United States Supreme Court Justice Sonia Sotomayor recently said she had “a great deal of trouble” with a business model involving the purchase of consumer debt. Sotomayor and the rest of the court heard a case this week revolving around a firm that purchases consumer debt for pennies on the dollar and then tries to recover payments from people in bankruptcy — even though it is barred by state laws from doing so.
The debt collection company is Midland Funding; a firm that buys up debt that is not legally recoverable — and then goes after it anyway.
Here in Pennsylvania, the statute of limitations on debt is four years.
Midland Funding simply ignores similar statutes in state bankruptcy laws around the nation as it pursues payments on old debts. During a recent hearing, Justice Sotomayor asked the company’s attorney, “Apparently, you collect on millions of dollars of these debts. So is that what you do?”
Midland claims it “makes every effort not to purchase time-barred debt,” though it admits that it sometimes fails in those efforts.
Justice Kagan said that if the case is decided in Midland’s favor, debtors will be paying “on things that they shouldn’t be paying on.”
We do not know how the court will rule on the matter before it, but we do know that debt collectors are constantly in search of ways to wring payments out of consumers, even though in some cases a statute of limitations applies to the debt. In all cases, collectors are forbidden by law from engaging in abusive debt collection.
Here in Philadelphia, you can contact Bensley Law Offices to speak with a consumer protection attorney experienced in stopping abusive collection practices.