The Worst Thing a Debt Collector can do to You

Picture with me the following scenario:

You receive what looks like formal documents in the mail, or someone shows up at your doorstep to hand them to you, or you get a note in the mail saying you have certified mail to pick up at the post office. No matter how this piece of paper gets to you, it looks official and serious.

After scanning the document to make sure you’re not being arrested, you then realize that you are being sued. By a collection company. For a debt that you may or may not owe to a doctor, hospital, credit card company, or car dealership. Or some other entity that you supposedly owe money to.

What you do next with this document greatly depends on whether you understand what the WORST thing a debt collector can do to you. Here’s option 1 (the not-so-good choice):

  1. You ignore or forget (same thing) the piece of paper. Maybe hope it’s somehow not legitimate, or reason that you just don’t have time to deal with this right now. Or maybe you do owe the debt, so what’s the point of fighting something you already know you owe?

Option 2, below (the better choice):

2. You respond to the document by filing what’s called an “Answer.” Or you hire an attorney to do this for you. You show up in court when you’re supposed to, and you get all the information before settling or going to trial with the collection company.

You may be thinking to yourself: “But why go to all that trouble? That’s just attorney-speak for generating more business for themselves. Or, who has the time to do that? I’m working two jobs and trying to pay child support, there’s no time to deal with something I already know about.”

Don't just sit there! Do something!

Don’t just sit there! Do something!

Here’s where you are wrong. Option #1 allows the debt collector to do the WORST thing that they can do to anyone: ask for a default judgment from the court, and then move forward with enforcing their default judgment.

Default judgments generally provide the maximum amount the collection company is seeking, plus fees, interest, and costs of filing a lawsuit. Allowing a default judgment to happen to you just raises the amount of money you are going to have to pay. A default judgment also allows the collection company to garnish your wages, if you’re employed, or find alternative ways to suck money from you. Third, a default judgment becomes part of your public record, people can see it and draw their own conclusions about it.

Bottom line: the worst thing a debt collector can do to you is get a default judgment against you. Don’t ignore the paperwork they serve you with, and read the paragraph above to understand what makes default judgments the WORST.

You Need to Read This

https://www.propublica.org/article/for-nebraskas-poor-get-sick-and-get-sued

 

For those of you Nebraskans who might have missed this article, published in the Lincoln Journal-Star, as well as ProPublica, The Atlantic, and The Daily Beast, you should read it. The author explores how rampant debt collection lawsuits have become in the state of Nebraska – particularly, the overwhelming amount of lawsuits filed by Credit Management Services.

 

In case you don’t feel like reading a whole other article (you’re busy, I get it), here are some take aways:

 

  • In 2013 Credit Management Services filed 30,000 lawsuits, which is more than all of the other Nebraska collection agencies combined. That amounts to filing approximately 120 lawsuits per business day.
  • “From 2008 to 2014, CMS seized at least $88 million from Nebraskans’ wages and bank accounts, according to court data analyzed by ProPublica.”
  • “In 2013, Cook County, Illinois, which contains Chicago and has a population of over 5 million, had about the same number of collection suits as Nebraska with its population of fewer than 2 million. That year, it cost $172 in Cook County to file suit for the sort of small amounts that predominate in Nebraska, where the fee was $45.”
  • Many of the debtors are low income (making $30,000 or less annually), and many of the debts being collected on are less than $700.

 

This article shows not only how collector-friendly Nebraska laws are (which begs the question, why isn’t someone in the state legislature taking this cause up already?), but also reinforces my belief that everyone should be educated on their consumer rights. And hopefully get educated before you get that call demanding payment for a past-due medical bill or over due credit card account.

 

Here’s the link to the article again, in case you missed it at the top:
https://www.propublica.org/article/for-nebraskas-poor-get-sick-and-get-sued