(Your) Debt for Sale! (Your) Debt for Sale!

If you owe a credit card debt or have an unpaid balance on a department store charge card and your account goes delinquent for an extended period of time the debt could be bought.  That’s right, bought.  An emerging trend in the investment arena is that of debt buyers.  Bands of investors will form a company that does virtually nothing other than purchase large portfolios of allegedly defaulted credit card accounts for pennies on the dollar for the sole purpose of attempting to collect whatever they can on those accounts. Charged off credit card accounts account for the vast majority of accounts sold to junk debt buyers, followed by auto loans, telecommunications debt and retail accounts. 

Sometimes the debt that has been purchased is what is called “time-barred.”  This means the statute of limitations has expired and the holder of the debt can no longer file a lawsuit to collect on the debt.  This, however, does not prevent the holder of the debt from continuing to collect on the debt via letters, phone calls, etc.   If the debtor–the person who allegedly owes the debt—makes a payment or acknowledges the existence of the debt  it is no longer “time-barred” and the statute of limitations for collecting on that debt can be reset.   

It is a numbers game…..junk debt buyers file scores of lawsuits in courts all across the United States in hopes of collecting on old debt claims that have been charged off by the original creditor.  The debt buyers bet on the proposition that most people being sued on a debt will either ignore the lawsuit or enter into agreements with them to pay off the debt.  Either of these results means a “win” for the debt buyer and a “loss” for the debtor. 

Many times the debt buyer lacks the neccesary paperwork and evidence to prove their claimed entitlement to collect on the debt.  In 2009, North Carolina passed a law requiring debt buyers to provide a significant amount of evidence at the time of filing a lawsuit to collect on a debt.  Many analysts and industry observers have said this North Carolina law is the strongest in the nation in protecting debtors.  But even with this law, North Carolina debtors still must know how to respond if they are sued by a debt buyer, the original creditor, or a collection agency.  If you are sued or contacted by a company about a past due debt do not take chances and guess your way through handling the situation.  Contact an experienced attorney for a consultation and possible representation.


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