JPMorgan Chase has recently pulled back efforts to recover credit card debt in six states, one of which is California. It's suspected that the credit card giant has slowed its collection efforts because of fraudulent or insufficient evidence used to show the company had the right to collect. However, the precise reason for the slow-down is currently unknown.
Collection action against debtors is big business for banks and debt buyers. JPMorgan Chase reportedly received $1.4 billion in 2011 on defaulted credit card loans. At the same time, the company also dropped more than 1,000 debt-collection lawsuits last year nationwide.
Reportedly, the bank also went so far as to dismiss some of its attorneys, in addition to all but ceasing a collection effort that was pulling in hundreds of millions of dollars per month.
State and federal authorities have not yet directed their attention to JPMorgan Chase in California, though other governments have acted against similar debt collectors. Minnesota's attorney general took legal action against Midland Funding, one of the country's largest debt buyers. The attorney general charged that the company filed fraudulent affidavits to recover credit card debt. Midland was additionally accused of robo-signing, the now infamous practice of mass-signing legal documents. Midland's parent company, Encore Capital, was also charged by Texas officials, who said that Encore had also used robo-signing to authorize documents.
Many California residents who are currently burdened by crushing credit card debt will want to be fully aware of their rights under the law. Banks, debt buyers and other creditors are known to use whatever means possible, sometimes illegal, to collect a debt that may not even exist. With these issues in mind, Californians should consider every legal option for restructuring and eventually discharging all of their credit card debt.
Source: cbsnews.com, "Chase stops suits against credit-card holders," Alain Sherter, Jan. 11, 2012