Debt Buying: Invest and Chase!


You have heard of real estate investments and even the purchase of stocks, mutual funds, and other securities.  Now comes a new (well, not so new….) investment opportunity:   debt buying.   Unpaid accounts such as car loans, credit cards, store charge cards, judgments, and others are offered by sale by the original creditor and investors, usually in the form of a debt buying entity, purchase the accounts with an eye toward turning a profit.  Sites such as DebtConnection.com and BeaDebtCollector.com offer opportunities for people to invest in aged debts for the proverbial pennies on the dollar in the hopes of recovering a tidy profit from the debtor.  Read here, here, and here for some perspectives on the debt buying industry. 

Debt buyerDebt buyers usually contract with debt collection agencies and law firms to actually collect on the debts i.e. chase down the money.  The collection activity spans the globe from letter writing, phone calls, text messages, threats of garnishment, threats of imprisonment, contacting family members of the debtor, and threats of physical harm—-just to name a few.  Some debt collectors have actually dunned, filed suit, and engaged in collection activity against the wrong individual and on occasion the individual will pay money to make them go away.  Quite a windfall indeed when you consider the “wrong individual” likely had valuable legal rights and claims against the collector——-not to mention the “wrong individual” never had any obligation to pay anything.

Groups like Portfolio Recovery Associates, LVNV Funding, and Unifund CCR Partners purchase large portfolios of old credit card accounts, charge card accounts, judgments, liens, and other unpaid debts and seek to collect.  Courts across the country are log-jammed with lawsuits and other actions related to these debts.  There are countless examples of courts dismissing cases against debtors for lack of evidence, unfair debt collection practices, or other illegal actions.  In October 2012, a District Court Judge in Maryland court dismissed over 3,000 cases filed by one debt collector.  This comes after a July 2012 ruling in which the same District Court Judge dismissed 3,000 cases filed by another debt collector and and, as part of a settlement, the collector agreed to pay over $1 million to the State of Maryland and $3.8 million dollars to be applied to the accounts of over 6,000 consumers whose cases had been resolved.

There are countless stories of debt collectors engaging in rude, illegal, and over-the-top tactics to recover money.  In fairness, I do not begrudge or vilify debt collectors as we all have an obligation to pay our debts and these folks are merely doing their jobs.  And there are some collectors who do things by the book and are to be commended.  In the end, all I ask is that the debt collectors follow the rules, legal and ethical, in collecting on said debts.  All too often this does not happen.  If you believe you are being harassed or otherwise treated unfairly by debt collectors be sure to contact an experienced debt collection defense attorney.

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2 Comments

  1. Hi, Debt selling is an good option for those who are finding hard time in collection. And the collection process should be done in a legal manner.
    Thanks for this post.

    • Debt collection needs to be regulated in light of the frequent abuses and misdeeds of creditors, collectors, and related persons/entities. Each week I get at least one call or email about harassing, unfair, or illegal debt collection. Consumers and debtors beware and know your rights. Creditors and collectors: you are on notice that you better do it right.

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