Junk Debt Buyers

Who are Junk Debt Buyers?

If you fail to make credit card payments for too long, creditors will usually sell your debt to a collection agency or debt collector. These companies will try to collect the debt from you, and if they also fail, they will in turn sell the debt to still another company, sometimes a competitor. When a debt goes unpaid for a long time, it’s eventually considered junk.

What Junk Debt Buyers Know and Don’t Know

Debt buyers do not always know that they are buying junk debts, but each time a debt is resold, it loses value, so companies that buy the cheapest debts for pennies on the dollar have a pretty good idea that they’re buying junk debts, many of which they won’t be able to collect on. Such companies can be defined as junk debt buyers. Essentially they are the same as any collection agency, and must obey the same rules, but they are willing to take more risks with the debts that they buy and are likely to be more aggressive about their collection practices as a result.

What Types of Debts Are Bought by Junk Debt Buyers?

Usually junk debt buyers purchase large portfolios of unpaid or “delinquent” credit card accounts. Such accounts are also referred to as “charged off” since they are no longer active. They’ll buy from both credit card companies and from other collection companies. Often these portfolios have a mix of debts, some of which are considered more easy to collect than others.

Pennies on the Dollar

The cheaper the debts that are being sold, the more likely the batch or portfolio will contain junk debts. Junk debt buyers are often willing to pursue these old, delinquent accounts, even if there are mistakes in the files, meaning that some of the debts have already been paid, settled, or discharged through bankruptcy. They don’t necessarily know what is a false lead and what isn’t, but their practices are aggressive across the board, so they’ll keep pursuing the collection until they’re told to stop. Fortunately, you are protected by The Fair Debt Collection Practices Act (FDCPA), which prevents collectors from harassing you.

What If I Don’t Owe this Debt?

The difference between regular collection practices and junk debt collection is that junk debt buyers may try to collect on debts that are no longer owed. This might include debts that have already been paid, have been settled through debt negotiation, were discharged in a bankruptcy case, or which have expired according to the legal statute of limitations.

Mistakes Happen

When debts have been bought and sold many times, mistakes can happen, and debt disputes do not always find their way back into the collection industry. Unfortunately this means that you’ll have to make an effort to dispute a junk debt collection even if you’ve already done so with a previous collector. This can seem annoying and unfair, but it happens, and the best approach is to stay calm and simply handle the problem.

How Can I Get Junk Debt Collectors Off My Back?

As a consumer, you have rights, and ultimately the law is on your side. There are a number of online publications created by the U.S. Federal Trade Commission (FTC) that will educate you concerning fair debt collection practices and how the law works. First of all, know that you are protected from harassing phone calls that contain abusive language and threats, which is considered illegal and worth reporting to the FTC if you are a victim of it. You can also report such abuse to your state attorney general’s office. Second of all, a series of simple actions should be all it takes to get junk debt buyers to leave you alone. If they know that you are using and following the law, they will give up on you pretty quickly, especially since these companies already have enough bad press and can’t afford more.

Step One

The first step is to request a validation of the debt. This way you can find out if it’s real and add the information to your files. If the debt is not real, you can dispute it. Even if it is real, you can request that the company stop contacting you. According to the law they must comply.

For more information about your rights under The Fair Debt Collection Practices Act, go to http://www.ftc.gov/os/statutes/fdcpajump.shtm.