Posts Tagged ‘debt collection’

Debt Collectors Using Facebook?

A recent story in the Arizona Daily Star revealed how one debt collection firm pressured a businessman into paying what he owed based on information gleaned from his Facebook page. The businessman had apparently claimed to be broke and filing for bankruptcy, yet he was stupid enough to post pictures of his new Corvette and pictures of a recent fishing trip to Florida. The debt collector was able to use this information to get the fellow to pay up.

The fellow in this story clearly had the funds to pay what he owed. However, he is not among the majority of people hounded by debt collectors day in and day out in this country. Especially with the economy being as bad as it is. The fact that debt collectors are now sniffing around the social media for information that they can use to put pressure on debtors is concerning.

For one, privacy is at issue. Clearly, the information that people put up on the social media is meant only for people who know them. The fact that debt collection companies have now joined in with prospective employers in sniffing around the Internet for information on people is more than a little creepy. Having said that, if you put your life-story on the Internet for anyone to read, how much privacy can you reasonably expect to have?

For another,  how credible is information that people reveal about themselves on the Internet? Anyone could post stock images of a nice car or home and say that they belong to them. It is called bragging and the relative anonymity of the online world allows for such liberties. Of course, using your real name online reduces this anonymity somewhat, but still, you can be a millionaire online even if your bank account is empty.

I suspect that if the debt collection industry makes searching the Internet for information they can use against debtors to pressure them to pay becomes more widespread, that more than a few court cases will come up about the issue. How the courts will decide is anyone’s guess.

For the time being, I strongly suggest that people who use social media like Facebook and Myspace to share details of their lives change their settings so that only people who know them can access their pages. You don’t need to share your information with the entire world…especially if you value your privacy.

Debtors’ Prison?

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Although jailing people for unpaid debts was made illegal in the 19th century, in some states, particularly creditor friendly states like Minnesota,  it appears that debtors’ prisons still exist.  A Minneapolis Star Tribune story revealed a disturbing practice by the debt collection industry: using the power of a bench warrant to arrest debtors for failure to appear at court hearings.

The way it starts is that the debt collector gets a default judgment, which gives them the power to garnish wages, levy bank accounts, and seize personal property in order to satisfy the judgment. As part of the process, a hearing is conducted where the debtor must reveal his income and property to the debt collector.  While the individuals in the story were not technically arrested because they owed money, the judges oftentimes set the bail at the amount of the debt.

The story also mentions a couple of other states the connection between the person’s arrest and the debt is more direct: Indiana and Illinois. In one case, an Illinois judge ordered a man jailed for an indefinite period until he could pay $300 toward a debt to a lumber yard.

While most people will not face jail time for unpaid debts and while certainly, debtors’ prisons are no longer legal, the out of control debt collection industry has never particularly cared about what is legal and what isn’t.  Most debt collectors at best straddle the law and at worst outright ignore it.  The tactics of one firm caused this Florida man so much grief that he committed suicide. His family is now suing that firm for wrongful death.

There are steps you can take to avoid the worst debt collection tactics:

1: If you are sued, do not allow the debt collector to get a default judgment by failing to file an answer in time. In most states, you have up to 30 days to file a response.  While you may file the answer yourself, consulting with an experienced consumer law and/or bankruptcy attorney  is highly recommended. If you cannot afford an attorney, there are many who provide legal services to low income individuals for free or at a very low cost. You can find one in your state by going here.

2: Consult with a credit counseling/debt management agency. A credit counselor will work with you and your creditors to arrange a payment plan that you can afford and that will have your debts paid off in a few years. Most creditors will work with debt management counselors to lower your payments to an affordable level and will stop collection efforts once they are aware that you are on a debt management plan.

3: If you have no income or your current income is so low that you can barely cover your necessities, then it’s time to file for bankruptcy. Chapter 7 bankruptcy can protect you from judgments and creditor lawsuits. To find a bankruptcy attorney you may go here or here.

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