A New Low In Debt Collection

Six feet to be exact. Jessica Silver-Greenberg reporting for the Wall Street Journal.

Martha Kunkle has come back to life.

She died in 1995. Yet her signature later appeared on thousands of affidavits submitted by one of the nation’s largest debt collectors, Portfolio Recovery Associates Inc., in lawsuits filed against borrowers.

Some regulators complain that the use of Ms. Kunkle’s name reflects an epidemic of mass-produced, sloppy and inaccurate documentation in the debt-collection industry. Lawsuits have surged as more borrowers fall behind on payments and collection firms turn to courts to get what they are owed.

After being sued for fraud, Portfolio Recovery Associates decided in early 2008 that any documents bearing Ms. Kunkle’s name had “defects” and shouldn’t be used when trying to collect debts, a company spokeswoman said.

Last July, though, lawyers for Portfolio Recovery Associates sought a court judgment in a lawsuit against a Seattle woman for $2,892.10 in credit-card debt and interest that she allegedly owed. It was a cookie-cutter case, except for one thing: To vouch for the debt’s validity, the Norfolk, Va., company included an affidavit signed by Martha Kunkle.

The spokeswoman said the document was “inadvertently used by our outside counsel” because of “human error,” adding that the suit was dropped later “upon review of the case.”

The company said Ms. Kunkle’s name isn’t on any other affidavits submitted to judges since early 2008 by Portfolio Recovery Associates or outside lawyers who handle most of its debt-collection cases.

“When you see corner-cutting like this, it’s alarming,” Minnesota Attorney General Lori Swanson said about the Kunkle case. Ms. Swanson is investigating numerous buyers and collectors of consumer debt for falsifying affidavits.  A spokeswoman for the company, the second-largest debt buyer in the U.S. by revenue, said the company is unaware of the investigation and declined further comment. …