BANKRUPTCY STOPS ALL ABUSIVE COLLECTION EFFORTS

Part 1

The long recession has forced even debt collectors to resort to innovative but abusive collection efforts. Threatening debtors with imprisonment for failing to pay debt seems to be a common debt collector strategy in some states. Some states apparently have not repealed laws which provide for debtor prisons. Fortunately, in California, there are no debtor prisons, unless of course, a judgment has been issued and debtor fails to show up for a debtor examination. In that situation, a bench warrant of arrest will issue against debtor for contempt of a court order toappear. So, even in California, a debtor may end up in jail under certain circumstances. Does bankruptcy dissolve a warrant of arrest in this example? YES, strange as it may seem, the filing of a bankruptcy causes the withdrawal of the warrant of arrest.

Recently, the U.S. District Court froze all the assets of a California based debt collector called Rumson, Bolling & Associates which operated out of Van Nuys. The Federal Trade Commission alleges that that the debt collector engaged in unlawful debt collection practices and ripped off its small business clients. The court also appointed a permanent receiver to run the business while the FTC moves forward with its case against the three companies and six persons behind the operation. The debt collector’s website said “Oftentimes business will give up collecting on a past due account due to difficult debtors or time constraints. Rumson, Bolling & Associates believes that there needs to be a way for businesses to have a chance collecting on their past due accounts.”

What kind of abusive collection efforts did this debt collector engage in exactly? According to the FTC, the defendants’ collection methods included : 1. Threatening debtors with physical harm and death; 2. Threatening debtors’ pets with physical harm and death; 3.Threatening to desecrate the bodies of deceased relatives; 4. Use of obscene and profane language; 5. Improperly revealed consumers’ debts to third parties such as employers, co-workers, neighbors, and family members; 6. Falsely threatened debtors with lawsuits, arrest, seizure of their assets, or wage garnishment; 7. Falsely claimed that debtors would be liable for legal fees incurred in the collection of the debt.

continuing...