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Minnesota sues Edina debt firm over interest charges

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Minnesota sues Edina debt firm over interest charges
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For Jennifer Dahlke of Minneapolis, what started out as $2,073 worth of overdraft-related debt turned into a $4,312 nightmare that wouldn’t go away.

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On Wednesday, Minnesota Attorney General Lori Swanson filed suit against Bradstreet and Associates, an Edina-based debt collection firm. She accused the firm of charging up to 21.75 percent interest on consumer debt, though a Minnesota law caps the interest rate at 6 percent.

Dahlke is one consumer who was pursued by Bradstreet, but her situation isn’t unique.

Since 2009, Swanson said, Bradstreet has bought $18 million in debt from U.S. Bank and Wells Fargo, Minnesota’s two largest banks. There could be 16,000 Minnesotans affected by the case, and Bradstreet has obtained court-ordered judgments against 2,300 Minnesota consumers.

An email sent to Bradstreet on Wednesday seeking comment wasn’t immediately returned. Calls to the office would not connect.

On Wednesday, Swanson announced the lawsuit at her office, flanked by a handful of consumers who had seen their debts run up by Bradstreet’s high interest rates.

In some of the cases, including Dalhke’s, Bradstreet took the debtors to court and won judgments against them.

“Companies have the right to collect legitimate debt, but they shouldn’t charge people for interest that isn’t owed, nor should they get courts to award judgments against people for interest that isn’t owed,” Swanson said.

Bradstreet and an earlier predecessor company, Bridgestone and Associates, bought the debts from United Credit Recovery, a Florida-based debt buyer. Swanson earlier sued United Credit in another collection-related case.

The consumer debts originated with U.S. Bank and Wells Fargo, which were later sold off to United Credit. Bridgestone and Bradstreet then paid $434,000 to purchase $9 million worth of debts tied to Wells Fargo overdraft fees. Bridgestone and Bradstreet also paid $646,000 for about $9 million of U.S. Bank overdraft-related debt.

But Swanson said that the consumers’ contracts with U.S. Bank and Wells Fargo didn’t allow for any interest on the overdraft-related debts.

Swanson’s lawsuit, filed in Hennepin County District Court, seeks an injunction against Bradstreet and restitution for the affected consumers.

Dahlke, 42, who is a social worker at the U.S. Veterans Administration Hospital in Minneapolis, said Wednesday that Bradstreet made her fear for her safety, as the debt collectors calling her told her they knew she was single and where she lived.

Her overdraft debt of $2,073 originated with U.S. Bank. Dahlke, speaking at Wednesday’s news conference, said she set up a payment plan with Bradstreet and made payments for 15 months totaling $1,500.

When she asked Bradstreet for documentation of her payments, she was refused. During its collection efforts, Bradstreet called Dahlke repeatedly at work. The firm also called her elderly parents, telling them she was a “scumbag,” she said, and asking them to pay down the debt. She also received a letter from Bradstreet that said her debt was still accruing interest at a 21.75 percent interest rate.

“I didn’t know what I was up against,” Dahlke said. “They’re still harassing me.”

Bradstreet sued her in Hennepin County Conciliation Court, and was able to secure a judgment of $2,812 against Dahlke, though she said she offered proof of the $1,500 she had already paid. She later got in touch with Swanson’s office.

Dahlke said she’s appealed her case and has a court date, though it means more expense, as the appeal cost $500 plus attorneys’ fees.

The Pioneer Press is a media partner with Forum News Service.

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