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Debt collectors are increasingly turning to litigation to collect

It appears that more credit lenders are taking debtors to court over unpaid debts. From 2009 to 2012, the four debt-buying companies who make their earnings public almost doubled the amount of debt collected from court cases, according to the Center for Responsible Lending. Often times, debtors in Arizona and elsewhere don't even receive notice that they're being sued.

Debt collectors may count on the people they're suing not showing up. A 2010 study found that less than one in five defendants appeared in court when summoned in debt cases. In 2011, more than 200,000 cases of debt collectors suing debtors occurred in one state alone, according to a study published in 2013. Without a defendant present to argue his or her case, debt collection agencies are more easily able to convince a judge to rule in their favor, which could result in liens on property and garnished wages. It's already legal in one state for the courts to order that a secondary home be sold to pay for debts.

What's perhaps more disturbing is that with debt being bought and sold, mistakes are made, sometimes resulting in the wrong person being sued. It is not unheard of for people with a similar name to a debtor being taken to court, and if they do not appear to explain that they aren't the one who owes money they could end up being deemed responsible for someone else's debt.

Suddenly having one's wages or property seized because of old debts people may or may not be responsible could place significant financial stress on someone's life. People may even need to consider bankruptcy if they lose a case to a debt collector. An attorney could help people fight an accusation of owing money before a judgment is rendered and assets seized.

Source: The Huffington Post, "Debt Collectors Have Figured Out A Way To Seize Your Wages And Savings", Hunter Stuart, June 02, 2014

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  • MCBA | Maricopa County Bar Association
  • State Bar of Arizona
  • ABA | American bar Association | Defending Liberty Pursuing Justice
  • Oregon State bar
  • NACBA | National Association of Consumer Bankruptcy Attorneys
  • NACA | National Association of Consumer Advocates
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