-06-09 11:40:43 AM  

floor9: The tiny handful of defendants who show up and argue that the collector's claims amount to hearsay, or that the added legal fees are excessive, or that the statute of limitations for litigation has passed ... those are the people who stand a chance of winning. And absent the debt collector's lawyer -- who isn't present because s/he filed a few hundred lawsuits all over the country this week -- to argue against the debtor's claims, the judge may very well find in the defendant's favor.


It depends on who is litigating. If it's the original creditor and it's within statute, the debtor will likely lose. If it's a junk debt buyer, chances are they have absolutely NOTHING but a printed list of names and amounts.
 
2010-06-09 11:48:06 AM  

nekom: It depends on who is litigating. If it's the original creditor and it's within statute, the debtor will likely lose. If it's a junk debt buyer, chances are they have absolutely NOTHING but a printed list of names and amounts.


Ah, sorry - I should have been clearer. That was meant to apply to my paragraph above, where I was talking about cases where the debt collector's lawyer doesn't show and the debtor STILL loses.

Since so many of the cases are filed en masse, especially by junk debt buyers, and since so many debtors simply fail to appear, it's not cost effective to retain a local lawyer to go represent the debt collector's interests. So if more debtors started going and raising valid defenses, this sort of behavior would become too expensive and debt collectors would be forced to stop making taxpayers fund their collection activities.
 
2010-06-09 11:49:51 AM  

floor9: Since so many of the cases are filed en masse, especially by junk debt buyers, and since so many debtors simply fail to appear, it's not cost effective to retain a local lawyer to go represent the debt collector's interests. So if more debtors started going and raising valid defenses, this sort of behavior would become too expensive and debt collectors would be forced to stop making taxpayers fund their collection activities.


Oh exactly.

1. Buy millions of dollars in junk debt for pennies on the dollar
2. See if you can get some people to pay you
3. File suit on those who can't
4. Hope they don't show up, get your default judgment
5. Find out where they bank and raid it.

It's a good business model really. Unethical, despicable even, but profitable.
 
2010-06-09 11:52:24 AM  

nekom: floor9: Since so many of the cases are filed en masse, especially by junk debt buyers, and since so many debtors simply fail to appear, it's not cost effective to retain a local lawyer to go represent the debt collector's interests. So if more debtors started going and raising valid defenses, this sort of behavior would become too expensive and debt collectors would be forced to stop making taxpayers fund their collection activities.

Oh exactly.

1. Buy millions of dollars in junk debt for pennies on the dollar
2. See if you can get some people to pay you
3. File suit on those who can't
4. Hope they don't show up, get your default judgment
5. Find out where they bank and raid it.

It's a good business model really. Unethical, despicable even, but profitable.


Free Market!TM What are you, a communist?
 
2010-06-09 12:00:06 PM  
Yeah, finally time to buy a big gun.

This morning I saw a transaction to my bank from an account I closed last month. I called them up, they said it was a legit charge, and I threatened to call the BBB. I was told it was a different company altogether that had posted the charge, and then said I'd then call my lawyer (don't have one). Her response was: "Oh wait, I somehow have access to your account from that company, maybe I can cancel it here."

She cancelled it ("somehow") but kept insisting it was a totally different company, even though their addresses are the same and she had access to their database.

So, I can possibly be arrested for something like this? Better have your guns drawn if you wanna collect...
 
2010-06-09 12:01:03 PM  
This happened to my wife. She was working an internship in Boulder, CO, and one a few occasions travelled down E-470 to the airport to fly home for the weekend. E-470 is a boothless tollway, and so photos were taken of her license plate, and she was told that a toll would be sent to her.

A month or so later, still no mailings. She was worried and called up. Again, she was reassured that these things take time and a toll would be mailed to her.

Over the course of time and a hectic life including the run-up to her doctoral thesis defense, the toll just slipped her mind. We never received the mailings. Then, about nine months later, we receive a letter from a collections agency. Then another. Then another, each demanding not only th $4.00 toll, but also around $120 extra for missing the court appearance and othere late fees. I love her, but I was infuriated that she actually paid one. I told her immediately NOT to pay any others. Of course, the collections agency said they had the right to basically sieze her assets. Over a highway toll.

Turns out when I looked closer, the claim was that they served her a court summons and she just skipped the court date. The problem? She didn't live where they claimed to have served her summons - a previous address that was still on her vehicle registration. So, still sort of our fault, until we also noticed that they just ignored the part on the registration that instructed state officials to mail her renewal application to our new address. It turns out they intentionally sent it to the wrong address, then waited for long enough that we couldn't respond, then started threatening her with siezing her assets and bank accounts.

Well, we got on the phone with the E-470 authorities (for the umpteenth time, though now we had proof from the Texas DoT). There were stil a few days until the last of the tolls were officially unnegotiably delinquent, and after a few faxes and phone conversations, got those ones dismissed and had them call off the collections douchebags. We tried to recover the money she sent to the collections agency, but they insisted that money was already spent, even though they admitted they had no right to any of them in the first place.

And that , my friends, is why penguins are flightless.
 
2010-06-09 12:13:50 PM  

Civil_War2_Time: Yeah, finally time to buy a big gun.

This morning I saw a transaction to my bank from an account I closed last month. I called them up, they said it was a legit charge, and I threatened to call the BBB. I was told it was a different company altogether that had posted the charge, and then said I'd then call my lawyer (don't have one). Her response was: "Oh wait, I somehow have access to your account from that company, maybe I can cancel it here."

She cancelled it ("somehow") but kept insisting it was a totally different company, even though their addresses are the same and she had access to their database.

So, I can possibly be arrested for something like this? Better have your guns drawn if you wanna collect...


Yes, killing police officers is an appropriate response. Or, I don't know...pay your bills?
 
2010-06-09 12:15:35 PM  
When did we get to 14th century England? Debtor's prisons?
 
2010-06-09 12:18:16 PM  

Barbigazi: Or, I don't know...pay your bills?



You're a dipshiat. The entire point is that it wasn't his bill to pay.
 
2010-06-09 12:24:07 PM  
Barbigazi

Or, I don't know...pay your bills?

Always a dumbass retort. The bill was paid in full, and they then lied and tried to con me.

Aside from that, I just got off the phone with Comcast, who conveniently left $1.08 on my supposedly closed out account. Since I went to the Comcast office and delivered the HD equipment, paid the account in full and left with a receipt, the operator didn't know how that cashier could have left off the service fee for me returning the equipment in person.

Since they had left my account open, that $1.08 erroneous charge would have swelled to $9.08, with $8 tacked on each month that I would have let this go.
 
2010-06-09 12:25:18 PM  

Skail: You're a dipshiat. The entire point is that it wasn't his bill to pay.


None of this matters to a debt collector.
 
2010-06-09 12:28:50 PM  

floor9: None of this matters to a debt collector.


I know. See my long-winded post a page or two up.
 
2010-06-09 12:31:45 PM  
For about six months in graduate school I worked for an attorney that occasionally sued for debt collectors. From what I remember, the process in Indiana is (assuming the defendant never showed or never made payments):
- Statement of Claim - the requirement for "serving" a defendant varied from county to county; it could be as simple as making a public notice in the local paper over the course of two weeks.
- Either Summary Judgment (no-show) or Judgment (defendant showed and judge accepted proof that debt exists)
- Proceedings Supplemental to attach wages (garnishment) or property (liens). If these did not work or debtor failed to show up for court, then...
- Information for Contempt (contempt citation) - debtor could be arrested if they were pulled over and the bail is used as payment against the debt.

The attorney is also able to attach "reasonable" (subjective definition) attorney fees and actual court costs to the debt. This process occurred over the course of two or three months.

/Talk about a soul-sucking job
 
2010-06-09 12:32:05 PM  
No one is going to take away discovery in aid of execution from these creditors. Prepare to see more stories like this and variations where public benefits are wrongly garnished. It sucks to be a consumer debtor, big time
 
2010-06-09 12:32:11 PM  
FTA - "I was surprised that the police would waste time on my petty debts," said Williams, 45, of Minneapolis, who had a $5,773 judgment from a credit card debt. "Don't they have real criminals to catch?"

Err, dude, it sounds like you stole $5,773 and didn't pay it back. You are a real criminal.

If someone took $5000 from you, would you want to police to do anything about it?
 
2010-06-09 12:32:46 PM  
floor9

None of this matters to a debt collector.

If this is going to be the norm, and people have to spend hours/day seeking out those that are trying to steal money with erroneous charges, I'm quite sure there won't be many debt collectors left after all is said and done.
 
2010-06-09 12:35:58 PM  

MeinRS6: FTA - "I was surprised that the police would waste time on my petty debts," said Williams, 45, of Minneapolis, who had a $5,773 judgment from a credit card debt. "Don't they have real criminals to catch?"

Err, dude, it sounds like you stole $5,773 and didn't pay it back. You are a real criminal.

If someone took $5000 from you, would you want to police to do anything about it?


That guy might be a douche, yes, but there are a lot of normal, law-abiding people who get screwed by these jerks. In my wife's case, she tried repeatedly to pay the toll debt before it became delinquent, but got no help. After intentional deception on the debt collector's part, she got stuck with bills that were dozens of times the original value. Screw that.
 
2010-06-09 12:38:47 PM  
I wouldn't compare your wife's toll case to this guy. He was not proactively seeking to repay the debt.
 
2010-06-09 12:39:36 PM  

MeinRS6: Err, dude, it sounds like you stole $5,773 and didn't pay it back. You are a real criminal.


Bullshiat. Consumer debt is a civil matter, not a criminal one. Furthermore, deciding whether or not to pay back a debt is a business decision and nothing more. Fark that boy scout noise. Creditors take a risk when they extend credit, period.
 
2010-06-09 12:45:55 PM  

nekom: Furthermore, deciding whether or not to pay back a debt is a business decision and nothing more. Fark that boy scout noise. Creditors take a risk when they extend credit, period.


Ah, Obama's America. This should work out well in the long run.
 
2010-06-09 12:46:23 PM  

IndyMBA: Information for Contempt (contempt citation) - debtor could be arrested if they were pulled over and the bail is used as payment against the debt.


I don't have a problem with citing someone with contempt for failing to follow a court order. I do have a problem with contempt over failing to appear to a civil trial -- where arguably, the only damage done is to themselves, not to society.

I have an even bigger problem with debt collectors pulling the ol' "bona fide error" loophole and serving a prior address. Very few consumers know enough to wade through even the shallow end of the legal system, let alone how to successfully vacate a judgment over improper service. When it's all said and done, the debt collector gets to say "whoopsie daisy, our bad" and walk away unharmed.

Then there are consumers like me, armed with a passing knowledge of the legal system and enough money in savings to fight this through. I pray for the aforementioned Citibank collectors to take me to court for a debt that I never owed. That ten-year-old paperwork is sitting in my safe deposit box, just waiting to become a ticking nuclear timebomb fueled by their negligence and misconduct.
 
2010-06-09 12:47:43 PM  

MeinRS6: Ah, Obama's America. This should work out well in the long run.


Amen. Take me back to December 2008, when no debt existed.
 
2010-06-09 12:51:22 PM  

MeinRS6: Ah, Obama's America. This should work out well in the long run.


This is nothing new. Corporations default on debt all the time. So do people. Things happen.

Now if you obtain credit under false pretenses with no intention of ever paying it back, that's fraud, which is a crime. If you lose your job and can't afford your payment any longer, that does NOT a criminal make. Fark banks, and fark debt collectors.
 
2010-06-09 12:55:13 PM  
This is far from political in any way. If someone here hasn't been falsely charged for something they knew was an "error," please step forward and claim your internet. Otherwise, I'm pretty sure the cases of improper charges have affected everyone here with even a small dent on their credit report (like me). For me, that's just two erroneous charges before noon today. I'm at about 40 for the year so far, and probably at an hour spent on each to right the "error."
 
2010-06-09 1:01:37 PM  
Been a few years ago now but pulled my credit and there was a judgement listed that was about a year old. Contacted the courts and received copies of all the paperwork. Turns out not only was the signature card for the summons forged, the case was over a credit card that I never had/used. They claimed they sent me a preapproved card, don't remember receiving it, and since I didn't send in the decline card they assumed I wanted it and started charging annual fees, also never received a bill.

Court closed and removed the judgement. CC company had been purchased by WAMU who was then bought by Chase. Didn't have the time or money to try to get anything from Chase.

I know, cool story, but I just had to vent.
 
2010-06-09 1:10:24 PM  

GAT_00: When did we get to 14th century England? Debtor's prisons?


expect to see more of this sort of activity. it's all part of the cycle.
 
2010-06-09 1:11:01 PM  
i993.photobucket.com
 
2010-06-09 1:11:30 PM  

floor9: I don't have a problem with citing someone with contempt for failing to follow a court order. I do have a problem with contempt over failing to appear to a civil trial -- where arguably, the only damage done is to themselves, not to society.

I have an even bigger problem with debt collectors pulling the ol' "bona fide error" loophole and serving a prior address. Very few consumers know enough to wade through even the shallow end of the legal system, let alone how to successfully vacate a judgment over improper service. When it's all said and done, the debt collector gets to say "whoopsie daisy, our bad" and walk away unharmed.


I agree with you completely. The system is completely setup to benefit the "debtee" and not the "debtor". Most of these claims are, thankfully to the "debtor", handled through Small Claims (varies on the balance of the account) so an attorney is not required; even though it is highly recommended because of the process. I saw people accidentally accept a judgment even though they intended to fight it because they were unaware of the process.

The bottome line: keep all documentation related to any supposed debt. If you pay something off request a letter stating that the company is accepting your payment as payment-in-full.
 
2010-06-09 1:21:49 PM  
IndyMBA

The bottome line: keep all documentation related to any supposed debt. If you pay something off request a letter stating that the company is accepting your payment as payment-in-full.

Aside from that, ask for the employee ID and extension of the person you're dealing with while you're closing the account out. That seems to work like a charm, and they always act surprised and panicked when you ask.
 
2010-06-09 1:38:03 PM  
More good advice: Go to court. Sit in the crowd and watch. Proceedings are open to the public and you have a right to be there. Dress nice, turn off your cell phone, and sit quietly. Note how the litigants, lawyers, jurors, and judge all interact with each other. Observe the tempo of the proceedings. Listen to which defenses work ("Your honor, although that credit card was mine, my last payment was made in January 2001. According to title ### section ### of our state law, the statute of limitations on bringing a claim in this matter is four years. Even if the plaintiff's claim was otherwise valid, the last date on which he could have brought this action was February 1, 2005. As such, this action is time barred, and I am requesting that his claim be dismissed with prejudice"). Listen to what doesn't ("Your honor, although that credit card was mine, I just didn't have the money to pay. Plus, the bill was wrong. I tried calling them ten times and they flat-out refused to fix it.") Not only is it wildly entertaining (lots of people behave like they're on Judge Judy), but it's a fast way to start to get a grasp on how our judicial and legal systems work.
 
2010-06-09 2:00:35 PM  
Weird. I thought we did away with debtors prison.
 
2010-06-09 2:13:57 PM  
FTFA:

In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases, people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Ill., man "to indefinite incarceration" until he came up with $300 toward a lumber yard debt.


wtf? If that doesn't amount to debtors prison then nothing does. That is astounding and a hugely bad precedent.
 
2010-06-09 2:47:05 PM  
Any Fark LawyersTM want to explain how you can be held in jail for failure to appear for a civil matter?

I've always thought that you basically just lose the case, and its up to the plantiff to collect on their own.

Since when does the state get involved in collecting money in a civil matter.

Doesn't this happen all the time? "Yeah, we won the case, but we have no chance of collecting the money from the loser."
 
2010-06-09 2:51:41 PM  

downstairs: Any Fark LawyersTM want to explain how you can be held in jail for failure to appear for a civil matter? Doesn't this happen all the time? "Yeah, we won the case, but we have no chance of collecting the money from the loser."


I'm wondering the same thing. The article lightly touches on it, but doesn't really explain the mechanics. It's always been my understanding that the maximum penalty for failing to appear for a civil trial is that the opposing party can walk all over you with the judgment.
 
2010-06-09 2:58:45 PM  

Skail: She didn't live where they claimed to have served her summons


Seems like that should be cause to have the whole case thrown out! They perpetrated a fraud on the court.
 
2010-06-09 3:00:42 PM  

Civil_War2_Time: Barbigazi

Or, I don't know...pay your bills?

Always a dumbass retort. The bill was paid in full, and they then lied and tried to con me.


Spot on.

My father had a boarder some 7 or 8 years ago, who got a hold of my father's personal info, got an American Express card IN MY FATHER'S NAME, and ran it up. My father put a stop to it, by calling AMEX and having them cancel that card. HOWEVER, the boarder called AMEX after my father did, told them it was a mistake, reinstate the card, and oh can I have a credit increase?

AMEX is still trying to get money from my father. They've threatened to sue...in the state of California, which is pointless. To get my father, they have to sue in Maine, and they know they'd lose the case (there's a huge paper trail and a lawyer already involved) if they came to Maine.

This is only part of the story. It's what I was told. I'm sure there are more juicy details to it than just that.
 
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