Colorado draws a higher rate of complaints about medical debt collectors than all but six states, a new report shows.
The report, released Wednesday by the CoPIRG Foundation and the Frontier Group, analyzed 17,701 complaints filed to date nationwide with the federal Consumer Financial Protection Bureau (CFPB) concerning medical debts. The analysis tracked complaints during the last three years.
It found that in 63 percent of those complaints, people asserted that the debt was never owed, that it was paid or discharged in bankruptcy, or it was not verified as their debt.
“We’ve got a problem here,” said CoPIRG director Danny Katz. “If you’re going to collect debts, you should be collecting from the right person for the right amount.”
Katz said the report focused on medical debt because “medical debt touches almost everyone.”
Per capita, Nevada had the worst complaint rate. Colorado was seventh highest, and Rhode Island was lowest.
The analysis was released as Colorado legislators consider whether to “sunset” the state Fair Debt Collection Practices Act or strengthen its consumer protections by requiring collectors to provide more proof in court and limit the time they can pursue alleged debtors.
Across the country, major debt collection companies buy and sell spreadsheets of uncollected debts for pennies on the dollar, often with little or no information about the original debt. Their trade has garnered the nickname “zombie debt,” for debts that never die.
The Colorado Independent previously reported that four debt collection companies brought nearly 40,000 cases in Colorado county courts in three years, often winning default judgments and orders to garnish wages without proof that the defendant and the debt were correct.
Debt collectors have become the leading cause of consumer complaints to the attorney general’s office in Colorado. This month, that office won a $491,000 judgment for illegal business tactics against a collector that operated under various names — Peak Resolution LLC, PR and Associates, Paramount Recovery, Mile High Mediation.
“While there are many law-abiding debt collection companies in Colorado, we will not tolerate any company that collects debts illegally,” Attorney General Cynthia Coffman said.
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