I want to share an alarming article in the Houston Chronicle last week that talks about the drastic increase in the number of debt-collection cases filed in Texas courts, even though the Texas economy is doing great. Many of the cases are filed by debt buyers, which are companies that buy debt written off as uncollectible, usually from credit card companies, for pennies on the dollar. That means that the debt buyers don't have to recover a lot of money in a particular case to make money on their purchase of the uncollectible debt. And it also means the debt buyers have no reason not to try to squeeze some money out of the consumers whose debts were written off as uncollectible.
According to the article, "The jump in justice court filings is being driven by companies that acquire debt after credit card companies charge it off as uncollectable, judges say. Like many states, the Texas market is dominated by a small group of large corporations. Encore Capital Group, which often files as Midland Funding, and Portfolio Recovery Associates, or PRA, are the most prominent." Other companies that buy defaulted debt and then attempt to collect, often by filing lawsuits, include LVNV Funding, Resurgent Capital Services, and CACH.
Bear in mind that, as the article notes, Texas heavily favors the debtor, which means that wage garnishments aren't allowed and a homestead exemption protects a debtor's home from collection activity. But lawmakers have still enacted legislation that makes debt collection easier, resulting in the increase in lawsuits described in the article. Unfortunately, West Virginia does not offer the protections to debtors that exist in Texas, so there's no homestead exemption or prohibition against wage garnishments.
And if this increase in debt-collection lawsuits is happening in Texas, with its surging, "Texas-sized" economy, then what is happening in states with economies that aren't performing as well, such as West Virginia's? I'll tell you what's happening. An increasing number of West Virginia consumers have been or will be sued in debt-collection cases and won't have the ability to protect themselves from collection activity, as Texas consumers can (at least for the time being).
If you have been sued in a debt-collection case or if you have any questions about any consumer-related issue, please call me at (304) 769-6058, email me at firstname.lastname@example.org, or fill out the contact form on this site. I serve clients in Morgantown, Wheeling, Martinsburg, and nearby areas of West Virginia. I look forward to hearing from you.