The same problems that dogged the foreclosure of homes — and prompted public outcry and a multibillion-dollar settlement by some of the nation’s biggest banks — are increasingly showing up in the practices of large buyers of bad consumer debt, the New York Times DealBook blog reported yesterday. The companies, which buy huge swaths of soured bills from lenders for pennies on the dollar, are deluging the courts with shoddy lawsuits, according to a review of debt collection lawsuits along with interviews with state judges and prosecutors. As part of an effort to stamp out such practices, New York’s state attorney general, Eric T. Schneiderman, was expected to reach a settlement today with a debt buyer, the Encore Capital Group, over concerns that the company filed thousands of flawed debt collection lawsuits against state residents.
