By ALFREDO ALVARADO
President Donald Trump has rolled back financial regulations of all kinds. And now, thanks to his policies, the slimly debt collection business is back.
Debt buyers are companies that purchase debt from an original creditor, usually a credit card issuer or a bank. They then try to collect the amount owed.
Usually, they sue the debtor without notification. When the unsuspecting consumer does not show up in court, a default judgement is entered, paving the way for his or her salary to be garnished.
Sheldon Barasch, supervising attorney for the union’s Municipal Employees Legal Services, does not think highly of the debt collection business. “These debt settlement companies are a total scam,” he said. “We’ve seen this going on for many years.”
The MELS Bankruptcy Unit handles as many as 1,000 of these cases annually. A 2009 MELS study found that in 65 out of 238 cases, clients only learned of the lawsuit after their salary was garnished or bank account restrained. These clients would be deprived access to the money in their accounts for as many as three weeks.
Barasch recommends that members who are served with a lawsuit contact MELS as soon as possible.
“We’ve been very successful in these cases,” said Barasch. In many instances these companies are unable to prove their case. “They don’t have the documentation and we make them prove their case in front of a judge.”
In New York City, the number of debt-collection lawsuits dropped in 2008 from 300,000 to fewer than 47,000 eight years later. But now the debt-collectors are back in full force, with debt-collection lawsuits increasing to nearly 76,000, according to the New York State Unified Court System. For the state’s Consumer Financial Protection Bureau, cleaning up the debt collection industry is a top priority.
DC 37 members who have been contacted by debt-collectors and want assistance are encouraged to make an appointment with MELS for free legal help. A union attorney will provide representation in court.
To speak to a MELS attorney call (212) 815-1111 and make an appointment.