A New Plague on the Unemployed

Posted on | April 10, 2009 | No Comments

It’s bad enough that 13.2 million people are unemployed, that many who are eligible have been unable to secure unemployment benefits, that millions of part-time workers in the 16 highest-unemployment states are not eligible for unemployment benefits, that millions of unemployed people are losing their homes and considering bankruptcy.  But, there’s a new plague swarming about the heads of the unemployed–debt collection scams.

Increasingly, debt collection agencies are targeting unemployed people using debt collection scams.  Rogue agencies are digging up charged off and fraudulent accounts and attempting to convince unsuspecting people that they owe money.  The agencies select accounts that are more than 7 years old, hoping you will be unable to prove that you paid it off.  If you refuse to pay, the agencies threaten to make multiple inquiries on your report and to take legal action against you.

The really maddening part of this is that the collection agencies know that the consumer assistance resources and the laws governing their practices are toothless.  So, even if they fail to get you to pay, they can certainly make you miserable, and harm your credit score, while they try.  And, there’s very little you can do, except write letters and file complaints–many of which will be effectively ignored.

The unemployed and underemployed are particularly susceptible to these scams because they are overwhelmed by the emotional and financial consequences of their job loss.  The debt collection agencies know this and use their fears and worries against them, threatening to pile more misery, legal and financial woes upon them.

What can we do?

Right now, not a heck of a lot.  Sure, there are laws on the books, namely the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).  But, these laws require that the consumer, you, do much of the work and that you expend thousands on attorneys and credit monitoring services in the hopes of “punishing” debt collectors with a $1000 fine.  It’s feeble and ridiculous!

What’s worse, the laws tell you to file a police report, but police won’t take your report until the debt collection agency has harassed you or stolen money from your bank account.  The laws tell you to go on a letter-writing campaign to the collection agency, in hopes that they will just give up.  Worse yet, they make you pay to get a copy of your newly mangled credit report (except for the one free report per year), make you mail in two forms of ID to prove you have the right to freeze or put a fraud alert on your account, and none of that keeps the debt collection agency from making a million inquiries to drive down your credit score and force to you pay them.

Worst of all, a bad credit score can rob unemployed people of job opportunities and housing opportunities!

Here’s another one of those “write-your-representatives” moments.  That’s the best you’ll be able to do, at least until I finish drafting my bill.

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