It is not unusual for me to hear from people in the debt relief world, “Oh the creditor won’t want to sue the consumer, it costs the creditor money.” I chuckle inside when I hear that. It’s so not true. While that might be logical, logic and creditors have never walked hand-in-hand.
Out of New York comes a story about Cohen & Slamowitz, a debt collection legal firm. I so wanted to title this article Cohen & SlamTheCourt. Anyhew, the law firm files 5,700 debt collection lawsuits per year per attorney on staff. They have 14.
It appears the debt collection firm is just cranking out lawsuits using automated software that is taking garbage in and dumping garbage out.
There has more and more talk lately about the accuracy or validity of the information debt collectors and debt buyers are using to go after people with. Recently we published “Most Debt Buyer Lawsuits Foiled By Inability To Prove Debt Owed” and not that long ago I interviewed attorney Jason Rappa about this mess. You can listen to that interview here.
Companies like Commercial Legal Software sell automated debt collection software like Collection-Master.
Collection law firms are able to handle such large volumes of cases because computer software automates much of their work. Typically, a debt buyer sends a law firm an electronic database that contains various data about consumers, including name, home address, the outstanding balance, the date of default and whether interest is still accruing on the account.
Once the data is obtained by a law firm, software like Collection-Master from a company called Commercial Legal Software can “take a file and run it through the entire legal system automatically,” including sending out collection letters, summonses and lawsuits, said Nicholas D. Arcaro, vice president for sales and marketing at the company. – Source
Until regulation addresses the problem of a lack of accuracy about the underlying debt people are sued for and there is more reliance on automated processes to pursue debt collection cases, two things will be true.
- More people will be sued for debts of any amounts.
- Consumers need to show up in court if they are sued for a debt and ask for proof the debt is valid.
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I have had four American Express cards. The interest rate was jumped to 27.22% and I decided to quit paying on one card. All of the other cards were paid off but the interest on the one card plus “penalties” was beyond reason so I gave up. AMEX will not negotiate but keeps passing the contract from collector to lawyer to lawyer. I downloaded the collections regulations so I also know the collections law. I have stopped collections letters and telephone calls with a letter. No lawyers are hired to “protect” me. No bankruptcy will be filed.
What will happen is that if these social dredges step outside the law I will have the evidence to sue for far more than they would ever be able to collect.
I am waiting for that new house that AMEX/collections will buy me…