Chapter 13 Debt Scavengers
In another blog article, I talk about claims abuses arising from debt scavengers in Chapter 13 cases. This blog will further explain the roots of these abuses.
With the use of PACER, ECF, BANKO, other Bankruptcy Databases, and proprietary computer software, technology has now opened a new door to collect on stale debt which does not exist outside bankruptcy.
Many debt scavengers file claims across America using Computer Software which simply reconciles their database of debtor names with Bankruptcy Debtor names. When matches are made, the software generates unsigned proof of claims in wholesale mass production in very little time.
For instance, “Bankruptcy Claim-Pro” claims to produce “1000 proof of claims in minutes” with a simple interface between National ECF data and debtor accounts such as “EDI (Electronic Data Interchange), AS400, Oracle/Sybase/SQL Server/MySql/ODBC Database, DBase2 and DBase3, Mainframe, ASCII, Tab Delimited, Comma Delimited, Excel, XML, any computer readable format.”
This company also claims to have access to the database of bankruptcy debtors so the debt collector need only supply a name in order to receive a proof of claim back.
Typically, a debt scavenger’s bankruptcy portfolio will contain a similar debtor name as that who just filed bankruptcy. The computer software program matches their debtor in their portfolio with a different debtor but with a similar name from the Bankruptcy Debtor Name database, to generate an unsigned proof of claim, and file the same.
Many of these claims do not even contain a human signature. It is very questionable whether any human even sees these claims since they are entirely automated. Of course, such a practice is completely illegal for failing to comply with Bankruptcy Rule 9011.
Typically, when a zombie debt collector is caught with an objection to the claim, they simply withdraw their claim. Their business model is “catch me if you can.” Unfortunately, these debt scavengers do not get caught as much as they should. In most cases, objections never take place in light of the small claim amounts, costs and expenses of objecting, and time involved policing proof of claims.
Moreover, these withdrawals also directly violate Bankruptcy Rule 3006 because they take place without Court Permission after claim objection.
So what do you do? Examine every claim that is submitted in your Chapter 13 case. If any appear over 4 years old or you do not recocgnize who the creditor is, tell your attorney immediately!
Written by Michael Doan