When Debt Collectors Error, Consumers Pay

When debt collectors make a mistake, it’s up to the consumer to prove his innocence. In most states, credit repair specialists caution, laws governing debt collection favor collection agencies, not debtors. In most states debt collectors are allowed to freeze bank accounts, seize checking and savings account balances, garnish wages, and place liens on homes and property without any legal oversight and often without notifying the debtor.

If the debt has already been paid, if the consumer was the victim of identity theft, if the collection agency has made an identity mistake or an error in debt amount, the consumer bears the burden of proof and must defend himself in court to resolve the problem. Unfortunately, aggressive collection actions often leave consumers without the financial resources to hire a knowledgeable attorney, stacking the decks against them once again. Too often the innocent wind up paying for debts they do not owe.

The poor economy has fueled the growth of a new type of debt collector, warn credit repair professionals. These “debt sharks” buy up lists of uncollected old debts, many of which have already been claimed as losses by the financial institutions that hold them. In the business to make money, debt sharks don’t bother to investigate to see if a debt has already been paid or reduced or forgiven. They don’t look into the circumstances of the debt to see if it’s the result of identity theft. They don’t verify the current status of the debt to see if it has been partially or fully paid.

Debt sharks take old, usually out-of-date debt lists and initiate immediate and aggressive collection actions. Many of these debt collection firms don’t even bother to contact debtors to see if they’re going after the right person, they just file collection actions in court based on the often faulty information on purchased debt lists. As soon as debt collection actions have been filed, these sharks turn around and strip unsuspecting consumers of their cash and attach their assets.

Consumers can be left with no money to pay for food, shelter or medicine. And even when debt collectors admit an error, it can take their victim’s months to recover their money.