No Fresh Start How States Let Debt Collectors Push Families into Poverty

[ashling]

http://www.nclc.org/issues/no-fresh-start.html

How States Let Debt Collectors Push Families
into Poverty

The economic downturn has strained millions of families to the breaking point, and the astronomic growth of the debt buyer industry makes them increasingly vulnerable to seizure of essential wages and property to pay their oldest debts. NCLC surveys the exemption laws of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands. Sadly, not one jurisdiction's laws meet basic standards so that debtors can continue to work productively to support themselves and their families.

This report builds on NCLC's advocacy, training, publications, and public policy work on fair debt collection to promote family financial well-being. Learn more about NCLC's work.


Overview

States' outdated exemption laws fuel the lucrative and fast-growing debt buyer industry. In 2012, debt buyers purchased (for just a few pennies on the dollar) nearly 90 million consumer accounts with a face value of $143 billion, according to the Federal Trade Commission. Consumers disputed at least one million of these debts, yet only half of the disputed debts were verifiable at all by the debt buyer.

By updating their exemption laws, states can prevent debt buyers from reducing families to poverty. These protections also benefit society at large, by keeping workers in the work force, helping families stay together, and reducing the demand on funds for unemployment compensation and social services.
Key Recommendations

State exemption laws should be reformed to:

Preserve the debtor's ability to work by protecting a working car, work tools and equipment, and money for commuting and other daily work expenses.


->Protect the family's housing, necessary household goods, and means of transportation.

->Protect a living wage for working debtors that will meet basic needs and maintain a safe, decent standard of living within the community.

->Protect at least $1200 in a bank account so that debtors can pay commuting costs as well as upcoming rent and utility bills.

->Protect retirees from destitution by restricting creditors' ability to seize retirement funds.

->Be automatically updated for inflation.


->Close loopholes that enable some lenders (such as payday lenders) to evade exemption laws.


->Be self-enforcing to the extent possible so that the debtor does not have to file complicated papers or attend court hearings.


Model Family Financial Protection Act
NCLC has written model language for states to achieve these goals. The model law also includes steps that states can take to reduce the pervasive abuse of the court system by debt buyers.
- See more at: http://www.nclc.org/issues/no-fresh-start.html#sthash.Mo5jRuXd.dpuf- See more at: http://www.nclc.org/issues/no-fresh-start.html#sthash.Mo5jRuXd.dpuf

[moriah]

1. The very first thing is to keep a judgment from happening. If you're served, FIGHT!

Even if you have to answer on your own and get a lawyer later, there are sample Answers that you can file pro-se at the county courthouse. If you need help, you can usually contact your local law school for at least direction to free legal advice centers to find out your state's processes.

Don't ignore the summons and complaint thinking it'll just go away.

Most of the time, their Complaints are deficient. In Arkansas, they often refuse to attach a copy of the account agreement and instead rely on affidavits -- my roommate's case was dismissed when he was sued by a junk debt buyer because Arkansas no longer allows that. But you have to speak to up to exercise your rights, a judge isn't going to dismiss the case without you saying the affidavit is insufficient under the law.

Most of the time, if you can make the lawyers fees for prosecuting your case be more than the amount they paid for your debt, they will drop the case or offer to settle for a much lower amount. If you're able to countersue for FDCPA violations, remember you need as much proof as you can get of them and submit the proof with your Answer and Counterclaim -- they will usually agree to drop the suit or offer to settle the account for $500, and settle your counterclaim for $500 -- the same as both parties dropping their cases.

Also, check out creditboards.com, guys. I'd recommend it highly if you're having problems with your credit, or if you get served. They are some smart cookies there.

[catbyte]

2. Debtor's prisons aren't far behind--private contracted, of course.

[Liberal_in_LA]

3. important issue, thanks for posting this article

[msongs]

4. youd think the democratic party USA Inc would DO something to help people in this case nt