The recession hasn’t been bad for every industry. Just take a look at debt collectors. As consumers struggle to meet their obligations in the wake of the housing collapse and widespread job losses, business for collection agencies has soared.
With the boom in business has come a newer, more aggressive strategy including the increasing use of arrest warrants and the seizures of paychecks and bank accounts. In fact, the practices have become so aggressive that consumer advocates are arguing that something needs to be done to level the playing field between debtors who are struggling to make payments and collection agencies looking to profit off of another’s misery.
Minnesota Sen. Al Franken’s office has fielded hundreds of such calls, and, when the Senator read an investigative series by the Minneapolis Star Tribune about this aggressive new breed of collections agent, decided something needed to be done. He plans on introducing legislation that would make it an unfair practice, under federal law, for private firms to use arrest warrants in debt collections and grant consumers the right to sue collectors over the practice.
The proposed bill would not limit a judge’s authority to issue a warrant against a debtor who can pay but refuses to show up in court once a creditor sues. But the current practice allows for creditors to seek a warrant prior to the consumer even having the ability to contest the debt.
Even when consumers do challenge a debt there’s no requirement, under the current law, that requires the collectors verify the money is still owed. That is a practice the Senator would like to see changed.
There is no doubt that the current system is broken. Aggressive private firms and overwhelmed courts have allowed the reemergence of debtors prisons that benefit no one but the bill collectors. The proposals put forth by Senator Franken are reasonable and in no way take away from the power of businesses to collect on money rightly due to them. They should receive bi-partisan support, though given the decidedly pro-business bend to most of Congress such support is likely a long shot.
photo courtesy of Marcin Whichary via Flickr