Debt Buyers: Collection Agencies That Will Do Anything to Collect a Debt
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There have always been creditors and debtors. In the old days, the creditor was also the debt collector if the debtor didn't pay back the money or pay for their goods or services. Today, many debts are sold to private companies called debt buyers who, unfortunately, will do anything to collect a debt – including breaking the law.
Why Are Debt Collection Practices Worse Today?
In a recent interview, Steve Recordon, San Diego-based attorney who represents those being sued or harassed by debt buyers, explains what used to happen and what happens today:
- What used to happen. In the old days, collectors rarely used strong arm tactics or threats to collect the debt. They would typically send out collection letters, which are now called dunning letters. After that, they would graduate to phone calls. That's how the collection process should work, and in does work, in most situations – but not all. Initially, if the original creditor couldn't collect, then he would sometimes sue, and if he didn't want to do that, if it was a business decision not to sue, then the debt would just die a natural death.
- What happens today. What's happened now is that we have the original creditor selling the debt to what we call a debt buyer, then, the debt buyer, owning the debt, going after the debtor personally. This has really been a phenomenon that started back in the early 1990s. Over the years, debt collection has become big business – and because it's big business, you have both the good and the bad. Unfortunately, it's loaded with abuses for the bad.
The Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) is a federal statute that was enacted by Congress in 1978 when the Federal Trade Commission started getting swamped with complaints by consumers about debt collection and the abuses that some debt collectors use to collect debts. The Act is designed to police the collection industry because the federal government just didn't have the resources.
Recordon explained how attorneys become involved in FDCPA cases:
The collection industry got so big that the government simply couldn’t do it themselves. So, part of the Act contains a private attorney general provision which means that if the debtor is being harassed under the Act, meaning the Act has been violated, the debtor can have an attorney sue the debt collector and the debt collector has to pay the attorneys’ fees for the debtor.
Since a debtor normally doesn’t have the money to pay his debts, he certainly doesn’t have enough to pay an attorney. However, this provision shifts the burden to the debt collector and allows the private attorney general part of the statute to kick in allowing attorneys like me to enforce the FDCPA.