"Zombie Debt" Buyers Cancel $9.5M+ In Consumer Debt In Settlements With WV AG; Lawyer Accused Of Threatening Suits To Collect Time-Barred Obligations

From two press releases from the Office of the West Virginia Attorney General:

• West Virginia Attorney General Darrell McGraw [last week] announced settlement agreements with three unlicensed collection agencies that will result in $1,277,648.33 in cancelled debts for 161 West Virginia consumers and $15,337.50 in cash refunds.

• The Attorney General’s Consumer Protection Division had opened an investigation against the companies – Trailhead Capital, LLC, a debt buyer based in Chicago, IL; Hollis Cobb Assoc., Inc., Trailhead’s affiliated collection agency in Norcross, GA; and Troy Capital, LLC, a debt buyer based in Las Vegas, NV – after receiving complaints that revealed the three businesses were collecting debts in West Virginia without a license and surety bond as required by state law. Records also showed that the debts the companies were attempting to collect were primarily charged-off credit card accounts originally owed to Chase, Wells Fargo Bank, and GE Capital.

• In West Virginia, businesses that purchase defaulted debts for collection, as Trailhead and Troy Capital did, cannot avoid being licensed and bonded by hiring other agencies to assist them in collecting the debts.(1)

For more, see Attorney General McGraw Recovers $1.25 Million From Three Unlicensed Collection Agencies.

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• West Virginia Attorney General Darrell McGraw [] announced a settlement with Laurence A. Hecker, a New Jersey lawyer, and several out-of-state debt collection agencies that Hecker represents known as the APM Companies resulting in more than $7.9 million dollars in cancelled debts for West Virginians.(2)

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• McGraw’s office began investigating Hecker and the APM Companies in 2006 after receiving complaints from West Virginia consumers who reported they were threatened with lawsuits and excessively pressured to pay alleged debts. To further embellish the lawsuit threat, Hecker sent letters to consumers on his law office stationery to demand payment of the debts. The Attorney General’s investigation revealed that the majority of the collection attempts were for "time-barred" debts, i.e., debts so old that the statute of limitations to sue had expired and lawsuits were therefore barred by law.

For more, see Attorney General McGraw Recovers $7.9 Million for West Virginians from NJ Lawyer Hecker and APM Collection Agencies.

(1) The West Virginia AG observed: "Debt buyers often take overly aggressive collection actions that include the filing of lawsuits – even when they have little proof of the debts they seek to collect from consumers."

(2) McGraw’s Consumer Protection Division entered into an agreement with Hecker and his two affiliated Pennsylvania collection agencies, APM Financial Solutions, LLC, and Account Portfolio Management, LLC. The settlement requires the cancellation of $7.9 million dollars in charged-off credit card debt that Hecker and the APM Companies attempted to collect from 1,922 West Virginia consumers. The companies also paid $45,000 toward customer refunds and consumer education and agreed to delete the debts from credit records.