Over $600,000 in Consumer Debt Settled Against Debt Collection Company | Breakup

More than 250 Kern County residents have been sued by Persolve in cases where the company could not prove ownership of the underlying contracts, prosecutors said.

Assistant District Attorney John Mitchell said he was glad he was able to get debtor relief. He said if they had gone to trial, the court might have imposed six-figure penalties, but would not have had the power to award debtors relief.

“Through this settlement, our office was able to obtain relief for debtors and help them settle their credit with credit reporting agencies,” Mitchell said. “That should help them benefit from lower interest rates the next time they try to get a car loan or a mortgage.”

Andrew Steinheimer, the attorney representing Persolve, declined to comment on Monday.

Persolve is a debt buying and collection agency that buys overdue debts – that is, debts that other debt collection companies have already attempted to collect – in batches of a thousand accounts or more at once. He then sends letters to debtors demanding payment.

Prosecutors said in court filings that the letters are “misleading, unlawfully threaten post-judgment remedies to which (Persolve) is not entitled, require debtors to waive their statutory rights and fail to do all disclosures required by the Rosenthal Act and the Federal Fair Debt Collections Practices Act, Persolve then sued if the debtors did not immediately repay the debt.

How were the letters misleading? On the one hand, Persolve did not inform the debtors of the amount needed to settle the debt; instead, they told debtors they owed a specific amount plus an unspecified amount of interest.

The company also gave conflicting deadlines of 30 days and 10 days for debtors to respond to the letter, prosecutors said. And the agency filed documents with Kern County Superior Court that included the debtors’ unredacted Social Security numbers and other personal financial information.

The case was filed in 2010 but was delayed for years after the trial court granted a motion for summary judgment. The DA’s office appealed the decision and was overturned by the 5th District Court of Appeals, which found that “litigation privilege” – a type of immunity granted for certain acts performed in connection with litigation – did not protect Persolve from litigation.

The appeals court found that prosecutors could use the federal Fair Debt Collection Practices Act and the California Rosenthal Fair Debt Collection Practices Act to pursue unfair trade practices claims against Persolve.

“Through the litigation of this case, we not only got a decision from the (court of appeals) that will benefit prosecutors across the state of California,” Mitchell said, “but we were also able to help debtors in the Kern County who have been affected by Persolve’s actions.