Some Debtors Are Getting Payback

Some debtors getting payback
Consumers winning lawsuits against collectors not following the law
By MARY FLOOD
Copyright 2009 Houston Chronicle
April 15, 2009, 6:02PM


Got debt? If you’re being harassed by collectors, you may also have a good lawsuit.

Lawyers in the debt business say that as collectors get desperate in these tough times, consumers are increasingly fighting back by suing those who use illegal tactics.

In Houston, U.S. District Court statistics show lawsuits filed against debt collectors under a federal consumer protection law are up 60 percent the first quarter of this year, compared with the same time last year.

“This is definitely increasing in popularity,” said Daniel Ciment, a Houston lawyer who once owned a collection agency and now sues debt collectors. “It’s most likely because debt collectors are hurting.”

Houston lawyer Dana Karni, who teaches consumer law, said the law essentially allows consumers to get their own private attorney general.“A lot of consumers don’t understand that they can go after the debt collectors and they can get paid for their pain and suffering and their attorneys fees can be paid,” Karni said.

Karni sued for Evelyn Turner when debt collectors relentlessly called her while her husband was in Iraq, threatening the Huntsville woman would lose her freedom and her children if she didn’t cover a debt she’d long ago arranged to be paid with a home equity loan.

“They said I’d go to jail, lose my family, my home, never see my children again. It was really brutal. It was horrifying,” said Turner, who husband is a civilian worker overseas. “I didn’t know I had the right to make it stop. After bawling my eyes out every day, I broke down and one of the ladies at the office told me to get an attorney.”

Turner’s title company hadn’t paid the debt as promised. Turner’s happy now with the $17,500 she got under the federal Fair Debt Collection Practices Act. Karni got more than $50,000 in legal fees and costs reimbursed.

Karni said there aren’t many lawyers doing this, but some can make a living suing collectors.

“Anyone who thinks there isn’t collection abuse is an idiot,” said Manny Newburger, an Austin-based lawyer who defends debt collectors nationwide. But Newburger believes it’s a few bad actors in a legitimate industry.

“As long as you have human beings doing this, people are going to screw up,” Newburger said.

Those screw ups often involve breaking laws about when to call, how often to call, when to stop calling at work, who can’t be told about debt and about making false claims such as threatening jail time, the forcible taking of a person’s home, or wage garnishment.

Matthew Probus, a Sugar Land lawyer, filed a lawsuit in March for a Houston woman headed to the hospital to visit her prematurely born daughter when debt collectors started harassing her over a $200 debt she owed Target.

“She got five calls in 30 minutes. It was sad and outrageous,” said Probus, who used to be the lawyer for a collection agency and switched sides.

He said folks can sue under state or federal law, though he leans toward the federal law. A basic case may get the $1,000 maximum under federal law but, he said, people who have really been bothered with dozens of daily calls or stress that results in hospitalization, can get more.

Newburger said it should not be forgotten that most of those called actually do owe money and sometimes the debtors lie to or use foul language with the collectors.

“Bottom line: people who owe money ought to pay their bills, people who collect debt ought to follow the law and consumers have the right to expect not to be abused,” he said.

The lawyers said Texas is especially famous for two multi-million dollar cases under the laws to curb debt collectors.

A jury awarded an El Paso couple $11 million, though an appeal’s court cut that down to $1 million in 1998. Trying to get $2,700 owed on a VISA card bill, collectors swore at the couple, harassed them at work, said they’d put out a contract to kill one of the debtors and appeared to have called a bomb threat to a debtor’s workplace.

In another legendary Texas case, an elderly woman with anxiety disorders was awarded $15 million by a Duval County jury after being harangued about a relative’s debt and believing threats she’d be jailed so she surrendered to confused authorities.

mary.flood@chron.com