OUR TURN: Debt bill hurts consumers - Brownsville Herald: Local News

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OUR TURN: Debt bill hurts consumers

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Posted: Tuesday, January 16, 2018 11:58 am

Why is Rep. Gonzalez backing a bill that would shield lawyers from liability for false, deceptive, misleading, and unfair practices when collecting debts in courts?

Texans like to boast that everything is bigger here. Unfortunately, when it comes to consumer debt in collection, they are correct. A recent study by the Urban Institute, anonpartisan economic and social science research group, reported that more than 44 percent of Texans had some form of debt in collection. That’s 11 percent higher than the national average, putting Texas second only to Louisiana.

In some counties within the 15th United States House District of Texas, the number is even higher — a whopping 52 percent — 8 percentage points higher than the state average and nearly 20 points higher than the national average.

Yet, rather than provide consumers with additional protection and resources they need, a bill sponsored by Texas’ own Vicente Gonzalez, D-McAllen, House Resolution 4550, would give attorneys and law firms a free pass when they use false, misleading or abusive practices to collect debts in court.

In 2017 alone, collection attorneys filed more than 160,000 cases to collect consumer debts in justice courts across the state. This number represents a 10 percent year-over-year increase since 2013.

The vast majority of those cases were filed for debt buyers — companies whose business it is to buy delinquent debts at pennies on the dollar to collect from consumers who, for the most part, do not have resources to contest the lawsuit. Approximately 30 percent of those cases resulted in a default judgment for the collector.

The harm resulting from judgments obtained through abusive litigation practices can have long-lasting effects, making it more difficult for consumers to obtain a loan, find a job or secure insurance.

Although current law is designed to protect consumers from unfair collection practices, few resources are available to consumers once a collection case is filed. The Fair Debt Collection Practices Act, in existence since 1977, penalizes debt collectors who use false, misleading or abusive practices to collect debts. HR 4550 carves out an exception, just for attorneys, to immunize them from liability when they abuse the debt collection process in court.

The proposed bill is likely to lead to:

➤ More lawsuits as attorneys rush to litigation to immunize their conduct in an already overburdened court-system.

➤ Less informal resolution of consumer debt as lawsuits become preferred method of collection.

➤ More use of unfair litigation tactics, all now covered by the FDCPA, including: 1. Lawsuits against consumers in distant courts.

2. Lawsuits to collect zombie debt.

3. Lawsuits to collect amounts not owed.

➤ More judgments obtained through unfair means with long-lasting and devastating consequences to consumers.

We are law professors at Texas law schools with practical experience representing both consumers and collectors. We believe that lawyers occupy a privileged role in our justice system and should be held to the highest ethical and professional standards.

Accordingly, we write to express our belief that lawyers who engage in abusive litigation practices to collect consumer debt should not be immunized from liability under the FDCPA.

To quote from Chief Justice Nathan Hecht’s 2015 address to the Texas Legislature, “justice for only those who can afford it is neither justice for all nor justice at all.”

Mary Spector is professor of law at the SMU Dedman School of Law in Dallas. Genevieve Hebert Fajardo is clinical professor of law at St. Mary’s University School of Law in San Antonio. Neil L. Sobol is professor of law at the Texas A& M University School of Law in College Station.

Note: University affiliation provided for identification only. The views we express are our own and not the views of our universities.

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