Minnesota notifies debt collection agencies of potential punishment for failure to conduct background checks

February 1, 2011 by Todd Murray · 2 Comments 

Back in December, I wrote about a Star Tribune story that detailed a number of problems with Minnesota’s debt collector licensing process. As noted in the story, many debt collection agencies weren’t conducting background checks of new collectors because they supposedly believed–erroneously it turns out–that the state was doing it for them.

This past week, the newly inaugurated Dayton administration informed eight of Minnesota’s largest debt collection firms that it’s “prepared to commence formal action” for failing to conduct criminal background checks of collectors. The eight firms that were notified were Allied Interstate Inc. of Plymouth, AllianceOne Receivables Management Inc. of Eagan, Bureau of Collection Recovery of Eden Prairie, I.C. System Inc. of St. Paul, Financial Recovery Services Inc. of Edina, NCO Financial Systems Inc. of Mendota Heights, Receivables Management Solutions Inc. of West St. Paul, and Van Ru Credit Corp. of Des Plaines, Ill.

Minn. prepares crackdown on debt collectors | Star Tribune | January 28, 2011

Todd featured in Sunday’s front page Star Tribune story about deceased collections

September 22, 2010 by Todd Murray · Leave a Comment 

The latest installment of the Star Tribune’s “Hounded” series, which appeared in last Sunday’s paper, focuses on the sub-industry of deceased collections. The story included a few quotes from me about my very brief stint attempting to collect deceased debts and how the experience convinced me to ditch the collection business once and for all and start my consumer law practice.

The article also includes a great deal of information about the somewhat mysterious deceased collection industry and reviews some of the questionable tactics that they use to try to collect debts from recently deceased consumers. The moral of the story: when you die, the assets from your estate are used to pay creditors. If your estate has no assets, then the creditors are out of luck. And family members have no personal obligation to pay the debts of the deceased.

If you’ve recently lost a loved one and are being harassed by creditors for payment, I strongly recommend that you contact an attorney that is knowledgeable about the probate process. And if the harassment is especially egregious, consider talking to a consumer rights attorney.

UPDATE: The StarTrib has removed the “Premium” pay wall.

Death won’t stop these debt collectors (PDF link here)| Star Tribune | September 19, 2010

Star Tribune story on lack of judicial oversight for garnishment process

September 2, 2010 by Todd Murray · Leave a Comment 

Continuing its excellent “Hounded” series, the Star Tribune ran another story last weekend about the gaps in judicial oversight for the bank and wage garnishment process in Minnesota. The story points out that Minnesota law authorizes garnishments before the debt collector’s lawsuit has even been filed with a court. And even when the debt collector does file the lawsuit with the court before garnishment (and most do), the garnishment process happens largely without any judicial supervision. Only when the debt claims an exemption and requests a court hearing, does the court get involved. The piece tells the story of a couple of consumers that have had a particularly difficult time navigating the exemption process.

After reading the story, I’m even more convinced that Minnesota needs to prohibit any garnishments before filing, and allow pre-judgment garnishment only with a court order. I’ve written about it in the past, but I’d also like to see the existing exemption process blown up, and a new process put in place that prevents creditors from freezing exempt money, even if it’s only for a few days. And as the story points out, states like North Carolina and Texas have created exemptions for money earmarked for reasonable living expenses. But in an allegedly progressive state like Minnesota, there’s no such protection–creditors can garnish money that you’ve earmarked for your basic living expenses, leaving you out of luck.

Justice denied as debt seizures soar | Star Tribune | September 1, 2010

If you still have questions about garnishment, feel free to download my free guide How to Survive Garnishment. It’s packed with information and tips for handling garnishment and will answer most of your questions about the garnishment process. If the guide doesn’t answer all of your questions, I offer 30 minute consultations for $150.

And if you’re being garnished and were never served with a lawsuit, I may be able to help you stop the garnishment by vacating the underlying judgment. Feel free to use the contact form in the upper right corner of this page to contact me to discuss the possibility of getting the judgment vacated.

FTC heeds Franken’s call for review of debtors being thrown in jail

July 19, 2010 by Todd Murray · Leave a Comment 

Last week, Minnesota Senator Al Franken issued a press release calling for a review of the practices and procedures that are causing increasing numbers of consumers to be thrown in jail in debt collection cases. Here’s the press release:

WASHINGTON, D.C. [07/15/10] – U.S. Sen. Al Franken (D-Minn.) called on Federal Trade Commission Chairman Jon Leibowitz to take immediate action to address possible illegal activities by debt collection firms in Minnesota and across the country.

“Right now, Minnesotans are struggling to make ends meet. The last thing they need is to become victims of debt collection abuse,” said Sen. Franken. “Recent reports raise serious questions about whether our current laws go far enough to protect consumers, and I want to make sure Minnesotans aren’t at risk of being harassed or improperly jailed.”

Recently the Minneapolis Star Tribune published two articles detailing the disturbing practices of some debt collection agencies in Minnesota. The article cites a sharp rise in the use of arrest warrants against debtors, resulting in an increasing number of Minnesotans finding themselves behind bars for old or minor debts. The paper attributes the rise in arrests to the growing debt-buying industry that profits from buying people’s debts and the poor economy. Agencies can then use the court system to collect debts, as bail is frequently set at the amount the debtor owes.

The Star Tribune also discovered that Minnesotans are more frequently finding themselves pursued by debt collection agencies for debts that they don’t actually owe or debts that they already paid.

Sen. Franken’s letter to Chairman Leibowitz can be read here.

You can read the Star Tribune’s articles, “In Jail for Being in Debt,” and “Phantom Debts, Real Anguish” on their website.

In response to Franken’s letter, the Federal Trade Commission has agreed to take a harder look at the process for potential abuse.

“We’re trying to identify what the practices are, under what conditions people who may have consumer debt collection claims against them may be jailed, and whether such practices are in conformity with federal law,” said Julie Bush, a staff attorney in the FTC’s division of financial practices. She said the inquiry was not a formal investigation.

Bravo to Chris Serres at the StarTribune, who’s excellent article has been the catalyst for political action (or at least lip service about political action).

Star Tribune story on people being put in jail by debt collectors

June 9, 2010 by Todd Murray · Leave a Comment 

Over the weekend, the Star Tribune ran a story about people that have been put in jail by debt collectors. As I’ve written about in the past, these people are not being put in jail for not paying their debts. Instead, they’re being jailed for not filling out a court-mandated form or for not appearing at a court hearing. But as the story points out, the problem is that many of these people: (a) never received the court forms or notices; or (b) had no idea that they could go to jail if they didn’t follow the rules.

This is yet another example of debt collectors using court rules to bully and intimidate people to make a buck. And while I agree that there should be penalties for not following court rules, this is going too far. No one should end up in jail from a debt collection case. Ever. Period. End of story.

In jail for being in debt | Star Tribune | June 9, 2010
Is jailing debtors the same as debtors jail? | Star Tribune | June 9, 2010
What to know: Avoiding warrants | Star Tribune | June 9, 2010
Top five companies using debt arrest warrants | Star Tribune | June 9, 2010

(photo: mksfly)