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

The good news is current consumer protection laws make it possible to put a stop to a junk debt buyer’s credit card debt collection efforts.

Junk debt buyers are companies that buy batches of thousands of discharged credit card accounts from the credit card banks for pennies on the dollar (under 10 to 15 cents per dollar of debt).  Junk debt buyers also resell these accounts to each other for as little as less than one cent per dollar of debt.  As an example of such purchases, Business Week reported Portfolio Recovery Associates, a large national junk debt buyer, acquired 1,030 portfolios over an 11 year period with a face value of $35.3 billion for $791.6 million, representing more than 16.7 million customer accounts. That averages out to less than three cents per dollar of credit card debt.

Based on those fractions, according to the Credit Card Debt Survival Guide, junk debt buyers do not have to collect on a majority of those debts. If they collected on just less than half, they would be hugely profitable.

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.

Junk debt buyers’ and their collection agents’ debt collection efforts, unlike the original credit-card-bank creditors, are covered by the FDCPA.  With a properly crafted written response, like the ones that can be found in the Credit Card Debt Survival Guide, these debt owners and collectors must stop their collection activities including no negative marks on a consumer’s credit report.