We all know this is happening. Dishonest creditors that prey on the general public. Bankruptcy is frequently the end result.
Dishonest creditors are rampant. They have always been around, but now many are trying extra hard to make up for their “lost profits” due to the economy and will pull the most despicable tricks on good and trusting people. To be sure, many, if not most, creditors are honest people and companies. But, there is an enormous percentage of creditors that play with words and manipulate the good nature of most people to their devious advantage. Believe me, it’s absolutely out of control. I know because I see it every day as a bankruptcy attorney. The result for some people is that they end up filing bankruptcy to stop the lawsuits and impossible situations that they find themselves in.
We all have experienced creditors who treat us horribly. When the customer makes a minor mistake or has a misunderstanding, the customer gets hit with a fee or penalty and treated rudely. But if the creditor does something improper or something happens on their end that is wrong, good luck getting any justice. It’s just “company policy” we are told. You are lucky if you even get a “we are sorry” over the phone.
You won’t believe what happened to this client of mine……
I recently had to deal with a situation that is just unbelievable. My client signed a contract with a large company for a monthly service. The contract was very specific and stated that the monthly payment was $300 a month for 12 months. However, when the bill started to come, it stated that the amount owed was $500. The client calls and talks to a customer service representative. The representative takes a look and says that it’s a “computer glitch” and that the problem will resolve itself in a few billing cycles. Well, to make a very long story shorter, this problem continues on for over a year! But, the customer keeps on paying $300 a month as required by the contract.
Guess what happens at the end of the contract? Yep, you got it. The creditor sends the “delinquent account” to a collection agency! What for? Well, according to the company computer, the client didn’t pay the extra $200 a month for a whole year and now owes $2,400 plus late fees and interest! Unbelievable!
Oh, it gets much worse. I can’t make this stuff up. So, the client is naturally upset but has his anger in check…for now. He contacts the collection agency by fax (keeps the fax receipt, by the way) and transmits the original contract with the creditor and also proves that every single payment was made under the contract. What response does the client get? A rude, indignant and dismissive attitude by the collection agent. They couldn’t possibly be wrong. They represent the creditor. You know, the good guys, the guys that are always right. You, the client, are the bad guy, the deadbeat, the one that owes a delinquent bill.
“But I have proof that I only owed $300 a month. I sent you a copy of the contract and proof of every payment. What do you have to say about that?”
The collection agency persists in its arrogant attitude but has to concede to the facts. The truth is that the creditor made a mistake and refused, through gross negligence, to fix its problem. It went on and on for over a year. The client contacted the creditor at least 7 times and many of those communications were in writing!
Ok, so it’s over, right? I mean, the client proved that he paid in full. That’s it. We’re done!
Not so fast, says the collection agency. You owe the creditor late fees and interest! What the??? No, this can’t be real or happening. This is a joke, right?
I’m not kidding you. The above story ACTUALLY HAPPENED! This creditor is so corrupt and shameless that it is incapable of admitting any wrong or of taking any steps to correct its mistakes, behavior or attitude. The only difference in this case was that the client wasn’t weak and knew his legal rights. This client got justifiably angry. This client fought back. So what happened?
The client properly pointed out that the creditor (and perhaps the collection agency) was committing mail fraud because a fraudulent bill was continually being sent, using the U.S. Postal Service, for a debt that was obviously not owed. In fact, the creditor admitted in writing that it was not owed early on and repeatedly throughout the year. In other words, it was deliberately trying to collect for a debt that didn’t exist! That’s fraud. And using the U.S. Postal Service to perpetrate a fraud is mail fraud.
But wait, there’s more! This creditor was so corrupt that when it agreed that the bill was “settled,” as they put it, that it still wanted the client to admit, in writing, that another $1,300 was still technically “owed,” apparently due to interest and late fees. But, out of its generous heart, the creditor would accept, as a “full settlement,” the amount of what has already been paid. Huh?
“You want me to agree, in writing, that I really owe the original contract amount ($3,600) PLUS another $1,300 for late fees and penalties……..but you’ll accept $3,600 as full payment?” Isn’t that tax fraud?
Why, yes it is. It is an intent to commit tax fraud because the creditor was planning on “writing off” a loss of $1,300 on their corporate tax return. Yep. That’s right. In fact, they were so shameless and stupid about it (criminals usually are both), that they actually requested the social security number of the client so that they could send him a 1099C to cover their tracks!!!! Unreal.
In the end, the client would have no part of this tax fraud scheme. After significant pressure, the creditor and collection agency caved and accepted the fact that the client wasn’t admitting to owing anything, whatsoever. And, no social security number was provided.
Believe me……the above scenario is happening every day in different ways. But, this is sickening and disgusting behavior. Again, most creditors are decent and honest, but way, way too many are not. Be careful!