Uncashed Settlement Checks Provide Windfall For Legal Aid Group

A legal aid group in New York that helps individuals being sued by debt collectors is going to be receiving a check for $170,000 as a result of the funds left over in a class-action settlement.

The Civil Legal Advice and Resource Office, or Claro as it is more commonly known as, was designated as the recipient of the money, which is what remains following a $59 million settlement in a lawsuit back in 2015 against Leucadia National Corp. and Mel S. Harris & Associates that alleged the defendants obtained default judgments by filing lawsuits against individuals that falsely claimed the individuals had been properly served with notifications of the legal action.

The $170,000 is what is remaining from the settlement as a result of some individuals who were part of the class-action settlement who did not cash their checks.

Claro helped 6,000 individuals in New York City who were sued by debt collectors last year, according to a published report.

“This award provides a tremendous boost to Claro, and will enable us finally to upgrade our technology — which will improve our efficiency and effectiveness,” said Dora Galacatos, executive director of Fordham Law School’s Feerick Center for Social Justice, which helps operate Claro programs in the Bronx, Manhattan and Staten Island, according to the report.

The report goes on to say that consumer advocates and legal aid lawyers are seeing an increase in the number of collection lawsuits being filed against individuals for unpaid debts. One legal director went as far as to call the uptick “disturbing,” saying that collectors are engaging in “the same racially disparate patterns” that led to the filing of the suit against Leucadia and Harris & Associates back in 2012.