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Should You Worry About Scavenger Consumer Debt Collectors?

May 18th, 2009

scavenger-consumer-debt-collectors.jpgWhen Jack picked up the phone he was shocked at what he heard. In the form of consumer debt collectors, it seems that the past had caught up with him. Jack had defaulted on payment of an unsecured loan that he had taken. There were calls from his bank but Jack was unable to pay the amount. Then credit collection agencies started calling him to pay the debt. They even visited his place but Jack had no money to pay.

After a while the bank and collection agencies realized it was a lost case and stopped contacting him. After two years when his financial position had improved, suddenly this call to pay up the debt has caused havoc in Jack’s life. The bank was demanding payment of the money due. What Jack is dealing with is probably not the bank from whom he had originally borrowed money but is actually a different kind of creature known as a scavenger consumer debt collector.

Scavenger consumer debt collectors are companies which purchase debts that have been deemed “uncollectible” by other companies. These are usually debts which are written off by the lending company. The debt collectors in these cases often call themselves law firms and use such unfair practices to collect the debt that they may cause you a considerable amount of trepidation. However, such methods are usually in violation of the Fair Debt Collection Practices Act. They may claim that they are not bound by the rules and regulations of the Fair Debt Collection Practices Act, but in most cases they certainly are.

Collecting debt written off by lenders is a huge business today. Many people are joining together to form companies that try to collect these types of debts. These people purchase the debt from the original creditors at “fire sale” (that is, very low) prices and try to recover the entire debt amount. You may be surprised to know that two of these companies (scavenger consumer debt collection companies) have even made it into the Fortune 500 list.

After purchasing debt from the lender, these companies may contact you disguised as law firms. They tell you that they are being asked to sue you but they want to settle the matter as amicably as possible. They will call for a meeting where they will use all of their available pressure tactics so as to extract the maximum possible amount of money from you. They may start by saying that they will accept 70-80% of the amount due. These companies may then tell you that they can try to reduce the amount as low as 50% of the total outstanding, if you pay the amount within a specified period of time. If you do not agree to their terms and conditions then they may actually give the case to a law firm which will sue you on their behalf. If you still do not want to pay then you will have to appoint a good attorney for yourself.

Some of the things that you can do when contacted by scavenger consumer debt collection companies are:

  1. When they first contact you while cloaked as representatives of a law firm, try to find out if they are actually lawyers.
  2. If you have money to settle the debt(s) do not hurry. These companies can settle the debt for an amount as low as 25% of the total.
  3. If negotiations break down and they send you a lawyer’s notice, find out if such a law firm actually exists.
  4. Appoint a good law firm if you are being sued and find out from your attorney what property cannot be seized to clear the debt.
  5. If your debt is so old that the statute of limitation has run on the debt, then never agree to send any money to them. Just inform them the statute period has expired on the debt and you will not pay for any amounts outstanding that were accrued before the expiry.

In summary, don’t be afraid and don’t forget to use your brain so that you can avoid being easily fooled by scavenger consumer debt collectors. Chances are that you may not have to pay a single penny.

This article on dealing with consumer debt collectors was originally purchased from a member of the DigitalPoint forums under a private label rights license. It has been modified somewhat to improve spelling, grammar, keyword targeting, and general readability. Attempts to identify the name of the original author have been unsuccessful.

One Response to “Should You Worry About Scavenger Consumer Debt Collectors?”

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