If you owe money on an old credit card, medical bill, or other expense,
you have likely been contacted by a debt buyer. Debt buyers purchase outstanding
debts from the companies who are owed money.
While buying debts is perfectly legal, debt buyers often engage in shady
business practices that flaunt the laws meant to protect consumers from
harassing or threatening behavior.
How Debt Buying Works
When a person fails to pay a debt, the company that is owed the debt will
first make its own attempts to collect. You may receive phone calls, emails,
or letters attempting to convince you to make a payment.
If these efforts do not work, your account will be turned over to the company’s
collections department. This department will report the delinquent account
to your credit report, and will begin offering you settlements to pay
off the debt. The collections department may also threaten litigation,
or could sue you for failing to pay the debt.
After a while, the cost of the company’s collection efforts will
outweigh the amount of the debt. When this happens, the company may sell
that debt to a debt buyer for a discounted price. The company will recover
some money in the sale, and will no longer have to spend time and effort
trying to collect the debt.
For example, suppose you owe $1,000 to American Express on an old credit
card. You haven’t made a payment on this card in years, and the
account has long since gone into collections. A debt buyer could offer
American Express $200 to purchase your $1,000 debt. Since American Express
has likely given up on trying to collect this debt from you, it will accept
the $200 and close out your account. Now, the debt buyer will pursue you
for debt that it purchased. You will still have an obligation to pay the
full $1,000 to the debt buyer even though American Express sold the debt
for only $200.
Defenses Against Debt Buyers
The process above can take place multiple times. Debt buyers can purchase
debts from each other, and your account may trade hands frequently before
a debt buyer takes any action against you.
When a debt is passed around from company to company, paperwork can get
lost. It is very common for debt buyers to lack the documents needed to
enforce the debt. For example, a debt buyer needs to a person’s
cardmember agreement to prove that you had a contract with the original
creditor. If the debt buyer does not have this document, it cannot legally
enforce the debt. However, some debt buyers may attach other documents
to their demands that do not meet the legal requirements in an attempt
to trick naïve consumers into giving them money.
Additionally, since the debt buyer does not have access to your original
account records, it may not be able to prove that payments to that account
were credited or billed correctly. When an attorney challenges the consumer’s
billing history and records in court, the debt buyer may not be able to
prove its claims.
Finally, the debt buying process takes time, and there is a possibility
that the debt may no longer be collectible. In Florida, a debt must be
collected within five years. If five years passes without any collection
activity, the consumer will no longer owe the debt.
If you have been targeted by a debt buyer, it is important to remember
that you may not legally owe the debt. Before you pay what you don’t
legally owe, speak with an attorney who can advise you of your rights.
At Loan Lawyers, our attorneys have years of experience fighting back
against debt buyers and can help you create a plan to defend yourself.
To schedule your free and confidential appointment, contact us today by
calling (888) FIGHT-13 (344-4813).