All states have laws that are intended to prevent debt collectors from driving families into destitution. But those laws, some of which date to the distant past, have been rendered ineffective by debt collectors using new and devious ways to win court judgments that allow them to seize debtors’ paychecks or bank accounts.
Last week, a network of debt collectors agreed to pay $59 million to settle a class-action suit brought on behalf of people in New York, many of whom had their paychecks garnished or their bank accounts frozen. The lawsuit, filed in 2009, accused the companies of filing false affidavits in court claiming that they had properly notified people that they were being sued. The plaintiffs charged that after they failed to show up in court, the debt collectors applied for a default judgment, making it possible to get access to the people’s bank accounts and paychecks.
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