This week’s Newsweek has a great article on the abusive tactics debt collectors are increasingly using. The article is called “A New Shakedown” and it’s worth the read – especially in light of the shakedown a creditor recently pulled in a Nebraska bankruptcy case. The collector ended up violating the stay.
The debtors’ chapter 13 bankruptcy case was filed on February 13, 2008 and listed Geneva Roth Companies as a claim in the amount of $170. On May 21, a collector working on behalf of the creditor GRC (Sherman and Roman) called one of the debtors and started “to verbally abuse the debtor and coerced a payment from the debtor threatening criminal sanctions.”
According to a signed statement, despite being informed of the bankruptcy filing and the pending bankruptcy case the collector told the debtor that she “was a key element in an investigation of fraud and bank theft….that they will be forced to have me identified as a felon. [The debtor went on to tell her that [she] was not going to talk to her about this at work and that I would call her back. [It] was then I had to call her back within minutes or my husband and I would be identified at our work by cops if I didn’t and it would be embarrassing.” The debtor was ultimately compelled to use a debit card to pay $300. She was left shaken.
And then she called her lawyer
Debtors’ attorney was not happy with this (I wouldn’t be either). He called on the collector to remind them about the bankruptcy filing and to demand a return of the funds. The collector refused to provide a street address. The collector also claimed that she was never told of any bankruptcy filing. After the attorney told her that there was a bankruptcy filing, but before the attorney could provide additional details, the collector “informed debtors’ counsel that he had an attitude problem and hung up.” Debtors’ counsel filed a motion seeking a turnover of the property.
On June 17, the Bankruptcy Court issued an Order to Show Cause why the collector should not be sanctioned for violating “the automatic stay and why they should not be required to return in full the post petition payment made by the debtor under threat of prosecution.”
No creditor or collector appeared in person or by phone.
The court found that the violation of the stay was willful. “The action by the representative of the collection agency in refusing to acknowledge the bankruptcy, threatening criminal prosecution if the debtors failed to immediately make a payment and coercing the debtors into giving private banking information to the creditor are appropriate circumstances calling for the recovery of punitive damages.” The collector was ordered to turn over the $300 wrongfully taken; $924 in debtors’ attorney fees; and $5,000 in punitive damages “for the outrageous action.” The shakedown did not work and the now the collector must pay.
In re: Loseke, Bankr.D.Neb. No. 08-80324
Related posts:
- Furnishing Tax Returns to Creditors
- Lies and the Liars That Tell Them
- When You Discover that You Are a Creditor in a Bankruptcy Case…
- Would-a, Should-a, Could-a.
- A Battle with Nationwide
Tags: Automatic Stay, Bad Debt Collectors, Bankruptcy, Chapter 13, Fair Debt Collection Practices
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