Debt collectors will do just about anything in order to collect the debts which they believe are owed to them. Many times this even includes fraudulent and deceptive practices, many of which are against the law. This has led many state regulators to ramp up their investigations of debt collectors in order to root out these illegal practices. The Attorney General of California is currently undergoing a large investigation partially focusing on companies that purchase delinquent credit card debt as well as deceptive practices by the lenders themselves.
The investigation has resulted in the state government suing JP Morgan Chase & Co., which is the largest banking firm in the country. The lawsuit alleges that the banking firm and its bank, Chase Bank, used deceptive practices in its lawsuits against consumers. The Attorney General alleged that the banking firm clogged up courts all over California with over 100,000 lawsuits which were based on inadequate documentation. Some of these inadequate documents included documents forged by low-level workers pretending to be assistant treasurers and executive banking officers.
Another target of the investigation are debt collection agencies which purchase the delinquent debts from the original lender, such as Chase. One 43-year-old man almost fell victim to one of these companies when the collection agency attempted to collect a debt which it claimed it had purchased from Chase. However, the affidavit from Chase, submitted in the lawsuit by the collection agency was inadmissible because the defendant was not able to cross examine the Chase affiant during the trial. The man and the collection agency eventually settled out of court.
Unfortunately, many times no settlement can be reached between a collection agency or lender and the consumer. This means the consumer may have to battle it out in litigation which could be costly and time-consuming. However, many times consumers have the option of discharging credit card debt by petitioning for a Chapter 7 bankruptcy, which is designed to discharge unsecured debts, which includes debts owed to credit card companies.
Source: rep-am.com, “Regulators stepping up probes of debt collectors’ practices,” Andrew Tangel and Alejandro Lazo, June 29, 2013