Congress Rewards the Debt Collectors
The Boston Globe wrote a powerful expose of the dark underbelly of debt collection, complete with dozens of slimy tricks that debt collectors used to cheat people out of their property and drive up costs for those who are already having trouble paying their bills. Judge Carol Kenner wrote a superb op-ed, suggesting how the debt collection laws should be reformed to protect ordinary folks from the worst abuses.
Friday night Congress responded, sending a bill to the president for his signature. And what does the bill do? According to a headline in an online news outlet for the debt collection industry, the new law provides for “industry approved changes” to the Fair Debt Collection Practices Act. The industry group is celebrating. Just in case the debt collection industry hasn’t muscled enough out of people, Congress is offering to make the laws a bit friendlier for the debt collectors.
Remember some of the abuses: Debt collectors who tried to collect for bills that had been incurred by deceased family members. Debt collectors who gave “sewer service,” pretending to notify people of pending court actions but throwing away the notices. Debt collectors who ran up expenses, turning claims for a couple of hundred dollars into claims for thousands of dollars. Debt collectors who seemed to be in charge at the local small claims courts.
And so, when Congress decided to take action, whose bidding did they do? They helped out the debt collectors. The debt collection provisions are buried in a bill with another Kafka-esque name: the Financial Services Regulatory Relief bill.
The changes may or may not be big, depending on your view of the rules on hot check collection and whether people should receive warnings so they can protect themselves from debt collectors. But the size of the help isn’t the point. The question is why in the wake of documented abuses is Congress not even interested in asking some tough questions about how they might better protect people who are receiving debt collection calls for bills they don’t even owe.
Once again, hard-working families who have been cheated don’t seem interesting to this Congress. Instead, the only voices heard on Capitol Hill belong to the big players who can line up Political Action Committees and hire lobbyists.
This is wrong.
This is outrageous!! But, it is par for the course. It doesn't surprise me. Folks, debt is oppressive, and it is becoming more so as we speak. Pay off debts and live on cash. There is power in that. You can't control congress. Live meagerly, and prepare for lean times, so you can survive without debt.
If I become so sick at some point in my life that I would create mounds of medical bills that would bankrupt my family, I'd rather NOT die later and leave my family poor. I'd rather go sooner, before I drag my family into slavery. Isn't that what congress is telling us to do? It is more important that a debt be paid, than for someone to benefit from medical technology and live longer. Paying debt is more important than life. I'd say our values are getting a little screwed up.
Jim Anderson
The Truth About Credit
October 3, 2006 8:00 AM | Reply | Permalink
The same website linked to in this post that reports on these changes, also reported last month that debtors cannot tithe to their church when they are paying off a bankruptcy. I like the way the United States Bankruptcy Court for the Northern District of New York is reluctantly put it...
"Thou shalt have no gods before me ... except for MasterCard, Visa and American Express."
Boy does that put it in a nutshell. Think we might be losing our religious freedom in this country, bit by bit? For that matter, we are losing all our liberties bit by bit. Except of course the freedom to sell ourselves into slavery.
Jim Anderson
The Truth About Credit
October 3, 2006 8:44 AM | Reply | Permalink
Jim:
The reason why tithing to a church is scrutinized is because there have been several instances where:
1) the church was merely a conduit for laundering money to a relative, business partner or other insider; or
2) debtors never tithed until they filed bankruptcy and the "tithe" was merely an attempt to hide income that otherwise was available to pay creditors.
The policy wasn't meant to discourage charitable giving, it was meant to prevent fraud in bankruptcy cases.
Satellite Sky Blog
Find the Truth. Do Justice.
October 3, 2006 7:55 PM | Reply | Permalink
It doesn't really matter what the justification is. The result is the same.
Jim Anderson
The Truth About Credit
October 4, 2006 1:11 PM | Reply | Permalink
Re; I'd rather go sooner, before I drag my family into slavery
Your family is not responsible for your medical bills and will not be bankrupted by them (unless of coyrse theyu use their credit cards or take out loans in their own name on your behalf). If you die in debt, probate will divide your assets between your creditors and that will be that-- anything not paid will necessarily be written off. They can't come after your kids, cousins or other relatives for any of it.
October 5, 2006 6:56 PM | Reply | Permalink
I understand what you are saying, however, immediate family relies on my assets, and they become their assets when I die. If I run up a ton of medical debt before I die, my family would surely still suffer. Creditors have access to assets before family. One big one is the home we live in. If that is taken, my family is on the street. I'm not so sure anymore that a bankruptcy court would preserve that asset for my family. I have life insurance, but my family could still be left broke with an unexpected level of debt when creditors go after that. It wouldn't surprise me if that would be considered one of "my" assets that could be used to pay debt. Families are not just a group of individuals. In California, we are a community property state, so my bet is creditors will hold my wife responsible for my debts, medical or not. I'm not so naive anymore to think that what you say means they'll be okay. The legal tricks played in unconscionable adhesion agreements (that people mindlessly sign) - even when being admitted to the hospital - give up rights that increase the power of collection, and make family members responsible. We have constitutional rights, but most financial transactions today require the waiving of rights to obtain the service. I have protested these waivers in hospitals before, and they let me strike those waivers, but only after much consternation. Sure, you are right, family can't be held responsible according to the basic principles of law, but it ain't that simple. The law has become extremely complex. I'm sure a good attorney for a collector can deprive family members of basic needs, if they have to trick them into making a contract to do it.
Creditors may hound my close relatives. In the book Credit Card Nation, Manning recalls a story where creditors hounded the parents of a college age man who committed suicide after running up high balances on credit cards and couldn't pay them. The credit card collectors called his parents and insisted they "honor his memory" and pay his debts. They also tried to convince them, if I remember correctly, that they could be held responsible for the debt if they decided to sue. Some people, under the influence of a collector's intimidation will make a deal to settle, and inadvertently create a contract for a debt they don't owe.
Jim Anderson
The Truth About Credit
October 9, 2006 8:07 PM | Reply | Permalink