Debt buyers took them to court. Now 238 Mississippians will see their judgments erased

Approximately 238 Mississippians will have judgment balances on debt eliminated or reduced as the result of a settlement recently reached by attorneys general 42 states and the District of Columbia with the nation’s largest debt buyers.

The $6 million settlement resolves the states’ investigation into the collection and litigation practices of Encore Capital Group Inc. and its subsidiaries Midland Credit Management Inc. and Midland Funding LLC and settles claims that Midland signed and filed affidavits in state courts in large volumes without verifying the information printed in them, a practice commonly called robo-signing. Mississippi’s share of this payment will be $94,925.

As part of the settlement, Midland will eliminate or reduce the judgment balances for the approximately 238 Mississippi consumers for a value of $281,748 in cases where Midland used an affidavit against them in court between 2003 and 2009. Midland will notify impacted consumers by mail of the balance reduction, and no further action is necessary from the consumer. Midland will also set aside $25,000 per state to compensate consumers who may have paid Midland money that the consumer did not owe.

Debt buying involves buying and selling overdue debts from creditors and other account owners. Debt buyers often purchase overdue debts for pennies on the dollar and then seek to recover the full balance from consumers through collection attempts by phone and mail. Debt buyers, including Midland, also take consumers to court to collect the debts they purchase. However, people are often unable to afford attorneys to defend the allegations, and cases result in default judgments, hurting credit and putting people in jeopardy of having their wages garnished, according to a news release from Attorney General Jim Hood’s office announcing the settlement.

“The practice of robo-signing hurts consumers, especially our lower-income consumers who may not have the means to fight a debt collector in court,” Hood says in the release. “Midland illegally attempted to collect debts it had not verified through robo-signing and other illegal practices. Today’s settlement provides assurance to consumers that Midland will not abuse them again and serves as a warning to other dishonest companies.”

The settlement requires Midland to reform its affidavit signing and litigation practices. Midland must verify the information in affidavits and present accurate documents in court proceedings. When Midland files a lawsuit, it must have account documents about the debt before it files the case, including the amount of the debt, proof of an agreement, and an explanation about why any additional fees are justified.

The settlement offers protections to consumers Midland is collecting from even if they are not being sued. All consumers must receive accurate information about valid debts. If a consumer disputes a debt Midland is collecting, the settlement requires Midland to review original account documents before it continues its collection efforts.

Joining in this settlement were attorneys general in the states of Alaska, Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii , Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Michigan, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming.