City Council Approves Debt Buyers Bill
FRIDAY, MARCH 13, 2009

The City Council on Wednesday by a vote of 46 to 0 approved the Debt Buyers Bill which will protect low income New Yorkers from debt buyers who have siphoned millions of dollars from the City's poorest residents through illegal means. Oda Friedheim, a staff attorney in the Civil Practice's Law Reform Unit, presented powerful testimony before the City Council on February 25, strongly advocating for the bill.

Debt buyers "have used our overworked courts as their private collection agency, forcing working families with children, senior citizens and the disabled to fall short when the time comes to pay their rent, utitities and even their grocery bills," Oda told the Committee on Consumer Affairs. "Many people who receive a summons from a debt buyer believe they will face imprisonment if they do not pay. It is the right time to put some reasonable controls on this unregulated part of the collection industry so debt buyers cannot operate unchecked to prey on our comunities."

As part of its civil practice, The Legal Aid Society represents low income clients who have been sued by various debt buyers for credit card debts they allegedly owed at one time in the past. We having assisted hundreds of clients sued by debt buyers and observed that in the vast majority of cases, the amount of the debt being sued on was under $3000.00, but the claimed default interest rates and the fees associated with these old credit card debts doubled or tripled the original sum the debt buyer alleged was owed. Debt buyers typically purchase bundles of discharged debt for less than five cents on the dollar, and together with this potential interest and fee multiplier, and the fact that a large percentage of debtors default, the investment in litigation becomes highly profitable for them.

Read the full testimony