Thanks to a stubbornly persistent recession, millions of Americans find themselves saddled with debt that they can’t repay or can repay only with such difficulty it discourages them from even trying.

Trying to collect these debts has become a big and fast-growing business with debts being packaged and sold, often for pennies on the dollar, in financial instruments with a disturbing resemblance to the way sub-prime mortgages were packaged and sold off. The whole point of buying deeply discounted debt is that the buyers keep every dollar they collect. So-called secondary debt is now a $60 billion industry.

Aggressive attempts to collect the debts threaten to overwhelm the courts and have resulted in a record number of complaints to the Federal Trade Commission. Those collection tactics may get even more aggressive if the industry can persuade Congress to allow it to make automated calls to cell phones.

Abusive collection tactics such as deception and harassment were outlawed by the 1977 Fair Debt Collection Practices Act but a Scripps Howard News Service investigation published over the weekend shows that the law is only spottily enforced and could benefit from tightening and more uniform enforcement. In particular there is a great need for improved documentation of debt that has repeatedly been resold to prove that the debt is lawfully owed. ...

Ample and easily available consumer credit is essential to a capitalist economy and U.S. economic growth. And for that system to function properly, it is also essential to have an effective and fair system to make sure those debts are repaid. Debt collectors working on behalf of lenders return $40 billion a year, money that is then recycled as fresh credit.

(Distributed) The Associated Press