New York Fines Two Firms Over Debt Collections

May 8, 2014
Wall Street Journal 
debt settlement news
Debt-buying firms Portfolio Recovery Associates Inc. and Sherman Financial Group LLC have agreed to end litigation against borrowers and pay fines under separate settlements with New York Attorney General Eric Schneiderman. The companies reportedly violated state law when they sought court judgments against consumers after the statute of limitations on the claims had expired.

Schneiderman alleged that the firms' actions resulted in about 3,000 improper court judgments against New York consumers. Neither company admitted to wrongdoing, but they agreed to ask courts to reverse judgments of more than $16 million against borrowers in the state and to stop collection efforts on those judgments. They also pledged to improve their collection practices, including by disclosing to consumers that they will not pursue collections suits after the statute of limitations has lapsed and providing details about the debt in collections lawsuits. Portfolio Recovery Associates will pay $300,000 and Sherman Financial will pay $175,000 in civil fines and other costs.

The settlements are part of a broader crackdown on debt collection practices. Last year, the Consumer Financial Protection Bureau proposed future rules for the industry. These would address issues such as intimidating collection tactics, errors in calculating how much money is owed, and debt recovery that targets the wrong people. Officials also want to make sure that consumers have sufficient information about how much they owe and who can collect it.

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