The three words that might best describe the federal government’s student-loan debt collector are petty, incompetent and ruthless.

For two decades, the Educational Credit Management Corporation  (ECMC) has received millions of taxpayer dollars from the U.S. Department of Education to hound former students into paying their student loans—even when they’ve already paid off their debt or run into financial troubles stemming from serious health problems.

ECMC’s egregious behavior has been particularly evident in trying to stop student loan holders from gaining bankruptcy protection.

Among the excesses uncovered in an investigatyion by The New York Times is the case of Barbara Hann. In 2004, Hann’s attempt to file for Chapter 11 was fought by ECMC, despite the fact that she proved in court that her student loans were repaid.

Nonetheless, the company pursued Hann and even managed to garnish her Social Security income after she came out of bankruptcy. This forced her to seek relief in court, where more than one judge criticized ECMC’s actions against her.

Today, the company refuses to apologize for its pursuit of Hann, claiming the matter was based on “complicated issues of legal procedure.”

Then there’s the case of Karen Lynn Schaffer, who ran into difficulty paying back the student loan she took out for her son to attend college. Her trouble arose after her husband could no longer work as a result of hepatitis C, diabetes and liver cancer.

Schaffer reduced her family expenses and got loan modifications, while also working full-time at a security job. But that wasn’t enough for ECMC, which accused her of spending too much money on dining out when she paid $12 at McDonald’s for some food.

The company has been getting away with its “ruthless” tactics since its founding in 1994, according to The New York Times, which reviewed hundreds of pages of court documents and spoke with consumer advocates, experts and bankruptcy lawyers about ECMC.

Its “pursuit of student borrowers has veered more than occasionally into dubious terrain,” the newspaper’s Natalie Kitroeff wrote.

At least one member of Congress, Representative Steve Cohen (D-Tennessee), wants to limit such predatory tactics, saying: “The government should hold its agents to the highest standards, and I don’t know that we’ve been doing that.”

-Noel Brinkerhoff

To Learn More:

Loan Monitor Is Accused of Ruthless Tactics on Student Debt (by Natalie Kitroeff, New York Times)

Education Dept. Reaps Profits from Student Debt (by Noel Brinkerhoff, AllGov)

Debt Collectors Cashing In on Student Loans (by Andrew Martin, New York Times)

Grieving Dad Is Hounded for Repayment of Dead Son’s Student Loans (by David Wallechinsky and Noel Brinkerhoff, AllGov)

Taxpayers Fund $454,000 Pay for Collector Chasing Student Loans (by John Hechinger, Bloomberg)     

Medical Debt Collectors Accused of Bullying Emergency Room Patients and Others (by Noel Brinkerhoff and David Wallechinsky, AllGov)