Debt-collection lawsuits dominated the civil caseload at Quincy District Court last year, accounting for 80 percent of the 3,376 cases heard there.
And in upwards of 90 percent of those cases, the debt collectors won, getting judgments to garnish wages and put liens on cars and homes, said assistant court clerk John Dalton.
Consumer protection lawyers say the reason is simple: Defendants are too confused by the process, too poor to hire a lawyer or too scared to show up in court.
Now, some debtors and consumer advocates are fighting what they call unfair and illegal practices by the debt collectors like abusive phone calls and lack of evidence that any debt is owed.
“There are significant problems in the system. We have to do more to protect low-income people who are just being hounded by the creditors,” said Nadine Cohen, who heads the consumer rights unit at Greater Boston Legal Services. “With anyone who has even a little money, (the debt collectors) are very aggressive on garnishing wages.”
Greg DiBella, an unemployed father of three in Quincy, is one of those people. He’s trying to defend himself against a lawsuit from a debt collector seeking about $8,700.
“Their lawyers have called and acted really tough on the phone with me. There’s no compassion,” DiBella said. “I’m just trying to get back on my feet.”
DiBella owned a pizza restaurant in North Quincy for seven years, but it went out of business in 2007, forcing him and his wife to rely on credit cards to survive. One of his daughters is disabled with Down syndrome.
They racked up $6,200 on one credit card, but fees and high interest rates pushed it close to $9,000, he said.
“I kept calling the credit card companies to work with them, and they said no,” said DiBella. “At one point, I was paying about $260 a month, and only $60 was going toward principal. I couldn’t afford it anymore.”
DiBella isn’t tangling with the credit card company anymore but with lawyers who work for a California-based company – Midland Funding – that buys debt for pennies on the dollar and then goes after the debtors.
Legal aid groups like Greater Boston Legal Services can’t do much to help, focusing their limited resources on home foreclosure cases and leaving thousands of people facing lawsuits from debt collectors to fend for themselves.
Dalton, the Quincy court assistant clerk, said Midland Funding is one of the big players bringing lawsuits in that court. But Midland is also a defendant in the crosshairs of consumer lawyers in Massachusetts, Ohio and Minnesota.
Elizabeth Ryan, a Boston consumer lawyer and Weymouth native, is bringing two class-action lawsuits against Midland, one in Quincy District Court with a Milton man as the lead plaintiff and another in Suffolk Superior Court.
Ryan’s lawsuit argues that Midland typically files lawsuits that never explain the basis of the alleged debt and win its cases against defendants “who are almost always under-represented” and then enforces those judgments with wage garnishment and arrest warrants.
Her case also argues that Midland is not licensed in the state as a debt collector. Since 2006 the state Attorney General’s Office has fielded 90 complaints against Midland.
Midland spokesman George Durham said complaints are rare, adding that “Midland works hard to work with our consumers in a respectful and constructive manner.”
Josef Culik, a Woburn consumer lawyer, who has defended lawsuits by Midland in Quincy civil court cases, said the company rarely has any proof of the debts they claim are owed.
“Outside of the debt collection business, anyone who walked into court to say I am suing somebody but I have nothing for evidence, they’d get laughed of court,” said Culik.
But all that’s required to get a civil lawsuit rolling is an affidavit claiming that defendant owes money.
Debt collectors like Midland Funding buy debt from credit card companies for as little as 3 cents on the dollar. From 2006 through 2008, Encore Capital Group paid $584 million to acquire debt portfolios totaling about $17.1 billion, according to a report from the National Consumer Law Center in Boston.
But Charles Delbaum, a staff attorney at the consumer law center, said all the information debt buyers usually get is a name, Social Security number and the amount owed.
“There’s room for error and mistakes as to amounts and identity,” he said.
That’s why Barbara Anthony, the state’s consumer affairs chief, said it’s important for people being pressed by debt collectors to ask for verification of the money owed.
Too often, though, people are too afraid or embarrassed to ask such questions and are uninformed about federal and state laws that regulate debt collection practices.
In Massachusetts, debts older than six years are time-barred, meaning debtors cannot be sued for repayment.
Other ground rules, said Anthony, are that collectors can only call between 8 a.m. and 9 p.m. and are prohibited from using obscene or profane language or calling more than twice in a seven-day period.
“I’ve heard stories of kids being told, ‘Your father’s going to go to jail,’” said Anthony. “That’s against the law.”
But a court summons shouldn’t be ignored, said Anthony and Delbaum.
“Owing a debt is not a shame,” said Anthony. “You have responsibility and you have rights.”
Christopher Burrell may be reached at cburrell@ledger.com.
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Some laws on debt collecting
- A creditor must allow you to see any documents that prove that you owe the debt. Failure to do so is an unfair or deceptive act or practice.
- Creditors and collection agencies cannot call you at home more than twice for each debt in any seven-day period.
- They can’t call you at work if you have requested that they not call. They also cannot use profane or obscene language or tell anyone, including your friends, neighbors, relatives or employers, about your debt, without your written consent.
The state’s consumer affairs hotline can help people navigate this process; call 617-973-8787 or toll-free at 888-283-3757.
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