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Debt buying is really big business – buyers paying three cents on the dollar.

Encore Financial, one of the largest credit card debt buyers, paid $562 million for $18.5 billion of debt last year, or three cents per dollar of face value

Debt buyingDebt buying is currently big business. Encore Financial, one of the largest credit card debt buyers, paid $562 million for $18.5 billion of debt last year, or three cents per dollar of face value, according to its Securities and Exchange Commission filings.  There may a change in the wind.  The Office of the Comptroller of the Currency “OCC” has began pressuring banks to clean up credit card debts.

The OCC best practices recommend/request that lenders:
• Vouch for the accuracy and completeness of all debt records they sell;
• Monitor how debt buyers collect on accounts and limit their reliance on litigation;
• Restrict debt buyers from re-selling defaulted consumer accounts;
• Establish a central debt sale oversight committee;
• Produce written justifications for selling debts instead of collecting on them internally;
• Provide debt buyers with key account information at the time of sale and make full records available at little or no charge; and
• Segregate accounts that are “near the statute of limitations” or belong to sensitive customers, such as those in bankruptcy or active-duty military service.

Debt buying: Many debt collectors have no proof of the debt they seek to collect and sometimes even sue and harass the wrong person.

Given that many third-party debt collectors have virtually no proof of the debt they seek to collect and sometimes even sue and harass the wrong person, these recommendations could be very useful to consumers. The OCC did its own investigation in 2011 and found (not surprisingly) that banks have people on staff whose main job is to pressures consumers to repay delinquent debt, and that if this fails, they sell the debt to third parties who sometimes extract payments from consumers who have no assets by obtaining judgments and garnishing future wages.

We have several videos on our web site.  Below are a few that might be of interest:
  • “Creditor’s Rights in Arizona”
  • “Why I offer free legal advice”
  • “Meet Ms. Drain and Suggestions on How to Hire an Attorney”

MUSINGS BY DIANE: “I have seen numerous debt collection cases in which the collectors do not care if the debtor is judgment proof (meaning they live on very low fixed income).  I’ve even seen lots of cases in which collectors sue on debts that are outside the statute of limitations. This is a violation of the Fair Debt Collection Practices Act as well and many states’ UPA statutes.  In any case, I hope to see a change in the number of debt collection actions following these developments, but only time will tell.