Beshear: Kentuckians benefit in settlement involving robo-signing by debt collection company

FRANKFORT — Attorney General Andy Beshear today announced that more than 260 Kentuckians will have their judgment balances eliminated or reduced in a settlement his office reached with one of the nation’s largest debt buyers for robo-signing large volumes of court documents without verifying the information.

In the settlement against Encore Capital Group Inc. and its subsidiaries Midland Credit Management Inc. and Midland Funding LLC, approximately 261 Kentuckians will receive a part of nearly $375,000 Midland must pay for its use of an affidavit against the Kentuckians in court between 2003 and 2009.

Midland will apply a credit of up to $1,850 on the outstanding balances of the judgments it has on the 261 Kentuckians, for a total value of $374,876 in forgiveness. Midland will notify Kentuckians by mail of the balance reduction and that no further action is necessary.

In addition, Midland plans to set aside $25,000 in Kentucky to make refunds to Kentuckians who may have paid Midland money that they did not owe.

“As Attorney General, I am committed to protecting Kentucky families, and no family should be pushed into debt at the hands of a company that manipulated them through tactics much like what we witnessed during the mortgage crisis,” Beshear said.

As part of the settlement, Beshear said Kentucky’s General Fund will receive more than $83,000 for lawmakers to appropriate during the 2020 legislative budget session.

Debt buying involves buying and selling overdue debts from creditors and other account owners. Often purchased for pennies on the dollar, debt buyers seek to recover the full balance from consumers through collection attempts by phone and mail.

Debt buyers, including Midland, also take consumers to court to collect the debts they purchase. People taken to court, however, are often unable to afford attorneys to defend the allegations, and the cases result in default judgments, hurting credit and putting people in jeopardy of having their wages garnished.

Beshear’s settlement resolves the investigation by Kentucky and multiple other states into Midland’s collection and litigation practices. Much like the conduct witnessed during the mortgage crisis, the agreement settles claims that Midland signed and filed affidavits in state courts in large volumes without verifying the information printed in them, a practice commonly called robo-signing.

The settlement requires Midland to reform its affidavit signing and litigation practices, and it offers protections to consumers Midland is collecting from even if they are not being sued.

All consumers must receive accurate information about valid debts. If a consumer disputes a debt Midland is collecting, the settlement requires Midland to review original account documents before it continues its collection efforts. Midland must provide these substantiating documents to the consumer for no charge.

The settlement requires Midland maintain proper oversight and training over its employees and the law firms that it uses.

The agreement prohibits Midland from reselling debt for two years.

The multistate settlement includes 42 states and Washington D.C. Bordering states taking part in the multistate settlement include Illinois, Indiana, Ohio, Tennessee and Virginia.