Canadian Bank Puts Collection Squeeze On Homeowners By Buying Up Their Old Unpaid Debts, Then Filing Foreclosure To Enforce Judgment Liens

In Northern California, The Bay Citizen reports:

• In a significant escalation by debt collectors who pursue consumers for payment, a major Canadian bank has threatened to foreclose on the homes of hundreds of Californians unless they pay back old credit card debts.
  
  California law generally makes foreclosure available only to lenders using residential properties as security, and collectors of unsecured debts, like credit card loans, normally are limited to attaching wages or bank accounts.
  
  But Credigy Receivables – a unit of the National Bank of Canada, which has more than $150 billion in assets – has taken advantage of California’s relatively lax debt collection laws. The bank has repeatedly bypassed a legal hurdle that normally prevents credit card companies from threatening to take away the homes of debtors who refuse or are unable to pay.
  
  Little-noticed except by debtors and consumer attorneys, Credigy’s unusual collection efforts begin with the purchase of judgment liens issued in California lawsuits filed by credit card lenders and other unsecured creditors. Credigy then names debtors who own residential properties as defendants in foreclosure lawsuits.
  
  A California Watch review of court records identified foreclosure lawsuits filed by Credigy since December 2009 in superior courts in Alameda, Fresno, Kern, Los Angeles, Marin, Orange, Sacramento, San Bernardino, San Francisco, San Mateo and Solano counties.
  
  A spokesman for Credigy’s owner, the National Bank of Canada, declined to comment, citing pending litigation. The company’s tactic – which consumer advocates say is designed to intimidate debtors – has sparked outrage.

For more, see Canadian bank goes after homes to collect credit card debts (New tactic catches some Bay Area homeowners off guard).