June 7, 2014

Chase Debt Collector Garnishes $10,000 of Woman’s Wages for Debt that Wasn’t Hers

Disturbing Trend in Collections for Credit Card Debt

All too often, these lawsuits arise from debt-buying firms that pay credit card companies for information on debts they have written off. According to the Center for Responsible Lending, income from lawsuits by debt-buying companies has almost doubled since 2009.

The same report shows that the portfolios of these debt buyers often have incorrect, old or missing information. This is a major reason why those targeted by debt collection lawsuits don’t receive notice of the suit and are misidentified, something that happens in 10 to 20 percent of cases, according to Fox Business.

Related: How to Pay off Debt Faster with a Balance Transfer Card
$2,500 Credit Card Debt Forces Retiree to Sell Inherited Home

Another case illustrates information accuracy problems in credit card lawsuits: Retired veteran Willie Wilson of Elgin, Texas, was forced to sell the home he inherited from his mother because he did not receive notice of a debt collection lawsuit. He learned of the judgment in 2009 when he went to appraise the house.

The lawsuit failed to notify Wilson at the correct address and misidentified the debt as associated with a MasterCard, an account he never had. By this point, the debt ballooned into $3,500 — money Wilson didn’t have. Wilson had to sue the debt collector just to find out that it wasn’t MasterCard at all, but an old Best Buy account.

Although this turned out to be a valid debt, the problems in the system drove up the amount owed. Had he received correct notification, he could have challenged the lawsuit or paid the debt without being forced to sell his mother’s home.

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