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Federal Court Data Show Big Jump in Consumer Lending Lawsuits in 2009

March 26, 2010

As San Bernardino County unfair debt collection attorneys, we were not terribly surprised to read that consumer lending lawsuits skyrocketed in 2009. According to a March 16 article by the Associated Press, new data from the federal court system shows a 53 percent jump in lawsuits filed under two federal laws that protect consumers from overreaching by debt collectors and creditors. The Administrative Office of the U.S. Courts also said Truth in Lending Act lawsuits concerning foreclosures tripled in 2009, to a total of 1,517. This is likely a fraction of all foreclosure-related lawsuits, however, because most foreclosure cases are contested in state court. The office also noted that bankruptcies increased 35 percent in fiscal 2009.

The two federal consumer protection laws with the biggest jump were the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. The FDCPA limits how debt collectors may deal with debtors, by placing restrictions on certain behaviors and requiring certain other behaviors. The FCRA requires credit reporting agencies and the businesses that report to them to maintain accurate records, respect certain privacy rules and respond in a timely manner to disputes. Combined, FDCPA and FCRA lawsuits increased from 4,239 in fiscal 2008 to 6,463 in fiscal 2009, the courts said. However, the debt-collection industry publication Collections and Credit Risk said this may be a drastic undercount, due in part to the way that federal databases handle cases. It said private research found 8,287 FDCPA cases alone in calendar year 2009.

Either way, the publication noted, this is a dramatic increase in consumer credit protection lawsuits. As Azusa debt collection harassment lawyers, we think the increase has everything to do with the down economy. When unemployment is high and the economy is bad, some people will inevitably not be able to pay their debts. This is a problem for debt collectors, who after all rely on consumers repaying their debts to make a living. To keep the payments coming, some debt collectors are willing to do whatever it takes, including breaking the law. Media reports throughout the last year have talked about debt collectors using lies, threats of jail or physical violence, obscene language and other tactics to scare debtors into paying. Others simply refused to believe disputes to the debt from people who are truly victims of mistaken identity.

Howard Law PC represents people who are victims of this type of harassing and illegal behavior by collection agencies. Consumers in California are protected not only by the federal FDCPA, but also a state version, the Rosenthal FDCPA. These laws ban harassing or unfair tactics, including constant phone calls; calls to people other than the debtor or a spouse; calls at work after being notified that the employer won't allow it; threats of action not legally possible or not contemplated; and much more. They also require debt collectors to verify the debt on request. However, our Fullerton illegal debt collection attorneys routinely hear from victims of debt collectors who break these rules to make a dollar. We help victims sue debt collectors for their illegal behavior, allowing them to stop the harassment and recover up to $1,000 in damages, plus attorney fees and repayment of any actual damages.

If you're being harassed or abused by debt collectors and you're ready to fight back, you should call Howard Law for help. To set up a free, confidential consultation, please contact us through the Internet or call us toll-free at 1-800-872-5925.