In 2010, the Federal Trade Commission (FTC) -- the agency charged with enforcing the Fair Debt Collection Practices Act (FDCPA), federal legislation that prohibits debt collection agencies from using deceptive, abusive or unfair practices -- received over 140,000 complaints related to debt collectors. Despite this rather vast number of complaints, however, it appears that debt collection agencies are continuing to prey upon consumers in need of debt relief.

In fact, it appears that more and more of these agencies are turning to an alternative method of debt collection that is perhaps far more insidious than harassing phone calls or persistent correspondence.

Specifically, certain debt collection agencies are purchasing debts from companies and filing a lawsuit against the debtor to collect the money owed. These lawsuits require notice to be sent to the debtor and for the debtor to make a court appearance. In the event that the debtor fails to show up for court, however, an arrest warrant will be issued.

To illustrate, consider the experience of Robin S. of Illinois who was originally pulled over by a police officer for a minor traffic violation and ultimately placed under arrest once the officer discovered that she had a warrant out for her arrest.

Here, Robin S. owed $730 for a medical bill and was unaware that a debt collection agency had ever filed a lawsuit against her.

"They say they send out these court notices, and nobody gets them," she said.

Robin S. ultimately had to spend four days in jail while her father cobbled together $500 for bail, money that was ultimately turned over to the debt collection agency.

According to consumer advocates, this tactic is tantamount to debtors' prison -- which were long ago outlawed in the U.S. -- and actively pursued by debt collection companies.

"Whatever the creditors or the creditors' attorneys can do to leverage some kind of payment, it will help their profits enormously because they have, literally, millions of these," said Beverly Yang, a legal aid attorney specializing in debtors' rights.

According to legal experts three steps need to be taken. First, state attorneys general need to begin looking into this practice and, if necessary, take legal action. Second, state courts need to be certain that all of the necessary information is received before serving notices. Third, state court judges must be certain that they fully understand debtors' rights in order to avoid sending people to jail unless absolutely necessary.

Stay tuned for further developments from our Phoenix bankruptcy blog ...

If you would like to learn more about debt relief or stopping creditor harassment, take the time to speak with an experienced legal professional.

The following post is for informational purposes only and is not to be construed as legal advice. Names have been withheld to protect the identity of the parties.

Source:

NPR, "Unpaid bills land some debtors behind bars" Dec. 12, 2011