Published On: November 2, 2020

Debt collectors doubled their earnings – all thanks to COVID-19

greedy debt collectors

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,”

greedy debt collectors

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.

greedy debt collectorsThere 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.

greedy debt collectors


greedy debt collectorsWe 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 L. Drain
By |Published On: November 2nd, 2020|Last Updated: November 2nd, 2020|

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About the Author: Diane Drain

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.

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