July 23, 2018

Georgia Collection Law Firm Facing Lawsuit from Governors’ Office of Consumer Affairs

Today’s AJC reports that Marietta collection law firm Frederick Hanna & Associates has been sued by the Governors’ Office of Consumer Affairs following multiple complaints about collection tactics used by the firm.   In November, the state consumer office served an investigative demand notice (i.e. a subpoena) on Mr. Hanna’s law firm asking for documents about the firm’s collection practices.   Hanna contends that because his office is a law firm the state agency has no right to this information.

Among the complaints leveled against Hanna along with other high volume collection firms (Hanna opens 50,000 new files a month!) is that they engage in collection of s0-called “zombie debt,” accounts purchased by collectors for pennies on the dollar because it is old – so old that the statute of limitations has run and the debt buyer has no legal right to sue. [Read more…]

Debt Collector’s Unlawful Message on Answering Machine May Give Rise to Stay or Discharge Violation Action

Over the past few months, I have received a number of calls from former clients regarding possible discharge stay violation actions.  As you may know, if you successfully complete your Chapter 7 or Chapter 13 case, the judge will issue a discharge order.  One effect of that discharge order is to make the automatic stay that protected you from creditor collection activities into a a permanent injunction against attempts to collect discharged debt.

More and more, it seems, creditors and collection agencies are pursuing discharged debt despite the absolute illegality of such activity.

My Bankruptcy Law Network colleague Kent Anderson offers an informative overview of this “zombie debt” in a recent BLN blog post.

I have not previously included Fair Debt Collection or Fair Credit Reporting work as part of my practice, but I am thinking about doing so.  Amazingly, there are some large, highly respectable companies involved in the zombie debt business.  Business Week published an interesting article about this phenomenon in 2007 called “Prisoners of Debt,” an article that is worth a read.

Apparently the zombie debt collectors are trained to walk a very fine line in terms what they say in collection phone calls.  These bill collectors are given scripts that often imply legal liability without specifically asserting that the debt is legally collectible.  Attorneys who pursue discharge violation actions, Fair Debt Practices action or Fair Credit Reporting actions often do not have a paper trail.  Zombie debt collectors rarely put anything incriminating in writing and they rely on the fact that most people do not have the equipment to record calls.

Texas attorney Brian Allen has an interesting post on his blog in July, 2008 in which he reproduces a recording from a zombie debt collector.  As Brian notes, the bill collector is attempting to get as close to the line of illegal activity as possible – and perhaps this collector crosses the line – what do you think:

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In any case, if you get calls from debts that were discharged or that are extremely old, you may have a claim for damages based on violation of federal law.  I plan to explore these issues in future posts where I can hopefully give readers of my blog more guidance as to what to do.

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