Beating Credit Card Debt Collectors at Their Own Game
Most people would simply rather pay their credit card debts than deal with collection phone calls and collection attorney letters. But, what about those who cannot afford to make monthly minimum payments on their credit card debt? Many fall prey to the debt collection industry. Some, however, become educated consumers and use the law to force debt collectors to spend their time with other, less knowledgeable consumers.
Time is money for a credit card debt collector, who is in the business of collecting unsecured consumer debt, most of which happens to be credit card debt. These consumer debt collectors and collection attorneys work on a percentage of what is collected. Most people think there is a debt collector for every debt, when the reality is there is only a debt collector for every easy-to-collect credit card debt.
The consumer debt collection industry’s growth has mirrored the growth of the credit card industry.
The Federal Reserve and Business Week report $133.7 billion of consumer debt in 1970 increased to $2.5 trillion of consumer debt in November 2007.
Each year debt collectors put more than $40 billion back into the U.S. economy, according to ACA International, a trade group for the debt collection industry.
There were 173 million credit cardholders in the United States in 2006, According to the U.S. Census Bureau.
According to the American Banking Associate, in the first quarter of 2009, 4.75 percent of bank cards were delinquent.
These statistics indicate debt collectors are awash in millions of delinquent credit card accounts.
Credit card companies must comply with Federal Reserve regulations by keeping reserves to for bad debts. Bad debt is part of their business. After these debts are written off, junk debt buyers bid on blocks of delinquent credit card accounts. If successful, they pay no more than 10 cents for each dollar of debt. With that discount rate junk debt buyers and the collection agencies and collection attorneys who work for them only need to collect 30 or 40 percent of the debts to make money.
If a consumer resists collection attempts (after they learn how to properly do so), it is simply not profitable for collectors to put more time into chasing them for their debt, when they can put that time in getting the easy returns from other people who put up no resistance. The Fair Debt Collection Practices Act (FDCPA) is the key to resistance.
The Fair Debt Collection Practices Act covers the behavior of collection agencies, junk debt buyers, and collection attorneys. The FDCPA treats attorneys as debts collectors, if they are collecting consumer debt. The consumer must be notified in writing by the debt collector of their right to dispute the debt and have it validated, according to the FDCPA. Copies of original documentation that verifies a debt are considered proper validation by the FDCPA. The FDCPA gives the consumer the right to tell the debt collector to stop collection activity until they have validated the debt.
So, who should the consumer debt-collection commissioned professionals spend their time with, those who properly dispute and request validation or those who put up no resistance?
Learn about the many strategies for eliminating credit card debt; some for those who can settle, some for those who cannot pay. Read all about them in the 230-page Credit Card Debt Survival GuideMatt Highlander writes for the Guide.
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