How to Stop a Junk Debt Buyer Attempting to Collect Older Credit Card Debt from You

by Matthew Highlander

A consumer with knowledge of existing consumer protection laws can stop a junk debt buyer’s credit card debt collection attempts.

Junk debt buyers are investors who purchase large blocks of written off credit card debt. These purchases are typically for about 10 cents per dollar of debt with each purchase totaling in the millions of dollars. Junk debt buyers repackage and resell this debt to each other for smaller and smaller sums, sometimes less than one cent per dollar of debt. In an illustration of this reported by Business Week, Portfolio Recovery Associates, a large national junk debt buyer, over an 11 year period paid $791.6 million for $35.3 billion of debt in 16.7 million customer accounts. That was less than an average of three cents per dollar of credit card debt.

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.

The junk debt buyer’s collection agents frequently call consumers before the first notice arrives and violate the FDCPA by threatening a phony lawsuit if payment arrangements are not made promptly. Unfortunately for them, some consumers honestly admit to the alleged, undocumented debt to these strangers and make the collection agency’s job easier.

While the debt collection attempts of the original-creditor credit card companies are not covered by the FDCPA, those of junk debt buyers and their collection agents are. With a carefully worded letter, like those found in the Credit Card Debt Survival Guide, the consumer can compel these debt buyers to cease collecting the alleged debt. Legally, that includes not placing negative marks on the consumer’s credit report.

About the Author:

If you are seeking credit card debt relief, whether you can afford to settle or not, read Credit Card Debt Survival Guide. Matt Highlander writes for the Guide.