Huffington Post:
Throughout the financial crisis and deepening recession, debt collectors have been harassing Americans, often under false pretenses, in order to scare up a quick buck. Frivolous debt-collection lawsuits have now become so pernicious and prevalent that they're drowning the court system, leading the Federal Trade Commission to call Monday for new state legislation that would staunch the rising tide of baseless debt claims.
Given the current balance of power in debt-collection cases, it's easy to scare people. As The New York Times outlines, some firms with a skeleton crew of lawyers now routinely file tens of thousands of debt-collection lawsuits a year via a largely automated process.
These suits are generally filed merely on the basis of Social Security number, address and date of birth, but this can be enough to freeze the defendants' bank accounts -- default judgment are common given that defendants' address information is often outdated or erroneous, and so the complaint doesn't reach them until after their court date -- and they can then be more easily pressured into paying something, anything, to make the problem go away.
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