Bill Bartmann: Temporarily Ban Debt Collection Lawsuits

ARM industry participant Bill Bartmann proposed Friday a moratorium on debt collection lawsuits filed by third party collection agencies until the national unemployment rate falls below 6 percent. Bartmann offered up the suggestion in an opinion piece published in the Christian Science Monitor.

Bartmann writes that a debt collection lawsuit moratorium would provide “time for the unemployed to get back to work and establish the financial equilibrium to avoid bankruptcy.”

The piece claims that the court system is “overwhelmed” by debt collection lawsuits, with between four and five million filed each year in the U.S. And Bartmann adds that many of the suits have dubious underlying documentation and often target those not in debt.

To ease any fears the ARM industry might have over his proposal, Bartmann suggests that the moratorium would not count as time lapsed on the statute of limitations for a debt. He offers no plan on how the accounting would work on such a “pause” in the debt’s life.

Below are the four points – the closing argument, if you will – of the plan:

1. A moratorium on certain types of debt collection litigation during periods of high unemployment provides time for the unemployed to get back to work and establish the financial equilibrium to avoid bankruptcy.

2. A moratorium isn’t a free ride for anyone.  No debt would be forgiven – merely postponed until the nation returns to a more “normal” employment environment.  Consumers and creditors both gain, since the former is better able to pay their debts voluntarily.

3. The temporary moratorium would be limited to third party debt collectors, companies that acquire charged off credit card debt for pennies on the dollar and then often use high-pressure tactics to force consumers to pay.

4. The moratorium would only apply while the national unemployment rate exceeded 6 percent. Interest would continue to accrue on the debt. The moratorium period couldn’t be counted when calculating the statute of limitation for filing a lawsuit against the consumer.