COVID-19, Debt Collection

Debt Collection Lawsuits Pause While One Debt Collector Continues to Pursue Collections

At the start of the COVID-19 pandemic, most debt collectors hit the pause button on collection lawsuits due to widespread national lockdowns. However, one of the largest debt collectors, Sherman Financial Group, continued to pursue its collection efforts. 

According to a study conducted by the Wall Street Journal, Sherman Financial Group had the largest increase of any debt collection firm between March 15, 2020 and December 31, 2020. The study analyzed filings from five state-court districts from the start of the pandemic to the end of 2020. The number of filings went up by 52 percent from the previous year. In comparison, debt collection filings went down by 24 percent with respect to the industry overall. 

Sherman subsidiaries filed 15,420 more debt collection lawsuits in 2020 than they did in 2019 in these five districts aloneThe districts surveyed serve approximately 13 percent of the nation’s population.   

In previous years, Sherman has been a smaller debt collection company. However, financial analysts believe that the company has established its reputation as a nonconformist in the debt collection industry. This is not the first time where Sherman has chosen to take advantage of a financial crisis to expand their reach in the industry. They behaved similarly during the 2008 financial crisis. 

Most debt collection companies have filed fewer lawsuits during the pandemic due to borrower hardship. For example, two of Sherman’s competitors, including PRA Group and Encore Capital Group filed fewer lawsuits in 2020 than in 2019 and limited new collection efforts. Another debt collection company, Oportun Financial Corp, suspended all new debt collection lawsuit filings, dismissed many of their pending cases, and capped interest rates on its outstanding loans. 

Of the lawsuits filed in the five districts surveyed by the Wall Street Journal, Sherman-owned subsidiaries accounted for 12 percent of the debt lawsuits filed, which was a six percent increase from the previous year.  

Facing debt collection is stressful and there are laws in place to protect consumers.  Debt collectors can be persistent, even to the point of becoming harassing and threatening at times. However, it is vital that consumers facing collections actions realize that they do, in fact, have rights, and these rights fall largely under the Fair Debt Collection Practices Act (FDCPA). 

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Source: The Wall Street Journal

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