Debt buyers drain over $7 million out of Maine consumers

The Center for Responsible Lending reports that, because of weak protections in Maine law, Maine consumers will pay $7.3 million to just one out-of-state company, Encore Capital, on debt they may not even owe.

Speculators purchase old debt from creditors like auto financing or credit card companies. These “debt buyers” then sue the consumer to recoup their costs. This is a legitimate business practice. But, the debt buyers’ industry today is ripe with abuse.

Because the debt is old, the debt buyer doesn’t even know for sure if the consumer still owes the debt, if the stated amount owed is correct, or even if they are suing the right person. And the unscrupulous ones don’t bother to find out.

What’s more, some debt buyers enlist the long arm of the law to intimidate borrowers, or worse, to convince courts to garnish their wages or place liens on their property.

Debt buyer 5-1-2015websiteThe practice is even uglier when you look at the volume of law suits filed. The debt buyers churn out lawsuits like Skippy™ churns out peanut butter. The Consumer Financial Protection Bureau labeled one debt collector in Georgia with a team of only eight attorneys a lawsuit “factory” after it filed 350,000 suits against consumers between 2009 and 2013. In New York State alone, Encore Capital and its subsidiaries, filed more than 239,000 lawsuits from 2007 to 2012.

Encore Capital operates in Maine too. They currently claim to own the debt of 91,000 Mainersthrough their subsidiaries such as Midland Funding and Midland Credit Management. The Center for Responsible Lending calculates that Encore will extract nearly $1.5 million from these Mainers by garnishing their wages and collect an estimated $7.3 million total through litigation.

MECEP recently testified on a bill before the Maine legislature that would put consumer protections into state law to curb abusive, dishonest debt buyer practices. We think Maine law should treat our citizens with justice and fairness and protect them from exploitation and abuse. There is no excuse for the legislature not to act now.

No Mainer should suffer harassment, incur legal expenses, and certainly not have his or her wages garnished or property taken for debt they don’t owe.