Debtors' Hell, part 1 -- great investigative reporting, from Boston

Debtors' Hell -- Debt Collection -- Boston.com--Boston GLOBE writers have served up a great bit of investigative reporting in this first of a series of four articles. Over at Callahan's Cleveland Diary we were talking the other day about similar financial abuse people in our area suffer at the hands of Ohio Savings, and one of the cadre of local flacks dismissed the case as just too commonplace. Some guys will come up with any argument to avoid doing serious work, even in their chosen vocation. Well, folks, we haven't seen such great investigative reporting here yet, but maybe it's time for the blogosphere to start talking about the seamy underside of MBNA and the predatory and whorish paper-buying practices of Javitch, Block. Here's a sampling of what comes out of Boston--read all seven pages:

The Goldstones, as debt buyers, are part of a growing trend that has transformed the collection industry. As the number of deeply indebted consumers has climbed, credit card companies and banks have become increasingly likely to sell off their uncollected accounts in bulk. Purchased by large debt-buying companies, the accounts are then repackaged and re-sold to smaller and smaller firms.

Daniel W. Goldstone, at his collection agency, Norfolk Financial Corp., was disbarred this year. In 1996, a federal judge determined he had bilked a client out of more than $800,000. (Read court documents related to this case here.) (Globe Staff Photo / John Tlumacki)
RELATED: Debt collector Daniel Goldstone is rebukedby federal judges and ordered disbarred by the SJC
By the time local companies such as Commonwealth and Norfolk pick up this kind of ''stale'' debt, they are buying it on the cheap from firms that have tried and failed to collect. It is their opportunity to make a profit but it also presents a challenge. ''How can [they] be successful where those who went before weren't?'' said Nicholas F. Ortiz, a consumer lawyer with a lawsuit pending against Norfolk Financial. ''That's where we come to seizing cars.''
Chad Goldstone said the debts he buys are typically one or two years old, although Commonwealth lawsuits examined by the Globe were often for credit card debt that was four or even five years old. Goldstone said he pays 6 or 7 cents on the dollar for the accounts he buys - $60 or so for a $1,000 debt - and generally collects 18-20 cents on the dollar.
Both brothers file nearly all their lawsuits in small claims because the filing fee is capped at $40 and judgments come with greater speed and ease. Chad Goldstone, with a staff of only six, estimated he sues as many as 7,800 people a year and almost always prevails - largely because more than 80 percent of the people he sues don't show up in court. ''People ignore the letters and the phone calls, and then we get a default judgment. That's an ostrich mentality,'' he said.
Or, he added, it's a ''game of chicken,'' in which Commonwealth keeps up the pressure until the holdouts give in, scraping together a negotiated amount, to avoid having their cars taken, or to get a vehicle back.
Daniel Goldstone has filed nearly as many lawsuits as his brother - about 22,000 over the last four years. And he appears to have resorted to car seizures at least as often