NY Times Editorial Regarding “Sewer Service”

NY Times Editorial Regarding “Sewer Service”

Today, the New York Times published an editorial regarding the numerous examples of debt collectors abusing the court system. The editorial board of the New York Times referenced a $59 million class action settlement of a lawsuit brought as a result of “sewer service” of lawsuits by debt collectors. “Sewer service” happens  when a debt collector fails to serve a notice of lawsuit and then files a false affidavit claiming the notice has been properly served on the consumer. When the debtor doesn’t show up in court, the collector can then apply for, and almost always wins, a default judgment, allowing the debt collector to garnish wages and paychecks without further notice. Victims of sewer service often first learn they are being targeted when property is seized. A default judgment on its own can follow someone for decades, making it difficult for that person to rent an apartment, open a bank account or get a job.

Sewer Service Runs Rampant

This is not a new phenomenon. In April, 2008, Attorney General Andrew M. Cuomo arrested the owner of a Long Island process-serving company, American Legal Process, for engaging in the practice.  However, in the most recent lawsuit settlement, approximately 115,000 default judgments will be vacated due to the fraud perpetuated on the court through false affidavits of service. In addition, 75,000 people are expected to receive monetary compensation of up to $59 million total.

Debt Collectors Sue on Expired Debt

The editorial also describes a multi-year investigation into the debt collection industry by the New York State Attorney General’s office. During that investigation, the Attorney General’s office found that companies buy consumer credit card debt for “pennies on the dollar” often trying to pursue debt that is outside of the statute limitations – – too old for it to be legally collected.  A nonprofit news organization, ProPublica, discovered that that debt buyer suits were disproportionately found in minority communities.

Model Debt Collector Law Proposed Regarding Garnishment

A policy and advocacy group, NCLC, has put together a model law (link downloads model law) for states regarding garnishment setting up certain standards such as allowing a debtor to preserve at least $1,200 in her bank to pay rent utilities and transportation to work. However, most states, including Oklahoma, have far from these types of realistic protections from garnishment. Instead, most state laws are woefully outdated, including Oklahoma’s protections, which provides garnishment exemption for five cows, 100 chickens, 20 sheep, 10 hogs, 2 horses (along with bridles and saddles), and feed to last one year.

In Oklahoma, just like Alabama, Kentucky, Delaware in Michigan, a debt collector can seize virtually everything owned by a debtor. To make matters worse, many of these debt collectors will refuse to provide the return of garnished funds even with provided with documentation showing that the funds were from a legally exempt source such Social Security benefits or veterans benefits.

If you have been the victim of illegal debt collection practices or sewer service, we want to hear from you.  Please use the contact form to the right to get in touch with consumer protection attorneys from Paramount Law for a free consultation.


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