Has an unknown company informed you that they now own your credit account and are demanding payment? Once a bank or credit company has unsuccessfully attempted to collect a debt, many will sell the account to a debt buyer. This new company is not a debt collection agency, but actually owns your account outright. The debt buyer can now use all available administrative and legal remedies to collect the unpaid debt.
Debt buyers deal is what is sometimes called “junk debt.” In many cases, the unpaid account is years old, having gone through both an internal collections department and an external collection agency. In fact, the account may already have a judgment or lien. Regardless, it is considered junk debt because the original creditor exhausted their efforts and deemed the balance as uncollectable. The debt buyer then swoops in and buys the account for pennies on the dollar, often purchased bundled with others, hoping they will collect enough to make it worth their investment.
If you are contacted by a debt buyer, it is important not to ignore them. Moreover, it is also essential that you don’t pay them, at least until you are confident that you actually owe the debt. One of the biggest issues with debt buyers is that they tend to receive little more than a list of accounts without any history or supporting documentation. There are instances that your account was paid or discharged in a bankruptcy, but the original creditor did not properly update your records. You then have the hassle of proving you no longer owe the balance. Worse yet, many unethical debt buyers will them sell your account again, knowing you don’t owe it.
An exhaustive study performed by the U.S. Federal Trade Commission found that “Consumers each year disputed an estimated one million or more debts that debt buyers attempted to collect. Prior FTC experience has found that consumers often dispute the amount of the debt or that they owe the debt at all. Debt buyers verified only about half of the disputed debts, which means that buyers either could not verify or did not attempt to verify about 500,000 debts each year.”
If you find yourself in a situation where a debt buyer is unable or unwilling to validate the debt, you do have protection under the law. Moreover, there are additional consequences if the debt was discharged in a bankruptcy. Do not hesitate to seek legal counsel.
What haven’t we covered yet that is important to you? If you would like to talk about how to deal with unscrupulous debt buyers, or need more information, please contact us.