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Dealing with debt collectors can lead to bankruptcy

Collecting debts is big business, and even though there are federal laws regulating the methods companies are allowed to use, lines are crossed, and it is the consumers who pay for it. In 2013, the Federal Trade Commission (FTC) received approximately 200,000 complaints regarding questionable tactics used by collection agencies. Those tactics have resulted in numerous consumers across the country -- and here in New Jersey -- filing for bankruptcy.

Some debt collectors have fraudulently obtained default judgments against consumers. Once a judgment is obtained, the company can garnish the consumer's wages, freeze bank accounts and pursue other legal collection remedies that are available to it through the court system. In some cases, people have been unable to get a job or a place to live because of tactics like these.

One company accused of using these tactics recently entered into a settlement to repay some victims and vacate judgments against others. Considering the fact that the debt collection business is worth billions of dollars, it is doubtful that this company's settlement will have a significant impact. That is why consumer advocates want the government to expand the Fair Debt Collection Practices Act, which could take some time -- if it happens at all.

Consumers here in New Jersey and across the country will likely continue to be victimized by debt collectors. Fortunately, consumers can choose to file for bankruptcy when debts become overwhelming. Any phone calls or other correspondence from debt collectors can feel like harassment. However, if consumers believe that a company is violating federal laws regarding the collection of debts, they have rights.

Source: thenation.com, "How Debt Collectors Ruin Lives", Michelle Chen, Dec. 2, 2015

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