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How Bankruptcy Trustees Use Lawsuits Against Collectors As Potential Assets

To be honest, I didn’t think this article was going to yield anything incredibly noteworthy, but it is the day after a holiday, and a Friday, so it’s not exactly the busiest news day of the year, so I read it all the way through. And was it worth it.

More local media outlets are visiting courthouses and using what happens there as fodder for articles. In a couple of articles about medical debt collections, the authors have spent a day or days at courthouses watching people who are being sued for unpaid debts. Those individuals have gone through a lot and their backstories can be tragic and unfortunate. That’s where I thought this article about individuals filing for bankruptcy protection in Florida was going. And, for the most part, it was. And then I got to the part where, as part of an interview to determine if an individual has any assets that can be sold to help pay off unpaid debts, the trustee asks the individual if he or she is receiving calls from debt collectors. I thought it was because the trustee wanted to get a sense of the scope of the financial problems the individual was facing. I could not have been more wrong.

If a collector violated fair debt collection practices, Hyman can sue and perhaps get a judgment with which to pay creditors. So his ears perk up when a New Port Richey man says he was hounded by a company called Portfolio Recovery.

“I know that one well,” Hyman says. “How many times a day would they call?”

“Quite a few.”

“More than two times?”

“They called even on Saturday and Sunday.”

Hyman makes a note. The man, who owes $350,000 on a loan for a failed daycare business, is poised and articulate. Hyman thinks he could be a good witness in any legal action against the debt collector.

I understand that the trustee is just doing his due diligence to determine if an individual has any assets, and if a debt collector has broken the law, then there might be something worth suing for, but this just seems like trolling for lawsuits. Maybe I read this differently than what was originally intended and maybe it’s just the skeptic in me.

At the very least, it’s something that companies in the industry should be aware of, if they are not already.

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