New York cracks down on Portfolio Recovery Associates
by Carol Thompson
The New York State Attorney General has placed debt collector Portfolio Recovery Associates, LLC under strict guidelines when attempting to collect debts from state residents.
The company, located in Norfolk, VA, has been the subject of thousands of consumer complaints nationwide and has filed 66,000 debt collection actions in New York courts alone between 2007 and 2012.
Among the thousands of judgments filed, Portfolio Recovery Associates has filed over 2,000 judgments on time-barred actions between Dec. 2008 and April 2012 and in some instances continued to collect on those judgments despite being time-barred.
Under the assurance the state made with Portfolio Recovery Associates, the company can no longer commence or cause to be commenced any lawsuit against a time-barred debt. New York’s statute of limitation’s is six years, however, some contracts, particularly credit card agreements, state that their place of incorporation serves as the location. Many companies incorporate in Delaware, which time-bars debts after three years.
The settlement requires Portfolio Recovery Associates to vacate the improper judgments with the court and cease any further collection activities on the judgments, make key enhancements to their debt collection practices, and pay civil penalties and costs to the state in the amounts of $300,000. PRA must also train its employees as to the collection practices they must follow in New York.
Portfolio Recovery Associates, like other collection agencies, buys bad debts for pennies on the dollar. They then attempt to collect on those debts, even those that are time-barred. For consumers unaware of collection laws, they pay the bill or have judgments placed against them.
Some consumers have had their bank accounts frozen or their wages garnisheed for debts that are either time-barred or weren’t theirs to begin with. Court papers are filed with little, if any, verification of debt and many don’t specify whether the debt is time-barred.
Beginning in March, any debt collector wishing to file a judgment in a New York State court will have to provide much more information about the debt and the filer must include the debtors address so the court can send out notice to confirm the court papers have been received by the person being sued.
The federal Fair Credit Reporting Act lists the laws that govern credit reporting. Each state has its own laws, many of which offer additional protection.
Image: Flickr/Brennan Clark