The Federal Trade Commission (FTC) receives more complaints about debt collectors, including debt buyers, than about any other single industry.
The Problems with Debt Buying
What is debt buying? It occurs when companies purchase a creditor's debt and then tries to collect the amount owed. Debt purchasing can be a lucrative business, with companies known to purchase debt for just a few cents on the dollar.
For consumers, debt buying can become a nightmare. There are cases in which debt collectors seek to recover funds from the wrong consumer for an erroneous amount.
In 2009, the FTC studied the issue by obtaining information from nine of the largest debt buyers that together amassed 76.1% of all debt sold in 2008.
As part of the study, the FTC studied 5,000 portfolios containing nearly 90 million consumer accounts. Although the accounts were worth $143 billion, debt buying companies purchased the debt for $6.5 billion. Credit card debt accounted for 62% of the portfolios.
FTC Key Findings from Its Review
The key findings of the three-year study are as follows:
- Buyers paid an average of $.04 per dollar for the owed debt. Older debt sold for even less.
- Buyers often received information to verify the debtors, including social security numbers, last day of payment and the original creditor's account number.
- The debt buyers rarely received notice of any disputes about the debt.
- Unfortunately, the accuracy of information buyers received wasn't always guaranteed.
- Consumers disputed an estimated one million debts each year.
What You Can Do If a Debt Collector Wrongfully Pursues You
Consumers are protected by what is called the "Fair Debt Collection Practices Act." This act was passed to address abusive and unfair debt collection practices. The law surrounding debt collection and bankruptcy is complicated. You should consult with an experienced bankruptcy lawyer to discuss your options, protections and rights.
The Law Offices of James V. Sansone offers a full range of family law and bankruptcy legal services. We are located in Santa Rosa, California and serve clients throughout Sonoma County, Mendocino County, and Lake County, including Santa Rosa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport, and Kelseyville.