Debt Deception - New Economy Project

Debt Deception

How Debt Buyers Abuse the Legal System to Prey on Lower-Income New Yorkers

May 2010

THE LEGAL AID SOCIETY NEIGHBORHOOD ECONOMIC DEVELOPMENT ADVOCACY PROJECT MFY LEGAL SERVICES Urban Justice Center, Community Development Project

Acknowledgments

This report was produced by a team of organizations that provide legal services to lower-income New Yorkers. Claudia Wilner, Senior Staff Attorney at the Neighborhood Economic Development Advocacy Project (NEDAP), co-wrote and co-edited the report with Nasoan Sheftel-Gomes, Staff Attorney at the Urban Justice Center, who also managed the research team. Brian Paul, a former intern with the Urban Justice Center, conducted extensive research and data analysis and contributed to initial drafts. Alexis Iwanisziw, Program Associate with NEDAP, provided extensive statistical analysis and created maps for the report. Carolyn Coffey, Senior Attorney at MFY Legal Services, April Newbauer, Attorney-in-Charge of the Civil Practice -- Queens Neighborhood Office of The Legal Aid Society, and Tashi Lhewa, Staff Attorney at The Legal Aid Society, researched, wrote, and edited sections of the report. The team would like to thank the following court personnel, without whom the report could not have been written: Justice Fern Fisher, Deputy Chief Administrative Judge; Ernesto Belzaguy and Carol Alt, former and current First Deputy Chief Clerk, NYC Civil Court, respectively; Assistant Deputy Chief Clerks, Mike Boyle (Civil Court, New York County); Monica Dingle (Civil Court, Queens County); Lorraine Kenny (Civil Court, Richmond County); Ron Romano, (Civil Court, Kings County); and Eddy Valdez (Civil Court, Bronx County). The authors would also like to thank the following colleagues for their invaluable assistance, recommendations, and support: Harvey Epstein, Project Director of the Community Development Project at the Urban Justice Center; Dora Galacatos, Senior Counsel to the Feerick Center for Social Justice at Fordham Law School; Sarah Ludwig and Josh Zinner, Co-Directors of NEDAP; Robert A. Martin, Associate Director, DC 37 Municipal Employees Legal Services; Lori McNeil, Director of Research and Policy for the Homelessness Outreach and Prevention Project at Urban Justice Center; and Matthew Schedler, Staff Attorney at CAMBA Legal Services. Last but not least, the authors would like to recognize our clients ? low-income and working poor New Yorkers who have borne the brunt of predatory debt collection practices.

i Dept Deception: How Debt Buyers Abuse the Legal System to Prey on Lower-Income New Yorkers

ABOUT THE ORGANIZATIONS

The Legal Aid Society -- the nation's oldest and largest not-for-profit legal services organization -- is more than a law firm for the poor. It is an indispensable component of the legal, social, and economic fabric of New York City -- passionately advocating for low-income individuals and families across a variety of civil, criminal and juvenile rights matters, while also fighting for legal reform. The Legal Aid Society has performed this role in City, State and federal courts since 1876. It does so by capitalizing on the diverse expertise, experience, and capabilities of 850 of the brightest legal minds. These 850 Legal Aid Society lawyers work with 600 social workers, investigators, paralegals and support and administrative staff. Through a network of borough, neighborhood, and courthouse offices in 25 locations in New York City, the Society provides comprehensive legal services in all five boroughs of New York City for clients who cannot afford to pay for private counsel. The Society's legal program operates three major practices -- Civil, Criminal and Juvenile Rights -- and receives volunteer help from law firms, corporate law departments and expert consultants that is coordinated by the Society's Pro Bono program. Annually, the Society handles more than 300,000 cases and legal matters for clients with civil, criminal, and juvenile rights problems. The Legal Aid Society takes on more cases for more clients than any other legal services organization in the United States and it brings a depth and breadth of perspective that is unmatched in the legal profession.

MFY Legal Services, Inc. ("MFY") was founded on the principle of equal access to justice through community-based legal representation of poor New Yorkers. Working in concert with neighborhood social service providers and community advocates, MFY provides advice and representation to over 8,500 New Yorkers each year and initiates affirmative litigation that impacts many thousands of people. Through its Consumer Rights Project, MFY provides advice and representation to consumers who are harassed by debt collectors, sued in New York courts, and affected in various ways by consumer issues. Our client population is comprised of poor and low-wage workers, persons with mental and physical disabilities, and senior citizens. MFY represented Robert Druce in Centurion Capital Corp. v. Druce, 14 Misc. 3d 564, 828 N.Y.S.2d 851 (Civ. Ct. N.Y. Cty 2006), the first New York decision to clarify that debt buyers are considered "debt collectors" for purposes of Department of Consumer Affairs licensing under New York City Administrative Code ? 20-489.

Neighborhood Economic Development Advocacy Project ("NEDAP") works to promote community economic justice and to eliminate discriminatory economic practices that harm communities and perpetuate inequality and poverty. Through coalition organizing, advocacy, community education, legal services and other strategies, NEDAP promotes fair lending and financial justice in New York's low income neighborhoods and communities of color. Through its Consumer Law Project, NEDAP provides direct legal services to thousands of low-income New Yorkers each year, builds the capacity of legal services and community-based organizations to address consumer financial justice issues, and advocates for systemic reform.

Urban Justice Center, Community Development Project ("UJC") is a non-profit organization that serves New York City's most vulnerable residents through a combination of direct free legal service, systemic advocacy, community education and political organizing. UJC staff represent almost 9,000 low-income and working poor New Yorkers every year. UJC's Community Development Project was formed in September 2001 to provide free legal, technical, research and policy assistance to grassroots community groups engaged in a wide range of community development efforts throughout New York City, including consumer debt work. Since 2005, UJC has represented alleged debtors in consumer credit, cell phone and medical debt cases in the New York City Civil Court. UJC has also represented victims of consumer fraud and unfair debt collection practices in affirmative litigation in State and Federal court.

Dept Deception ii

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