The debt collection industry has been on an increasing growth pattern for several years. In the past, junk debt buyers could easily raise money to start up a business. However, the current mortgage meltdown may be affecting their ability to do so.

Are there more junk debt buyers operating in the system now?

That's the question we posed to Bud Hibbs, a debt collection consumer advocate and consultant for over 25 years who has written several books, is approved to teach CLE courses through the State Bar of Texas and has appeared in numerous radio and television programs including the Oprah Winfrey Show in a recent interview. Here's what he told us:

Well, there were up until the mortgage meltdown. It's the proverbial Catch 22, though. Like the mortgage portfolios that they were buying, there was a day when a lot of companies said, 'Wait a minute, we're not buying these anymore. They're not what you're stating that they are. They're not the quality that you said they were.'

We also have a similar problem in the credit card industry. A lot of companies trade over the counter on Wall Street and what happens - let's go back to the Citibank account - if a company wants to go in and buy a portfolio for say, $50 or $100 million, they could approach Wall Street to raise the money and they could offer Wall Street, sometimes double, even triple what government rates were for treasury bonds, for example. They would get the money. They were able to collect the debt and once they paid off the lender, the Wall Street firm that loaned them the money, anything beyond that point was very, very profitable.

Debt collection is widespread in America

Hibbs says that the problem with debt collection in America today is very, very widespread and that debt collectors who are more egregious and more threatening are going to make a lot more money than the ones who aren't. If you are being harassed by a debt collector, contact an attorney whose practice focuses on issues relating to the Fair Debt Collection Practices Act (FDCPA) to discuss your situation. Consultations are free, without obligation and are strictly confidential. Click here to contact an experienced debtor's rights lawyer. We may be able to help.