Debt Collection and Foreclosure Cases
All four legal services programs received more requests for help from consumers with debt collection problems in 2010 than in prior years. As the unemployment rate continued to rise and many workers lost their jobs or had their work hours reduced, the number of cases involving repossessions, debt collection issues, and wage garnishments increased.
LSEM client: “L” is a 74 year old single woman who received a letter from collection attorneys indicating that she had been sued for $6,700 by a credit card company for defaulting on credit card debt. The envelope contained a filled out consent judgment. The letter demanded that “L” sign the proposed consent judgment and mail it back to the law office. “L” was given a matter of days to do so or the letter informed her she would be hauled into court. “L” then contacted our office fearing that she might have to go to jail for not paying this debt. Since “L” had not yet been served with the lawsuit, she had no idea what she was consenting to by signing the consent judgment. This appeared to be a collection trick and LSEM filed a counterclaim for violations of the Fair Debt Collection Practices Act. The case was quickly settled with “L” being completely released from the debt and receiving a payment of $2,000. More importantly, the collection attorney informed us that he was going to cease sending the letter and proposed consent judgment to consumers.
The foreclosure crisis continued unabated in 2010, particularly in St. Louis and Kansas City. The programs negotiated complicated loan modifications with lenders, and LSEM and LAWMO also assisted tenants who wanted to remain in their homes and who were current in paying their rent when lenders foreclosed on the properties. The programs assisted 1,779 clients with consumer debt problems in 2010 and counseled 632 families who were threatened with foreclosure.