As if there weren’t enough unscrupulous activities in business today, there is new game in town that could affect anyone who has outstanding debts. It is an investment into which many new companies are partaking, and it often violates fair debt collecting laws. This new practice is called “scavenger debt collection”, and can be quite frightening if you don’t know what you’re dealing with.
Scavenger debt collection is the practice of purchasing old debt for pennies on the dollar and attempting to collect the full amount, plus interest. While this investment is not, in and of itself, illegal, there have been thousands of reports by consumers who claim that scavenger debt collectors violate debt collection laws. If you have been the target of scavenger debt collection – or if you think you might be a potential target – you really need to understand this information.
To put this into perspective, I’ll give you an example scenario to which you might be able to relate. Let’s say that you defaulted on a credit card a few years ago. The credit card company attempted to collect the debt, but eventually wrote it off and handed it over to a collection agency. The collection agency also attempted to collect your debt by calling you and home and sending several letters, but you simply weren’t able to make good on the debt. Eventually, they stopped calling and you figured you were home free.
Believe it or not, it doesn’t have to stop there. A scaveneger debt collection agency can purchase your old debt from the original collection agency, sometimes for as little as $0.03 on the dollar. Once they’ve acquired your debt, they can go after you for the full amount plus interest. This is an incredibly lucrative venture because, not only have they acquired the debt for a small amount, but they also use forceful and sometimes illegal debt collection tactics in order to get you to pay.
Here are a few ways to recognize a scavenger debt collection company:
1. They identify themselves as a “litigation firm”. Most scavenger debt collectors will not identify themselves as collection agencies. They don’t want you to think that they are the same caliber collector as those who have tried in the past, so they misrepresent themselves as attorneys or paralegals who are planning to sue you for the debt that you owe. Although they probably won’t come out and say they are attorneys, they will do as much as they can to lead you to that conclusion.
2. They offer a settlement. Most collection agencies will never offer a debt settlement, and certainly not on the first phone call. A scavenger debt collection company, however, just wants to make some sort of profit, which means that they can charge you as little as 25% of your debt and still come out ahead. They will probably tell you that they are preparing to sue, but that if you want to avoid court, they are willing to negotiate a settlement.
3. They tell you that they must consult with the investors on a settlement. Often, if you do not agree to anything above a 75% settlement, they will say that they can “consult with the investors” on your behalf in order to get a lower settlement. They might say that they aren’t authorized to make that decision, but they will get back to you. This is another tactic to convince you that you are getting a great deal while they are losing out. Don’t fall for it.
4. They pursue the account after the statute of limitations has expired. Scavenger debt collection agencies are likely to try and collect debts which are no longer collectable according to federal law. All debts – called time-barred debts – have a statute of limitations after which the debtor cannot be sued or pursued for the balance. If you know that the statute of limitations has expired, simply tell them that the debt is no longer collectable and hang up.Whatever you do, don’t admit that you owe the debt, or the statute of limitations can be started over.
Reference:
- www.fair-debt-collection.com, Look Out For Junk Debt Buyers! by J. Tolley
