Debt Collectors Harassing Consumers on Phantom Debt
Phantom debt collectors are among the most aggressive in the industry, in practice and in policy, towards consumers they’re after. In a recent story from Butler, Missouri, one elderly woman was unable to convince a collection agency that she owed no money.79-year-old Judith Leonard, who receives food stamps and visits pantries to survive, broke her leg in March 2011, and stayed at Shawnee Mission Medical Center to recuperate. Leonard left the hospital with $1,100.00 in medical bills, her first debt-load in decades, and she couldn’t afford to pay it. A collection agency, Kansas Counselors, Inc., (“KCI”) called demanding money, and she set up a payment plan of $50 a month. She mailed in her payments three months in a row, and then got a letter from Shawnee Mission Medical Center; her entire debt was being forgiven, her account was at zero, and she was now owed a $150 refund.Quite wisely, Leonard sent two copies of this letter to KCI, and called the company to let them know her debt had been cleared. Instead of ceasing contact, the debt collection company began harassing her over the phone, seeking payments she no longer owed. ”He was really belligerent,” Leonard said of the debt collector who kept calling. ”He was going to come and break my other leg, it sounded to me like.” A debt that is no longer owed is called a “phantom debt;” many collection agencies, unfortunately, still try to collect on them, and aggressively so.A representative of the Better Business Bureau branch in St. Louis, MO, Chris Thetford, explains the situation like this: when the economy collapsed in 2008, lots of collection agencies bought a ton of consumer debt cheaply. Four years later, debt collectors are working to get back some $215 billion in consumer debt. In many instances, the collection agencies have very little information on the debts they’ve bought; they frequently pursue debts that have been discharged in bankruptcy, time barred from collection under state law, forgiven by the creditor, or never owed in the first place. When a collection company finds out the debt isn’t owed anymore, that doesn’t erase their need to collect the agreed-upon amounts. Thetford continued, “There’s a money motive for debt collection agencies to be more aggressive because of the dollars involved in the books of debt that have been sold.”But in Missouri, where Judith Leonard lives, there’s no help from the Attorney General’s office, since there’s no state law that equates with the federal Fair Debt Collections Practice Act. Leonard turned to a local television investigative reporter for help. Stacey Cameron, of KCTV5 News, contacted KCI by phone and in person at the company’s Lenexa, KS, office to see if he could clear the matter up. In a rare happy ending with a collection agency (and probably thanks to the presence of TV cameras), Leonard soon received two letters from KCI; one told her account had been settled, the other had a check for $150.This is a clear case of fighting for your rights as a consumer, in the face of unscrupulous corporate practices. Remember that as a consumer, you have the right to request written proof of the debt, and to file complaints around phantom debt with the Federal Trade Commission, which monitors the Fair Debt Collection Practices Act, the state attorney general, and the Better Business Bureau.You can also seek help from a consumer attorney, like Michael Agruss at Agruss Law Firm, LLC. If a collection agency has harassed you, you may be entitled to money damages up to $1,000.00, based on the FDCPA, which has been around for almost 35 years. The FDCPA is a federal law that applies to every state. In other words, everyone is protected by the FDCPA. The FDCPA is essentially a laundry list of what debt collectors can and cannot do while collecting a debt, as well as things debt collectors must do while collecting a debt. Plus, the FDCPA has a fee-shift provision. This means, the collection agency pays your attorney’s fees and costs. Founding attorney, Michael Agruss, has settled over 1,500 debt collection harassment cases. We want to help you, too.