As consumers are tempted into Black Friday impulse spending that can rack up debt, it’s important to know just how far some companies are willing to go to collect and how one woman recently turned the tables on a collector who ruthlessly harassed her.
The ABC television show 20/20 this week focused on a debt collector who uses the name “John Anderson” when making calls who now owes Jessica Burke of California more than just an apology after she won a lawsuit.
The debt collector now owes Ms. Burke over $33,000 after she sued him and the company that hired him for harassment and won in court.
Burke said Anderson called her several times a day over $350 in late payments for a used car she bought in Arizona in 2007, according to the ABC show.
Anderson, whose real name and employer ABC News's “20/20” agreed not to divulge, admitted on the show that he made disparaging remarks about Ms. Burke’s weight during his phone calls to collect the debt.
“She said, ‘I have a refund coming.’ I said, ‘A tax refund or a Jenny Craig refund?’ ... meaning that she was overweight,” Anderson told 20/20. “It’s probably not the proper thing to do.”
Given Burke’s experience over an eight-year-old debt, some may not think the robo-calls some collection agencies and mortgage loan servicers assign to relentlessly ring their home and cell phones aren’t so bad.
However, The Better Business Bureau offers a general guide to knowing your rights about just how far any kind of debt collector – from credit card to mortgage loan servicers – can go, and when it might be time to call in a lawyer.
The conduct of debt collectors is governed by the Federal Trade Commission’s Fair Debt Collection Practices Act.
Those who are shocked at the idea of being harassed from 2007-2014 over a $350 debt (as Burke experienced) may be further surprised at the news that mortgage loan companies and their agents can legally go after homeowners for decades after their homes have been lost to foreclosure.
People who have already lost their homes to foreclosure can still be legally hounded for years afterwards by lenders (mortgage companies like Bank of America, Fannie Mae and Freddie Mac) and their debt collection services via a legal caveat known as a "deficiency judgment."
When a lender forecloses on a mortgage, the total debt owed by the borrowers to the lender may be greater than the foreclosure short sale price. The difference between the sale price from foreclosure and the total debt is called a deficiency.
Therefore if the total debt owed on a home is $200,000, but the home only sells for $150,000 at the foreclosure sale, the homeowner is still on the hook for the $50,000 difference or “deficiency.” In some states, the lender can seek a personal judgment against the debtor to recover the deficiency.
That’s where the debt collection process can get ugly – freezing bank accounts, garnishing wages, seizing assets and employing hard-core debt collectors that use robo-calls and sometimes collectors like Mr. Anderson.
Business Insider reports that in 2014 the greatest complaints about collection practices and harassment centered around mortgage companies and the companies used to service those loans.
“In all, 27% of the Consumer Financial Protection Bureau's 36,400 mortgage-related complaints were directed at just one bank – Bank of America. Bank of America received almost twice as many total complaints as Wells Fargo (the nation's largest mortgage lender), even as Bank of America originated just one-sixth the number of new mortgages that Wells Fargo did in the first two quarters of 2012,” Business Insider reports.
Burke’s case was extreme since ABC reports that even after she turned over the car to the finance company and repaid her debt the collector continued to call her.
In the end, the daily harassment led Burke to hire an attorney and sue the debt collector and his agency for violating federal law by employing abusive collection tactics.
“That person made my life hell for a little bit,” Burke told 20/20. “I was terrified for weeks.”
According to 20/20, Anderson never appeared in court. On June 29, 2009, the federal judge awarded Burke over $33,000, but Anderson said he won’t pay.