Consumer Alert: Managing debt issues
Debt issues can be hard to manage and a collection call from a persistent creditor can make a difficult financial situation more stressful.
The good news? All consumers have debt collection rights, so before you make any decisions, it's important to know how to protect yourself and your assets.
But one business owner -- and hundreds of others -- learned the costly lesson the hard way.
Robert Brady Jr. has worked in his family’s Massachusetts heating and cooling business for 10 years.
“Making sure the parts are ordered correctly, finances, payroll, human resources,” he said. “I try to do it all.”
That includes dealing with debt collection services.
“We hired a subcontractor to do the electrical work,” Brady said. “We had a couple of issues with whether or not we felt they had done it correctly.
He admitted that his company didn’t pay right away, as they disputed the job. He wasn’t surprised to get a call from a collection service.
But this was unusual.
“He was threatening,” Brady said. “He was contacting my employees. When they would answer the phone, he would say that he would tell them the company was going under. And this was all over $4,000 or $5,000. It was so minimal. And so, at the time, I laughed about it.”
The owner of the debt collection agency was Neil Madison.
“He told me he was going take my car from me. He was going to repossesses my car,” Brady said. “I was going to have to get a ride from one of my employees and how embarrassing was that going to be.”
Eventually, Brady sent Madison $5,000.
The company claimed they didn't receive that money, so they would need a cashier’s check.
Days later, Brady was out $10,000.
He wasn’t alone, as 600 victims lost $6 million.
Instead of returning it to the business owners who hired his company, Madison kept it all for himself.
“There were numerous small ‘Mom and Pop,’ American businesses who were forced out of business once the debt was paid,” Camille Hammonds, a US Postal Inspector, said.
Brady even got a call from the subcontractor who hired Madison.
“They asked if we paid it and I said, ‘Actually, you got it twice from us,’ and they still to this day never got any money from it,” Brady said.
Madison pleaded guilty and was sentenced to eight years in prison.