By Karen Oakes, Southern Oregon Bankruptcy Attorney
Folks frequently come in to talk about bankruptcy and are very concerned that an arrest warrant may be issued as they haven’t paid their debts — either before filing bankruptcy or even after filing for bankruptcy. They have heard about phone calls or emails from debt collectors (or have even gotten those kinds of threats) where the debt collector, usually one with a heavy accent, threatens immediate arrest for non-payment of a debt. This debt is usually an old payday loan or small debt that the debtor may have long forgotten. These phone calls are intimidating and threatening. However, the arrest is unlikely in most circumstances says Jonathan Ginsberg, Atlanta bankruptcy attorney.
Most of these debt collectors are located outside the United States, frequently in India, and can be difficult to locate. Recently, the Federal Trade Commission announced a successful shutdown of one set of phony debt collectors as reported by Claudia Buck in a March 5, 2012 article in the Sacramento Bee. The FTC announced the shut down of American Credit Crunchers and Ebeeze after filing a complaint against the companies in federal court and the assets of those companies frozen. A settlement with the companies was reached, but in the last four months of 2010, the debt collectors received more than $5 million from folks who probably didn’t owe any of the debt or the debt was not collectible by those debt collectors as it belonged to another company. The tactics were so horrific that folks paid just to make the calls stop. The FTC reports that over the last two years, consumers have filed more than 4,000 complaints with the FTC and state attorneys general about fraudulent debt collection calls.
The FTC recommends doing the research before paying any debt collector.
The Bankruptcy Code provides for an automatic stay under 11 USC 362 which forbids the collection or the attempt to collect a debt. There are very few exceptions to this automatic stay (priority debt such as family support or recent taxes are usually excepted as explained by Cathy Moran, California bankruptcy attorney). Most debts are covered by the stay and the debtor is protected from such collection attempts. However, these debt collectors don’t care about the automatic stay–they just want their money and will use any tactic that may possibly work. And fear usually works.
Because these debt collectors violate federal laws, the bankruptcy law doesn’t scare them. Each week, I get reports from my bankruptcy clients of heavily accented debt collectors threatening them for non-payment of debts. If you get one of these calls or emails, report it to your bankruptcy attorney so that the attorney can attempt to locate the company in order to either file a lawsuit or threaten a lawsuit if the behavior doesn’t stop. One of my colleagues offered an additional creative solution that I provide to my clients. He tells his clients to say the following when the call is coming from India:
“ I am prepared to have you criminally charged in India for violating the National Security Act and the Gangster Act. My attorney is prepared to speak with Inspector General Singh and urge him to start a prosecution against you”.
The National Security Act and the Gangster Act are India’s version of anti-racketeering statutes. The above statements should make the phony debt collector stop calling.
Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg, and the Tampa Bay area.