On many levels, the situation with lenders and borrowers has gone beyond absurdity. Borrowers happily spend themselves into a deep pit. Lenders keep interest rates so high that those in trouble can never repay their debt, as much as they might want to. Lenders are happy with getting minimum payments forever.
This unhappy cycle just keeps working its way through until the borrower defaults and gets put into the collection system. Once there, the borrower is best advised to ignore collection calls and letters, until they can scare up some cash to try to make a deal.
I have a client, a widow, who came to us with about $30,000 in credit card bills. She was actually liquidating furniture and heirlooms, trying to sell her dead husband's gun collection to pay minimum payments on her cards. Her real estate taxes had been unpaid for two years, and she was behind on her mortgage, but she was doing everything she could to keep the credit cards current. She had been doing so for four years since her husband died. When we met, she was not even sure if her name or her husband's, or both, appeared on the bills.
Like many people, she had never even thought of the idea of not paying. She always paid her bills. Also, like many people, she would never have filed a bankruptcy case under any circumstances. As a result, she was very near the mental edge. I told her that if she kept her present plan, she would wind up broke, and that her really important bills, food, real estate taxes, mortgage and utilities had to come first. Though she wanted to pay the credit card companies, it was simply a mathematical impossibility.
Over time, she accepted this fact, and I gave her basic instructions, don't talk to collectors, give me her mail, I would make deals or eventually litigate the claims to resolution. Everything seemed fine. A strange twist then developed. She did not have caller ID. Also, she had family and was afraid that if she missed a call, she would miss something big. So she answered the phone, every time it rang. She tried to explain that she had a lawyer. She was a clerical worker, so she could really type. Most collectors she spoke to were courteous and polite.
Some were not. She got calls during which she was abused, called names and threatened with lawsuits and even jail. She dutifully typed out the details of these calls, the time and what was said, and turned them over to me. I am not all that interested in suing collectors. I am out to make deals or litigate and get my clients' finances straightened out.
But these collectors were making it hard not to take action. I am very good at holding collectors accountable for violating the Fair Debt Collection Practices Act. Each time she gave us the details of a violation, I filed a suit on her behalf. Each time the suit had no defenses. Often the underlying claim can be worked out in the context of resolving these suits. While the monetary details of the lawsuits are irrelevant, she might be the only client I ever have who will recover from the credit card companies and their collection agents almost as much as she borrowed.
A borrower who wants to pay but cannot, a lender who wants money but does not care how it goes about collecting it and the interplay of consumer protection statutes, lead to a result more absurd than could be imagined.
Eugene C. Kelley, Esquire is a partner in the Pennsylvania law firm of Kelley & Polishan, LLC with over 20 years experience in debtor/creditor law. He has substantial experience in FDCPA and consumer rights litigation, bankruptcy, commercial and collection law, with an emphasis on representing insolvent businesses and consumers. He has represented both creditors and debtors. He is a member of the Board of Directors of North Penn Legal Services, an entity dedicated to providing legal services to the poor and indigent. He received a Bachelor of Arts magna cum laude from the University of Scranton and his Juris Doctorate is from the Dickinson School of Law. He has lived in Northeast Pennsylvania for his entire life, and with his wife Janet is raising a family of four sons.
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