Predators — Bug Off! Debtors Can’t Pay!

Old debts, sold for pennies on the dollar, being used to harass the defenseless.

Back off, Bub! You’re putting unnecessary hurt on a friend of mine. She’s been through enough, including years of homelessness as she tried to raise her daughters without support from their fathers. Get your hands off her stimulus check!

“Gloria” messaged me in total fear after seeing this half-assed “article” about stimulus checks being garnished. She and her daughters have lived through years of austerity that would make these two-bit lawyer-debt collectors splutter like a clump of lard dropped in a hot frying pan. The teaser article she sent stated,

“New $1,400 stimulus checks are poised to get final approval from Washington leaders. Because those payments are included in a process called budget reconciliation, they are not protected from garnishment for unpaid debts.”

“Because they can” is the best explanation for the unbridled debt collection industry. For the past year, they’ve been mostly put on hold because of the pandemic, but as we turn the corner on this weirdest year ever, the debt collector cobwebs are being wiped off, harassment unleashed with vengeance. Anyone with an unpaid debt risks pretty horrible consequences, and will be fed plenty of damning misinformation in the process.

Bank industry protections, carved in stone. Photo Diane Nilan

Zombie Debt

The word “zombie” is a perfect description. Much debt, bundled and put up for sale by the debt collection “industry,” has already been written off. The remains, including details of the transactions, contain a heap of personal information, from social security numbers to home addresses, all things you wouldn’t want floating around the vile bowels of the internet. That’s what’s easily obtained by the nefarious debt collection industry.

The 2017 report from the Consumer Financial Prevention Bureau (CFPB) documented many dreadful realities of this bottom-feeding racket. Vulnerable debtors get relentlessly harassed in every way possible to the point of insanity. They’re tricked into paying a portion of their debt — which has been settled, in some cases 10+ years previous. Once the debtor engages with the agent, all kinds of legal havoc can befall the well-intentioned victim. Few protections exist, and regulations vary state-to-state.

A pre-covid Washington Post article detailed the scope of abuse,

“The issue has become more common with the rise of debt buyers that acquire debts at a fraction of their value, consumer advocates say. In their 2017 report, the CFPB studied 298 debt portfolios sold online, including on Facebook, and found that a ‘substantial portion’ of the accounts were likely ‘time-barred’ — or beyond their statutes of limitations. One portfolio with a face value of $156 million was being sold for $125,000, or less than 1 cent per dollar, the CFPB found.”

The older the personal data-rich debt portfolio, the cheaper it is. The cheaper it is, the most nefarious buyers can lap it up.

Of Course, Race is an Issue

To no surprise, people of color are most harmed by this despised industry. The Intercept examined how the unfolding covid crisis was impacting debt collection at the onset in March 2020:

“The Urban Institute has previously estimated that around 71 million Americans have debt in collections, a number that may now soar as unemployment hits new heights over the economic slowdown. While debt is ubiquitous in America, racial disparities persist.

“Four years after graduating, black college graduates on average owe $25,000 more than white graduates in student debt. An investigation by ProPublica found that court judgments in debt collection lawsuits were twice as high in black communities compared to mostly white neighborhoods.”

Errors Compound Strife

No person or entity is perfect, but when the CFPB of the pre-Biden administration reported that the credit industry had made scads of errors in their effort to collect past debts, you’d have to wonder really how bad it was.

“Many consumers impacted by Covid received a myriad of financial accommodations. For some entities, however, processing these accommodations and adjusting internal processes to service those accommodations proved difficult and ultimately led to consumer harm.

The February 2021 report from the CFPB documented scores of lenders’ errors in handling credit issues of covid-impacted borrowers, the kind of errors that would feel like being thrown into a vat of vipers, a more realistic description than the benign “consumer harm.”

Enough! Bring In the Superwomen!

Joe Biden’s administration has its hands full, and is pursuing plenty of reliefs for struggling families. What will happen, unless protections are implemented STAT, is the government relief money won’t hit the pockets of those who need it most — the families mired in poverty. They’re likely the ones with outstanding debt.

Vultures wait patiently as a hyena takes its share. Photo Diane Nilan

Debt collectors swoop in on incoming cash like a vulture spots and lands on road kill. Stimulus money, unemployment, and monthly child payments will not make it to their bank accounts. Poverty will not be eradicated.

I’d say it’s time for the Superwoman of Consumer Protection to be called in to put a stop to this egregious practices. Senator Elizabeth Warren (D-MA), assisted by Congresswoman Katie Porter (D-CA), would be the team to protect the life-saving relief coming to millions of impoverished families.

Otherwise, the Treasury should just open their vaults to these least-deserving lowlife entities and help them carry out the spoils.

Founder/pres. HEAR US Inc., gives voice & visibility to homeless families & youth, ran shelters, advocate, filmmaker, author, 15 yrs. on US backroads.

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