Debt Collectors Profit Because of COVID and Want More Money
Published On: November 2, 2020
Debt collectors doubled their earnings – all thanks to COVID-19
10/5/20 According to an article in ProPublica, debt collections have made a fortune this year due to the COVID stimulus monies. Those who really needed those funds used them to pay past-due debts, rather than saving the money to pay rent, utilities, food, health care and other very important necessities.
This article will help to explain the debt buying world and how our bad luck is their good luck.
“In August, Encore Capital, the largest debt buyer in the country, announced that it had doubled its previous record for earnings in a quarter. It primarily had the CARES Act to thank: The bill delivered hundreds of billions of dollars worth of stimulus checks and bulked-up unemployment benefits to Americans, while easing pressures on them by halting foreclosures, evictions and student loan payments. There was no ban on collections of old credit card bills, Encore’s specialty.”
Encore sued by CFPB for False actions.
Note – in September, 2020 Encore was sued by the Consumer Financial Protection Bureau because Encore had “pressur(ed) consumers with false statements and churning out lawsuits using robo-signed court documents,”
As the economy continues to struggle and under or unemployment continues to rise, the borrowers’ situation will become even more desperate. Which means they will default on more of their credit card debts, which will result in the debt buyers buying more and more debts at dramatically reduced prices. According to the article “In recent years, Encore has bought around 2 million to 3 million U.S. accounts per year, according to public filings. Last year, on average, the company paid 8.6 cents on the dollar for each account. For a typical debt of $3,142, Encore paid $271.”
They bully the borrowers into paying debts, rather than paying rent or buying food. The debt collectors lie about the law and mislead the borrowers about their rights. Such as harassing the borrowers at work, or calling family or neighbors.
There are long lasting consequences to choices made in haste.
According to the article “Collection suits can have a lasting negative effect on consumers. A recent study by economists from Dartmouth’s Tuck School of Business and the University of California, San Diego, focused on debtors who, after being sued, agreed to pay in order to avoid garnishment. The settlements left consumers worse off: They were more likely to fall behind on other debts or end up in foreclosure or bankruptcy, the study found. The main reason was that paying up on one debt had drained those consumers’ cash buffer and that left them vulnerable to falling behind on others.”
The moral to this story – know your rights.
There are federal and state laws that protect the consumer (that is you). Take the time to learn about those laws and NEVER assume the debt collector is telling you the truth.
MUSINGS BY DIANE:
We all want to believe that we would know when someone is lying or trying to steal from us. Right? Unfortunately, those of us who trust are viewed as “easy prey” to many who appear, on the face, to be people we can trust. Now I am not saying that everyone who is nice is really there to rip-off their neighbor. But there are so many scams now that it is hard to tell the “white hats” from the “black hats”. For you Millennials – that means the good guys from the bad guys.
The older generations tend to trust more than the younger ones. Probably because the younger generations have seen schemes that never existing even 20 years ago. My point in this rambling is to remind everyone to “trust, but verify”.
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
5 / 5
“You folks are the BEST OF THE BEST in Arizona.” M.H.
You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.
5 / 5
“My only regret is that I didn’t find Diane sooner.” K.H.
I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.
5 / 5
“Filing for bankruptcy can be a stressful life event” R.A.
Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.
Want to avoid dishonest debt collectors? Watch this video from FTC’s Consumer Advice By Joseph Ferrari,July 22, 2022 (reprint from FTC, Consumer Alerts) During Military Consumer Month 2022, the FTC [...]
CFPB Confirms Effective Date for Debt Collection Final Rules (Reprint from CFPB, July 30, 2021) The Consumer Financial Protection Bureau (CFPB) today announced two final rules under the FDCPA will [...]
CFPB Rule Clarifies Tenants Can Hold Debt Collectors Accountable for Illegal Evictions Bureau Issues Interim Final Rule on Fair Debt Collection Practices Act (reprint April 19, 2021) The Consumer Financial [...]
My intention is to put you back in control of your life
Start with $0 down*. We provide affordable payment plans.
We are a debt relief agency; we help individuals and small businesses through the bankruptcy process. Attorney Advertising. This website is designed for general information only. Any information you obtain from this website should not be construed as legal advice, nor as grounds for forming an attorney-client relationship. You should consult an attorney for information on obtaining formal legal advice.