Stranger Harassing You for Old Debts? Understanding Junk Debt Buyer
Have you been getting debt collection letters and phone calls from an organization you don’t recognize?
Chances are your debt may have been sold to a junk debt buyer.
There was a time when a company might just give up on collecting debts, particularly small ones, if they couldn’t collect them easily. These days, if a company cannot collect a debt, they often just sell it to a junk debt buyer for pennies on the dollar. At some point, many companies today would like to get a little money rather than expend resources pursuing a hard-to-collect debt. As an added bonus, the original creditor can declare a loss on their income tax.
What Is a Junk Debt Buyer?
A junk debt buyer is a company that purchases debts from original creditors, such as credit card companies, banks, and other lenders, at a discounted rate. These debts are often considered “junk” because they are old, charged-off, or have been deemed uncollectible by the original creditor. Junk debt buyers then attempt to collect on these debts, often using aggressive tactics to try to recover as much of the debt as possible. Unlike traditional debt collectors who work on behalf of the original creditor, junk debt buyers own the debt outright and stand to profit directly from any payments they can extract.
Understanding Junk Debt
Junk debt refers to debts that have been deemed uncollectible by the original creditor. These debts may be old, charged-off, or have been sent to collections multiple times. Junk debt buyers purchase these debts at a discounted rate, often for pennies on the dollar, and then attempt to collect on them. Junk debt can include credit card debt, medical bills, and other types of consumer debt. Because these debts are often several years old, they may be beyond the statute of limitations, making them legally uncollectible. However, junk debt buyers rely on consumers’ lack of knowledge about their rights to pressure them into making payments.
Is a Junk Debt Buyer the Same as a Debt Collector?
A junk debt buyer is not the same as a debt collector.
Junk debt buyers purchase debts for pennies on the dollar in order to collect on those debts. Once the junk debt buyer purchases the debt, the original creditor is no longer involved.
A debt collector is a company that collects debt payments on behalf of the company to which you owe the debt. In other words, your creditor may hire a debt collection company to collect payments on their behalf. In some cases, a junk debt buyer may even hire a debt collection company for this purpose. Additionally, a collection agency may purchase charged-off accounts from creditors and attempt to collect the entire debt from consumers.
It Can Get Even More Confusing
After your original creditor sells your debt to a junk debt buyer, it may not stop there. Your debt may be resold for an unlimited amount of time. When your original creditor sells your debt, they sell all rights to it at the same time. So, the junk debt buyer is free to turn around and sell your debt again if they can’t collect on it quickly.
What is the result? You may think a debt has been forgotten, then suddenly start receiving a barrage of letters and phone calls trying to collect. What likely happened is that whoever owned your debt sold it, and a new junk debt buyer is now trying to collect.
Another result is that the new owner of your debt may be more likely to violate laws and regulations that protect consumer debtors such as the Fair Credit Reporting Act, the Fair Debt Collection Practices Act. Collection agencies, including junk debt buyers, must operate within the legal frameworks set by the Fair Debt Collection Practices Act.
Read on.
Beware the Tricks of Junk Debt Buyers
Attempting to Collect Debts Beyond the Statute of Limitations
If a junk debt buyer contacts you about an old debt, it may be beyond the statute of limitations under Florida law. If it’s beyond the statute of limitations (generally five years in Florida but there are exceptions), that means you are not liable for the debt.
This often does not stop junk debt buyers. They may still try to convince you that you are liable for the debt. Many lawsuits filed by junk debt buyers lead to default judgments because defendants do not respond to the lawsuit. And if you bite and pay them something or make an agreement to pay, you have revived the debt and restarted the statute of limitations. And you have opened yourself up to a debt collection lawsuit.
Debt Reporting Re-Aging
Some unscrupulous junk debt buyers will report debts to credit reporting agencies as more recent than they really are. These buyers aim to collect the full amount of debt owed by consumers, often using aggressive tactics. The result is a significant drop in your credit score. This is something you may see in conjunction with the transgression we just discussed of trying to collect on debts that have passed the statute of limitations.
And here’s the clincher. If you pay this old debt, it’s still going to play havoc with your credit because it will remain on your credit report for years as a delinquent debt that was more recent than reality unless you have it corrected.
Reporting the Same Debt More than Once
One of the problems with a debt being sold and resold is that each of the buyers and the original creditor may report the debt to credit reporting agencies. That means the same debt could turn up on your credit report several times. Consumers may also face debt buyer lawsuits and should be aware of their legal rights and strategies to counter these lawsuits. This will weigh down your credit score until you dispute the false credit reports and get them corrected.
Identifying and Verifying Debt
If you receive a call or letter from a debt collector claiming you owe a debt, it’s essential to identify and verify the debt. You can do this by requesting a debt validation letter from the debt collector. This letter should include information about the debt, such as the amount owed, the original creditor, and the date the debt was incurred. You should also verify the debt by checking your credit report and contacting the original creditor to confirm the debt. This step is crucial because junk debt buyers often lack the necessary documentation to prove the debt, and without proper verification, they cannot legally collect from you.
How Do I Know if My Creditor Has Sold My Debt to a Junk Debt Buyer?
Your original creditor is not legally required to notify you when they sell your debt. Unless you follow up with your creditor about the debt and they tell you, you probably won’t know until the junk buyer tries to notify you or tries to collect.
Be aware that junk debt buyers often do not get all the documentation they need to prove the debt. Consumers may face debt collection lawsuits and should request proper documentation to defend themselves. And if they can’t prove the debt, they can’t win in court if you dispute it.
So be sure to send them a debt validation letter requesting the documentation that proves you owe the debt and they have the right to collect.
Defending Against a Debt Collection Lawsuit
If you’re being sued by a debt collector, it’s crucial to defend yourself against the lawsuit. You can do this by responding to the lawsuit and requesting documentation from the debt collector to prove the debt. You may also want to consider hiring an attorney who specializes in debt collection defense. Additionally, you can use the statute of limitations as a defense, as debt collectors only have a certain amount of time to sue you for a debt. Ignoring the lawsuit can result in a default judgment against you, which can lead to wage garnishment or bank account levies, so it’s important to take action promptly.
Stopping Calls from Debt Collectors
If you’re receiving calls from debt collectors, you can stop them by sending a cease and desist letter. This letter should include your name, address, and a statement requesting that the debt collector stop contacting you. You can also register your number on the National Do Not Call Registry to prevent debt collectors from calling you. Additionally, you can report debt collectors who are harassing you to the Federal Trade Commission (FTC) or your state’s Attorney General’s office. These steps can help protect you from aggressive and often illegal debt collection practices, giving you peace of mind and control over your financial situation.
We’re Here to Help
If you are contacted by a junk debt buyer, be very careful. It’s not uncommon for them to take unethical and illegal actions. You need to understand your rights and protect yourself. Understanding the role of a collection agency can help consumers better navigate their rights and protections.
If you are unclear about any aspect of the debt and if it is not a small amount, you would be wise to at least book an initial consultation with a good Florida debt collection defense attorney.
Contact Ziegler Diamond Law: Debt Fighters a free consultation by call us directly at (727) 538-4188 in Clearwater, (813) 225-3111 in Tampa or (352) 600-1326 in Mt. Dora.
Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.
