BSCD Deals

Every consumer should know that invoking current consumer protection laws will stop the collection activities of a junk debt buyer.

Junk debt buyers invest in discharged credit card debt for pennies on the dollar. They also sell and resell the debt they have purchased to other junk debt buyers for smaller and smaller sums of money. Business Week, as an example, reported Portfolio Recovery Associates, a large national junk debt buyer, paid $791.6 million over an 11 year period for $35.3 billion of debt in 16.7 million customer accounts. For each dollar of credit card debt that averages less than three cents.

According to the Credit Card Debt Survival Guide, those numbers indicate a junk debt buyer does not have to collect on even half of the debt purchased. They would be quite profitable, if they collected on a third of the debt.

The federal Fair Debt Collection Practices Act (FDCPA) can protect a knowledgeable consumer from junk-debt-buyer collection efforts, but junk debt buyers rely on the fact most consumers are not that knowledgeable about the FDCPA. Collection agencies for junk debt buyers send out first notices and most consumers do not respond in writing asking for documentation of the debt, as they should. When they purchase this debt in huge computer tape batches, junk debt buyers receive little original documentation of each debt; documentation that the FDCPA requires the junk debt buyer to provide to the consumer if asked.

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.

Junk debt buyers’ and their collection agents’ debt collection efforts, unlike the original credit-card-bank creditors, are covered by the FDCPA. With a properly crafted written response, like the ones that can be found in the Credit Card Debt Survival Guide, these debt owners and collectors must stop their collection activities including no negative marks on a consumer’s credit report.