A booming industry

The debt collection industry doesn’t operate the way it did years ago and the consequences can be seen in the number of fines and investigations that state Attorney Generals are reporting. In fact, the Attorney Generals of New York, Connecticut, Minnesota, California and several others have all reported illegal practices in their states.

Debt buyers, private companies who buy consumer debt for only pennies on the dollar and then use whatever tactics they have to – illegal or otherwise – to collect from the debtor are at the center of the controversy.

How debt buyers operate

Steve Recordon, an attorney from San Diego, California whose firm represents individuals who have been sued or harassed by debt buyers, explained how the process works in a recent interview, “[I]f one of the credit card companies has an account that's not being paid, it then goes into default, and they, themselves, try to collect. If they're unable to collect, they sell the account to a debt buyer. Debt buyer No. 1 picks it up and tries to collect. If they're unable to collect, they're going to sell it to Debt Buyer No. 2. As you go down the chain, obviously, the price that you're able to get for it goes down, and quite often, these debts are considerably past the statute of limitations.”

Aggressive tactics used on older debts

Recordon says that debt buyers become even more aggressive as the debt is sold to debt buyers 3, 4, 5 and so on as the chances of collection decrease with time. He explained:

Let’s say Debt Buyer No. 1 just bought an account. It's brand new. Debt Buyer No. 1 will start sending letters and calling – the first letters and calls may actually be fairly pleasant. However, if the debt remains unpaid, then it’s going to get more aggressive. Debt Buyer No. 5 knows that Debt Buyers 1, 2, 3, and 4 couldn't collect and that the only way they're going collect is by using extreme measures. I've seen situations where, eventually, they go down to the debtor's house, bang on the door (and this may be at midnight, or 1:00 a.m. in the morning) and yell at them threatening to wake up the whole neighborhood if they don't come to the door and pay the debt.

If you’ve been sued or harassed by a debt buyer / collection agency, contact an attorney whose practice focuses in this area of the law to discuss your situation. Consultations are free, without obligation and strictly confidential. To contact an experienced attorney, please click here. We may be able to help.