Have you received a bill from an unknown company? If you default on a credit balance, creditors have the option to sell that account to a debt buyer. These are not collections agencies. The original creditor has sold your account, often for pennies on the dollar, to another company. Therefore, a debt buyer is not in the business of collecting a debt on behalf of someone else. You now own them the money.
Debt buyers will buy thousands of bundled accounts at one time, well below face value. Their bet is that they can collect enough money to make a profit. So, they will send out notification letters, demand payment, and sometimes seek judgments and wage garnishments. The original creditor no longer has anything to do with the balance and the debt buyer makes all the decisions.
The problem for consumers is that debt buyers can be extremely aggressive with little more than a name and a balance. They can purchase a data dump that does not include any supporting documentation. This information includes thousands of accounts, many with incorrect balances or other data. In fact, it is even possible for a balance, discharged in a bankruptcy, to be listed. This is because accounts are sold “as-is”, without any guarantee of accuracy.
Moreover, many debt buyers will file lawsuits by the thousands. They expect most people will not respond, and they can then get a default judgment. This is what makes debt buyers extremely dangerous for consumers. They buy debt without any certainty of accuracy, and then begin aggressive collection campaigns. If they can’t collect within a certain amount of time, they will rebundle the account and sell it to the next debt buyer. This cycle can continue indefinitely.
The best way to deal with a debt buyer is to seek the assistance of an attorney. The fact is that they don’t expect you to in any way fight back. Moreover, in most cases, a lack of documentation means they cannot support their claim. Also, their actions, especially in the case of a bankruptcy, could violate the law. An attorney can help you resolve the issue quickly or determine if you have a case against the debt buyer.
There are additional numerous issues to discuss on this topic. If you would like to talk more about debt buyers, or need more information, please contact us.