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February 16, 2010

The Debt Collectors are Scared… The FTC is Investigating

Filed under: Credit — Barry @ 7:05 pm

Do you know what a debt buyer is?  I didn’t until quite a few years ago.  My wife started getting phone calls telling her that she owed money to some company unnamed company.  Sometimes the call was from Illinois, Missouri, Alabama, and sometimes even from outside of the United States.   The collector always said they were trying to collect on a debt they claimed was owed them, who always started the call with “We are trying to collect a debt, any information we obtain will be used for that purpose.”  My wife did not know what they were talking about, much less about some debt from the late 1980’s.

It turns out they were the debt buyers.   These are companies who buy old debt and questionable debt from that banks, credit cards and others have in all likelihood written off and figure they will never see.  The problem is that many times it is not your debt or, if it was you paid off the creditor some time ago.  Most of the time if you ever owed the money, you paid them off more than 4 years ago (the California Statute of Limitations for collecting debts), so you probably no longer have proof that you paid them off.  Very often, the debts are beyond the statute of limitations and the creditor may no longer sue you in court or get a judgment against you; further they may not put anything on your credit report.

  1. There are some problems with many debt buyers.
  2. The Debt Buyers get a percentage of every dollar they collect.
  3. The debt collectors are on commission… they have reason to lie and try to get you to pay!
  4. They will often try to reactivate an old beyond statute of limitations debt by convincing you to make a “small” payment.
  5. The  debt may have been Discharged in Bankruptcy.
  6. A previous debt buyer may have returned it as uncollectable and received a refund, and then the original owner may sell it to yet another debt buyers.
  7. They are more often using pressure tactics because they are calling from outside the country… Pakistan is a favorite as of late.

BEWARE

Making a small payment may reactivate a beyond statute of limitations debt and RESET the statute of limitations.

Do not talk to them.

Tell them to send you something in writing (preferably to your PO Box).

Write them, with a copy to your attorney, the state attorney general and their state attorney general disputing the debt, denying the debt and telling them to no longer contact you by telephone.

File a complaint against them WITH the FTC or your state Attorney General

But anyway, the debt collectors are afraid because the Federal Trade Commission is looking into their industry.  What are they afraid of… SUNSHINE!  But ultimately they are afraid that delinquent debt prices will drop… this means that if American Express (I’m not singling out American Express) currently gets $0.20/per dollar of debt sold, they may only be able to get $0.10/per dollar of debt sold.

Further many of the debt buyers are afraid that their stock prices will go down as well.

If you would like to read more… check out… http://bit.ly/6o5XRW

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