Tuesday, April 07, 2009

Sleazy Practices By Process Servers Wreak Havoc On Consumers In Debt Collection Lawsuits

A June, 2008 report by MFY Legal Services, Inc. of New York City shines some light on questionable practices engaged in by process servers when serving notices of debt collection lawsuits (many brought by "debt scavengers" on debts purchased for pennies on the dollar that are beyond the statute of limitations) on defendants that, arguably, are leaving them without the properly required notification of suits against them, and offers some recommendations with regard to improving the system. An excerpt from the summary of the report's findings:
  • In 2007, MFY Legal Services provided advice, counsel and representation to more than 350 clients who were being sued in debt collection cases. Of these, none had been served properly with a summons and complaint and most did not know that a lawsuit had been filed against them until their bank accounts had been restrained.

  • Default judgments due to improper service wreak havoc on the lives of many of MFY’s clients, most of whom have low-income wages or rely solely on Social Security, SSI, Veterans Benefits or pensions for support.

  • The civil justice system is based on the principle that defendants will have an opportunity to be heard in court before a judgment and action to collect on a purported debt is taken against them. It appears that nine out ten New Yorkers who are sued in the Civil Court of the City of New York are being denied their right to be heard because of possibly illegal process serving practices.(1)

For the entire report, see Justice Disserved (A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York).

Go here and go here for other posts on lawsuits involving faulty notifications to property owners; and here for posts on "sewer service" (a reference to the illegal process server practice of filing a sworn affidavit of proper service in court when none was actually made).

(1) According to the report, MFY staff examined a random sample of 91 consumer debt collection court files to determine the method of service. In a preliminary test, they reviewed court files of cases filed in Queens and Kings counties. Because collection companies tend to purchase a large number of index numbers at a time, they attempted to look at multiple cases handled by the same process serving company. MFY picked three process serving companies at random.

The files indicated that personal service was rarely made. Service to a person of suitable age and discretion accounted for 54 percent of the cases, while “nail and mail” service was the standard practice in 40 percent of the cases, and personal service comprised only 6 percent. Notably, process servers for two of the companies did not make personal service on any defendants, while one company managed to do so only in 18 percent of cases. Further, the type of service effected by one company in 93 percent of its cases was by “nail and mail,” while another process server company served defendants by leaving the summons and complaint with a person of suitable age and discretion in 83 percent of cases. foreclosure faulty notice SewerServiceAlpha

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