Philadelphia Bankruptcy Attorney Dan Mueller of Harborstone Law Group.

If you are struggling to pay your bills, call me for a free consultation. If creditors are harassing you, I can help you put a stop to it. Even if your home is in foreclosure, it may not be too late to save it. I will listen to you and help you find the answer that best fits your situation.

Harborstone Law Group represents consumers in bankruptcy and debt negotiation matters throughout Philadelphia, Montgomery County, Delaware County, Chester County, and Bucks County in Pennsylvania.

Brazen Debt Collection Scams: Phony Cops, Fake Courtrooms & Fictitious Judges

Debt Collection Scams and BankruptcyRecently, in an amazing display of hubris, a debt collection agency in Pennsylvania set up essentially a fake legal system to intimidate debtors into paying them.  The audacious scam started with service of false but official-looking subpoenas on debtors, which required the debtors to appear at a “debt resolution center”.  When the debtors reached the address on the subpoena, they found a fake but realistic courtroom with a bench, witness stand, phony ‘judge’ in a black robe, and people dressed to resemble police officers.

The scam was so convincing that some debtors gave the company access to their checking accounts and turned over the titles to their vehicles (in some cases for debts they believed they did not owe).  Not surprisingly, the attorney general is filing charges against the company in question, Unicredit America, Inc.

As outrageous as these debt collector’s actions are, many have done much worse.  Relentless debt collectors have shown up unexpectedly at debtors’ places of employment or home, threatened to injure or kill debtors or their families, and even driven debtors to suicide.  As a Philadelphia bankruptcy lawyer, I have seen all kinds of egregious actions intended to frighten debtors into paying.  One of the more common debt collector scams is to call the debtor impersonating a police officer and threatening to arrest the debtor. Sometimes the caller will tell the debtors that the police are on the way.  Debt collectors have been known to impersonate attorneys as well.

How to Protect Yourself from Debt Collector Scams

Although there are some ethical debt collectors who do not use intimidation, lies, and harassment to collect debts, the industry is rife with depraved characters willing to do anything to get a commission.  There are a number of things you should know to protect yourself from unscrupulous debt collection agencies:

First, it is not a crime to be in debt. You cannot be arrested because you owe money to a creditor. (Failure to pay child support is an exception.)  As I noted in an earlier post, our country does not have debtors’ prisons.  Although a creditor may file a civil lawsuit against you to try to collect a debt, it cannot have you arrested or charged criminally.  For a debt collector even to imply that you could be charged with a crime is a serious violation of the law.

Second, federal and state law severely restricts what debt collectors can and cannot do. Debt collectors cannot do whatever they like to collect a debt.  In the next post, I will discuss in more detail the restrictions placed on debt collectors by the Federal Fair Debt Collection Practices Act (“FDCPA”).  In short, the FDCPA bars debt collectors from taking certain actions, such as making false statements, impersonating the police or government officials, and engaging in other unfair and harassing behavior.  In addition, the Pennsylvania Fair Credit Extension Uniformity Act (PA-FCEUA) applies similar restrictions to creditors who collect their own debts.  There are serious penalties for debt collectors who violate the federal or related Pennsylvania statutes.

Third, you do not have to talk to debt collectors. If you do not want a debt collector contacting you, you can put a stop to it.  Under the FDCPA, if you tell a debt collector in writing to stop contacting you, the debt collector must stop all contact immediately.  Although the debt collector or creditor may still file suit, it is prohibited from calling, writing, or engaging in most other collection activity.  The only exceptions are that the debt collector may still send you a letter stating (1) that it will cease contact or (2) to let you know of certain actions it is taking, such as filing a lawsuit.

Finally, bankruptcy stops collection action. If it is appropriate for your financial situation, filing for Chapter 7 or Chapter 13 bankruptcy can stop debt collectors and creditors from taking any collection action against you while your case is pending. (This is the “automatic stay” of bankruptcy).  However, there are other steps you can take to stop creditor and debt collector harassment that do not involve bankruptcy.  An attorney can tell you if a debt collector’s tactics are illegal and advise you on the best course of action.

Philadelphia Bankruptcy Attorney Dan Mueller of Harborstone Law Group, PLLC helps people in the Philadelphia area resolve their debt problems and regain control of their financial lives.  You can reach him at 215-248-0989.

4 comments to Brazen Debt Collection Scams: Phony Cops, Fake Courtrooms & Fictitious Judges

  • Mark

    I was sent, by registered mail, a “Subpoena To Attend And Testify” that orders me to appear at an address clear across the state. It orders me to appear with items on an attached notice of deposition – six months of bank statements, utility bills, sources of income and itemized list of assets, etc.. I called to inform them that I could not afford the travel and was told to send the info by mail. I pulled a credit report that showed the original debt was last paid on May 24, 2009 to the original creditor. This debt was bought by this collection agency in September of 2011. Does the statute of limitations re-start with the purchase of a collection company, or from the last payment to the original creditor? I have acknowledged the subpoena; how do I proceed?

    • Mark,
      Although this could be a scam, it seems more likely that a creditor has sued you. It is further possible that the creditor has already obtained a judgment against you and is conducting post-judgment discovery. The purpose of such discovery is to find assets, such as a bank account, against which the creditor can collect the judgment. You should speak to an attorney who handles debtor defense immediately and before taking any further action. (If you have significant debt problems overall, you may wish to speak to a bankruptcy attorney as well.) Failure to respond to discovery can ultimately cause the court to find you in contempt.

      An attorney can help you determine if the documents you received are legitimate, advise you on protecting your assets, and review your options. Moreover, you may still have defenses to this action. For example, if you were not properly served with the original lawsuit, it may be possible to reopen the judgment and raise any defenses that you would have been able to raise at the time the case was filed (such as the Pennsylvania Statute of Limitation and improper venue).

      Keep in mind that the time to raise the Statute of Limitations defense is in response to the original lawsuit. Therefore, if you were properly served with the original lawsuit and did not raise that defense at the time, you may have waived it.

  • Got a call last week of Dec 2012 about a debt my husband owed from 2000 for … 192 bucks. Seems like a scam … Ran his credit several times since and never saw it on there. How should we handle it.

    • Karen,

      I cannot give you legal advice in this forum. However, I am seeing a dramatic increase in debt collection scams involving non-existent debts. Fortunately, there are protections from this type of action. A debtor has a right to ask for validation of the alleged debt. In other words, the collector must, upon written request, supply proof that the debt is legitimate and that the debt collector or the collector’s client owns the debt. (I plan to get into this area a bit more in an upcoming post.) If the debt is not legitimate, the collector will often go on the the next victim. If the debt is legitimate, but the collector cannot provide such proof, then you have a solid defense if the collector sues you.

      If the debt is legitimate but beyond the Statute of Limitations, it is often enough simply to inform the creditor that you know that the Statute has run out. However,if you are sued, you must raise the Statute of Limitations in your response to the suit. You may wish to discuss the specifics of your case with an attorney.