Lenders have been given free rein for a long period of time to collect old debts in any way that they want to. All creditors are supposed to practice fair collection techniques that do not harass the borrower. This is not always the case. In clear violation of the Fair Debt Collection Practices Act, many creditors and debt collectors will call multiple times a day in order to collect a debt from an individual. It is hoped that this will be addressed and eliminated with the Consumer Financial Protection Bureau’s plan to readdress the Dodd-Frank financial overhauls law. The law protects individuals from acts that are deemed to be abusive, deceptive or unfair in any way.
One phenomenon that occurs regularly is lawsuits filed by debt collectors that go unanswered by the person being sued. Whereas in bankruptcy court, all debtors are present to defend themselves, this is not the case in an overwhelming majority of lawsuits brought by debt collectors. Around 95 percent of those sued in this manner do not show up to court, leading to a default judgment for the debt collector. This allows them to garnish wages and freeze bank accounts at will.
The problem is that in many cases, those being sued do not even know that they are being sued, because the debt collector did not follow through with due diligence. Each debt collector is supposed to inform the debtor that they are being sued, but this is not always happening, so even some people who might have shown up to answer the lawsuit are not given the opportunity.
This is just one example of the questionable practices that many debt collectors have been pursuing. Even with the Federal Trade Commission winning cases against companies like Expert Global Solutions over and over again, more stringent law enforcement acts appear to be on the horizon.