Stop Garnishing Paychecks, Senators Write to Capital One and Other Collection Agents – ProPublica

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The nation’s biggest debt collectors should suspend wage garnishment “immediately,” two prominent senators urged in letters sent Wednesday.

The letters came in response to a ProPublica story this month that focused on how the most prolific filers of debt collection lawsuits, Capital One and major debt-buying firms, continue to garnish paychecks amid the COVID-19 pandemic. While most courts suspended further hearings in March, previously obtained wage garnishment orders were allowed to continue in most places. It has left some essential workers and others desperate for help amid the economic downturn.

“Committing collection lawsuits and garnishing the wages of consumers who are already struggling to pay for basic necessities will only exacerbate the economic and public health crisis,” wrote Senators Elizabeth Warren, D-Mass., and Sherrod Brown, D-Ohio.

Brown and Warren serve on the Senate Banking Committee, which oversees financial services companies. Brown is the ranking member.

Capital One largely stopped filing new lawsuits after mid-March, but other major collectors have not stopped filing new lawsuits. Warren and Brown also wrote to Encore Capital Group and Portfolio Recovery Associates, two of the nation’s largest debt buyers. Both continued to file lawsuits in April and May, according to ProPublica’s review of online court databases.

In the letters, the senators also ask companies to report on the number of lawsuits and wage garnishments they have filed this year. Because collection suits are brought in state and local courts, it is impossible to arrive at a complete account of these lawsuits (though ProPublica has attempted to shed some light on the practice by rounding the data from various states). This renders an aggressive form of fundraising that affects millions of people every year largely invisible to the public. Company responses can help reveal the extent of the activity of the largest complainants.

In a statement responding to the letter, a Capital One spokesperson said, “Since the start of the pandemic, we have been committed to working with all of our customers who are experiencing financial hardship due to COVID-19. In addition to deferring payments, offering tailored payment plans and waiving fees, we’ve stopped filing all new bank foreclosures and lawsuits and taken steps to prevent the seizure of any stimulus funds. . We recognize these are exceptional times and it is our policy to work with any customer in need of assistance who is impacted by COVID-19.

A spokesperson for Portfolio Recovery declined to comment, saying the company was reviewing the letter and preparing its response.

Sheryl Wright, an executive at Encore Capital’s subsidiary, Midland Credit Management, said: “In accordance with the long-standing hardship policy in our Consumer Rights Statement, we are suspending collections when a consumer tells us that was directly affected by COVID-19. , and we stopped bank garnishments for all consumers in mid-March. For any bank garnishment that was initiated prior to the judgment, if the consumer notifies us that we have inadvertently withdrawn exempt funds, including CARES Act relief payments, we will immediately initiate a refund.

Update, June 25, 2020: This story has been updated with comments from Midland Credit Management, a subsidiary of Encore Capital.


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