The Pandemic Is Bad for the Country, but Good for Debt Collectors

a couple reviewing their bank statements after a debt collector garnishes their wages

Americans have been living with the pandemic for approximately eight months now, and the country has been devastated by it. Over 200,000 people have died after contracting the virus, businesses have had to shutter their doors, and people have fallen into an immense amount of debt. The news is grim for citizens but for debt collectors, times are good. While the pandemic may have temporarily slowed calls from debt collectors, they are now becoming aggressive once again. If you are being harassed by debt collectors or are facing legal action, a Florida debt defense lawyer can help.

Profits for Debt Collectors Soar

Encore Capital, the biggest buyer of debt in the country, announced in August that they had doubled its prior record for earnings in a single quarter. That surprised many Americans, as the CARES Act provided hundreds of billions of dollars worth in stimulus checks and unemployment insurance to residents in the country. Foreclosure, evictions, and student loan payments were also deferred or temporarily stopped.

Unfortunately, the CARES Act had one big oversight: it did not protect borrowers from older credit card debt, which is what Encore Capital focuses on. Additionally, the pandemic forced millions of households to cut their spending. As some of that income became available, more households used it to pay back debt collectors. After Encore’s biggest quarter, experts predicted the company would make more than $200 million in profits and stockholders would earn 40 percent more than the previous year. Portfolio Recovery, another one of the country’s biggest debt collectors, is projected to have the same type of growth.

It is interesting to note that Encore has been sued by the Consumer Financial Protection Bureau for breaking the terms of a consent agreement in 2015. The company was charged with using false statements to pressure consumers and filing lawsuits at a remarkable pace use robe-signed court documents, which is against the law. Even that lawsuit did not deter investors from making record projections for the company.

Court Closures and the Pandemic

If there was any negative news for debt collectors during the pandemic, particularly in the early days of it, it was the fact that local courts across the country temporarily shuttered. Debt collectors could no longer file the lawsuits necessary to recover their debt, which is one of their main sources of revenue.

That worry is now over for debt collectors. In Indiana, Encore filed over 1,000 lawsuits against debtors in August alone, and more than 2,000 lawsuits were filed by the company in Atlanta. Other debt collectors have been taking the same types of legal actions, with Portfolio Recovery filing more than 3,000 lawsuits in Chicago throughout the month of July. These are just two of the biggest stories surrounding the lawsuits debt collectors have filed.

The companies have said in different statements that they try to avoid suing and it is only a last resort used. Unfortunately, that is not necessarily true and debt collectors are typically overzealous when attempting to collect on unpaid debt. While an executive from Encore stated that they have tried to help consumers during this extremely difficult time and have temporarily stopped seeking seizures of bank accounts, they continue on with wage garnishments.

Courts have started opening. Courts reopening have clearly allowed debt collectors to file an increasing amount of lawsuits, but the fact that the courts were closed for several months on end also makes it more difficult for consumers, and even their attorneys.

The pandemic has caused confusion all around the country, including in the court system. During the time their doors were shuttered, the backlog of the courts only continued to pile up. Even when a case can be heard in a courtroom, there is not a clear path to proceed as there once was. Some court proceedings are being heard virtually, while others are not. Capacity sizes are also changing, which is affecting how many cases can be heard over a certain period of time, and other defendants are asking to call in their arguments, particularly if they have a pre-existing condition that places them at greater risk for complications if they contract the virus.

The only clear answer in courtrooms these days is that there is no clear answer. That, combined with the significant amount of debt collection lawsuits being filed, is only adding to the confusion.

Populations Disproportionately Affected

The fact that certain populations have been disproportionately affected during the pandemic has made headlines since the health crisis began. It turns out that this holds true for debt collection lawsuits as well.

Workers that earn an income under $40,000 annually are disproportionately affected by debt-collection lawsuits, as are African American communities. Even worse, lawsuits against these groups typically result in judgments at higher rates, meaning these individuals often have their wages garnished or face a seizure of their bank account. Coupled with a pandemic that is already affecting these communities at disproportionate rates, it is clear to see the severity of the struggle these individuals are dealing with.

Studies in previous years have shown that workers have approximately four million dollars worth of wages garnished every year. In Florida, debt collectors can garnish up to 25 percent of a person’s disposable income, or the amount by which a person’s disposable income is greater than 30 times the federal minimum wage, whichever is less. During the time of the pandemic, when either of these amounts can greatly help debtors, a garnishment of this size can be devastating.

Are Debt Collectors Calling? Our Debt Defense Lawyers in Fort Lauderdale Can Help

The pandemic is causing difficult times for everyone, and debt collectors are not making it any better. If you are being harassed by a debt collector or are facing legal action, our debt defense attorneys in Fort Lauderdale, FL are here to help. At Loan Lawyers, we will prepare a solid defense for your case and give you the best chance of success. Call us today at (954) 807-1361 or contact us online to schedule a free consultation so you can learn more about your options.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation and find out more about our money-back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.