The King of Pop’s real estate bubble is still intact. Michael Jackson cut a last minute deal yesterday to keep his 2,500 acre Santa Barbara wonderland, Neverland Ranch, despite the fact he owes creditors $24.5 million dollars. Jackson’s lawyer, L. Londell McMillan announced that the pop star reached a “confidential” agreement with the Fortress Investment Group LLC. to refinance his outstanding loan. The property was scheduled to go on the auction block next week.
Michael Jackson may be an, um, special case, but it certainly doesn’t take a multi-million dollar debt to send a collection agency a- knocking. As the economy wanes, the business of debt collection is in a boom cycle. Unfortunately, that means an increase in shady debt recovery tactics. Despite the fact the Fair Debt Collection Practices Act “prohibits misleading representations, harassments, calling at all hours, calling neighbors, racial and other slurs, abusive language and the collection on a debt that’s not owed,” says Kristen Keefe, staff attorney at the Empire Justice Center in New York, abuse of the act is more prolific than ever. The Federal Trade Commission reported 69,204 complaints against debt collectors in 2006, the most for any industry the FTC monitors. “There’s probably more debt collection abuse now,” says Keefe. “Because there’s so much debt and debt buying has become so prolific.”Many complaints made to the Better Business Bureau (BBB) allege that “the collector was rude over the phone, hounded the debtor, told family members of the debt owed, or failed to provide proof of the debt owed,” says Alison Preszler of the BBB. One of the most common complaints last year was collection agents trying to claim “zombie debt,” after the debt had already expired. The statute of limitations to file a lawsuit on debt is six years, but “debt buyers are buying debt that’s seven years old and intimidating people to make payments,” says Keefe. However, keep this in mind: If a single payment is made on a zombie debt, the statute of limitations starts again for six more years, exposing the debtor to a potential lawsuit all over again.