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Thousands of Debt Collection Lawsuits Dismissed by Collection Agency Bankruptcy

January 22, 2010

As Riverside unfair debt collection attorneys, we were interested to read about the fallout from the bankruptcy of one of the largest debt collection law firms in the United States. As the Baltimore Sun reported Jan. 16, Maryland-based Mann Bracken was ordered by state regulators to cease operations earlier that week. The order was not entirely necessary; the law firm was already in financial trouble because an affiliated company that handles debt collection, Axiant, had filed for bankruptcy in November. The arrangement tied Mann Bracken's fortunes to an arbitration company called the National Arbitration Forum. That company was sued for consumer fraud by Minnesota's attorney general in 2009.

In fact, the Sun reported that the law firm's financial trouble may have started with the Minnesota lawsuit. The National Arbitration Forum was accused of conflicts of interest that biased its judgments in favor of the credit card companies that paid it. As part of the settlement, it agreed to stop handling consumer arbitrations. Axiant filed for bankruptcy four months later, and Mann Bracken blamed its financial troubles on that move. The firm was facing separate lawsuits and regulatory action accusing it of violating the Fair Debt Collection Practices Act and similar state laws. The firm's closure may dismiss those lawsuits, but it will also end tends of thousands of lawsuits filed by Mann Bracken against consumers. Experts told the newspaper that this was a victory for consumers, who may otherwise have ended up with legal judgments against them before they realized they had been sued.

Our Costa Mesa unfair debt collection lawyers don't exactly enjoy seeing another law firm fail -- but in this case, it may benefit consumers. As the Sun noted, Mann Bracken was under investigation, the target of multiple lawsuits and had a Better Business Bureau rating of F because of numerous accusations of unfair business practices. Closing the business will give valuable time to people who were being sued by the company. In any lawsuit, the person suing must notify the defendant. But shady debt collectors frequently fail to give notice, or find ways to ensure that notice isn't served quickly, because they will win automatically if the consumer doesn't appear and fight the case. This creates a default judgment that the unscrupulous debt collector may use to garnish wages or take property. Many victims don't realize this happened until it's too late to fight back.

If this happened to you, you may still be able to overturn the judgment if you can prove that the debt collector intentionally failed to serve notice. Howard Law PC represents victims of this and many other unfair debt collection practices. Our San Diego County FDCPA attorneys help clients overturn unfair judgments against them and enforce federal and California laws protecting them from abusive and unfair behavior by collection agencies. That includes agencies that threaten violence, arrest or other legally impossible actions; tell neighbors, co-workers and others about the debt; use obscene language; or call so constantly that it amounts to harassment. Under the FDCPA, victims of these and other illegal behaviors may sue for up to $1,000 in damages, as well as attorney fees and court costs.

Howard Law offers free, confidential consultations to all potential clients. If you'd like to learn more, please don't hesitate to call us for help. You can reach us toll-free at 1-800-872-5925 or contact us online.