After years of being allowed to run rampant, a bill was proposed which would Nebraska lawmakers to take on debt collectors and put a hold on their practically punitive powers.
In a small state with a population just under two-million, nearly 79,000 lawsuits were filed in 2013 against individuals struggling not to let their bank accounts go negative. Largely targeted against the working poor, debt collectors took clients to court for amounts as low as $50. Complaints rose up around the state but were rarely heard underneath the din of near-continuous litigation.
ProPublica and the Omaha World Herald both ran stories about the controversy strewn about by Credit Management Services, a collection agency based out of Grand Island, NE. A class action lawsuit, based off the findings of a 2011 judgment, succeeded in awarding nearly 12,000 claimants a proportional piece of a $200,000 payout. The plaintiffs had earlier found themselves victims of deceptive and borderline abusive tactics. CMS had, in many cases, circumvented federal and state law by failing to properly notify persons that they were being sued. Often, they’d send out misleading requests for tax documents and asset totals, trying to trick the recipients into thinking they were required to provide the information. US District Judge Joseph Baitallon wrote in his ruling that the process seemed designed to confuse laypeople.
Credit Management Services didn’t have to admit responsibility, per the settlement, but agreed to stop using problematic forms.
The settlement wasn’t penalty enough to dissuade CMS from making a caricature of itself. ProPublica summarized the results of an almost comical February hearing. Nebraska legislators had unanimously passed a bill to raise the cost of filing lawsuits by $1. The single dollar was to be scraped off the $45 filing cost to be distributed to legal aid organizations; the intention was to give poor folks the power to stand up to aggressive litigators in court.
CMS lobbyists opposed the bill, claiming that the tiny increase would pose a burden to their business.
Such unexpected resistance opened the eyes of lawmakers, prompting them to introduce another bill which would ease the burden on the victims of companies like CMS. If the legislation is passed into law, persons facing debt collection lawsuits would be able to save the first $2,000 in their bank accounts from garnishment. ProPublica – one of a very few sources to have covered the issue in detail – published a handful of interviews which show how violent garnishments can be in Nebraska. Some people were forced by CMS to have their accounts frozen and wages and simultaneously garnished. One woman had an amount of $1315 taken after a judgment, fulfilling her financial obligation, only to have her next several paychecks cut while the transfer was pending.
By all accounts, it seems Nebraska has to piece any piece of legislation which assists debtors in living normal lives while still trying to pay their bills and past-due accounts. With some of the laxest collection laws in the country, ordinary working people are at the mercy of litigators hounding them for small paydays with big consequences.