How to Stop a Junk Debt Buyer Attempting to Collect Older Credit Card Debt from You
4:11 AM
A consumer with knowledge of existing consumer protection laws can stop a junk debt buyer's credit card debt collection attempts.
Junk debt buyers are investors who purchase large blocks of written off credit card debt. These purchases are typically for about 10 cents per dollar of debt with each purchase totaling in the millions of dollars. Junk debt buyers repackage and resell this debt to each other for smaller and smaller sums, sometimes less than one cent per dollar of debt. In an illustration of this reported by Business Week, Portfolio Recovery Associates, a large national junk debt buyer, over an 11 year period paid $791.6 million for $35.3 billion of debt in 16.7 million customer accounts. That was less than an average of three cents per dollar of credit card debt.
With those fractions, junk debt buyers do not expect to collect on most of the debts, according to the Credit Card Debt Survival Guide. It is easy to see how if they collected on only 20 percent of the debt they would be profitable.
A general lack of consumer knowledge of the federal Fair Debt Collection Practices Act (FDCPA) gives junk debt buyers confidence in their ability to collect on these cheap debts. Junk debt buyers through their collection agencies mail tens of thousands of collection letters to consumers holding discharged credit card debt. Most addressees do not properly answer this initial communication in writing asking for documentation of the debt. If a consumer knew this batched debt comes on computer tape in groupings of thousands, sometimes millions, of accounts with little or no original documentation, they might respond more confidently.
Even worse, when contacted by telephone and threatened with a bogus lawsuit, many consumers out of honesty admit to the undocumented debt, making the debt collector's job easy.
The original-creditor credit-card banks collection calls are not covered by the FDCPA, but those of junk debt buyers and their collection agencies are covered. A well written letter, like the ones that can be found in the Credit Card Debt Survival Guide, invoking sections of the FDCPA will force the junk debt buyers to stop their collection efforts including the placement of negative marks on the consumer's credit report.
Junk debt buyers are investors who purchase large blocks of written off credit card debt. These purchases are typically for about 10 cents per dollar of debt with each purchase totaling in the millions of dollars. Junk debt buyers repackage and resell this debt to each other for smaller and smaller sums, sometimes less than one cent per dollar of debt. In an illustration of this reported by Business Week, Portfolio Recovery Associates, a large national junk debt buyer, over an 11 year period paid $791.6 million for $35.3 billion of debt in 16.7 million customer accounts. That was less than an average of three cents per dollar of credit card debt.
With those fractions, junk debt buyers do not expect to collect on most of the debts, according to the Credit Card Debt Survival Guide. It is easy to see how if they collected on only 20 percent of the debt they would be profitable.
A general lack of consumer knowledge of the federal Fair Debt Collection Practices Act (FDCPA) gives junk debt buyers confidence in their ability to collect on these cheap debts. Junk debt buyers through their collection agencies mail tens of thousands of collection letters to consumers holding discharged credit card debt. Most addressees do not properly answer this initial communication in writing asking for documentation of the debt. If a consumer knew this batched debt comes on computer tape in groupings of thousands, sometimes millions, of accounts with little or no original documentation, they might respond more confidently.
Even worse, when contacted by telephone and threatened with a bogus lawsuit, many consumers out of honesty admit to the undocumented debt, making the debt collector's job easy.
The original-creditor credit-card banks collection calls are not covered by the FDCPA, but those of junk debt buyers and their collection agencies are covered. A well written letter, like the ones that can be found in the Credit Card Debt Survival Guide, invoking sections of the FDCPA will force the junk debt buyers to stop their collection efforts including the placement of negative marks on the consumer's credit report.
About the Author:
Matt Highlander has researched credit counseling, debt settlement, debt collectors and collection attorneys. If you are seeking credit card debt relief, read Credit Card Debt Survival Guide Matt writes for the Guide.
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