When Companies Buy Debt from Collection Agencies

Debt collection companies can be intimidating. They often use shady practices to force consumers to pay questionable debt. If you are being hounded by debt collectors, call the Ohio consumer law attorneys with Luftman, Heck & Associates today at (888) 726-3181.

Imagine this: You’re going about your day when your phone rings. The caller states that he is attempting to collect on a debt you owed to a credit card company years ago. You rack your brain trying to figure out what he’s talking about or where he’s calling from, all while he’s demanding that you pay the money you owe – now, today, or else you could be facing ominous charges.

This is the kind of problem many consumers face. They receive calls and letters from companies they’ve never heard of, and which demand that they pay for past debts owed long ago.

Questionable Old Debt Is Often Sold “As Is”

Creditors that hold onto seriously delinquent debts are often able to write them off. However, in an attempt to make some money, they frequently sell off the debts to other companies for pennies on the dollar. For example, they may sell a $1,000 debt for $50.00.

Debt buyers who purchase these debts then attempt to collect the full amount owed. These debts, often referred to as “zombie debts,” may be old enough that the statute of limitations to sue you has expired. The debts may have been discharged in bankruptcy, or they may have been paid many years ago.

Much of the debt bought includes little information beyond a consumer’s name, address, phone number, and social security number. Many states do not require creditors to provide more information, so much of the debt sold to debt buyers is “as is” and “with all faults.”

Debt Buyers Use Shady Practices

John Oliver, the host of the television show Last Week Tonight, presented voice recordings of actual debt collectors leaving badgering, threatening, and often frightening messages for consumers. One caller referred to a consumer as a “loser,” and one threatened to hurt a family pet. Still another debt collector threatened violence against a consumer. Oliver showed a clip of a debt collector saying he liked to track down the name and number of a consumer’s employer and then call the boss at home to attempt to collect the employee’s debt.

Some of the most glaring examples of a debt buyer taking advantage of the fears and anxieties of consumers are the deplorable acts of Williams Scott & Associates, a.k.a. Warrant Services Association (WSA). WSA is a debt agency that collected millions of dollars in old debts from unsuspecting consumers after posing as a federal entity, such as the Department of Justice, the U.S. Marshalls, or a fictitious government task force created to investigate fraud. The callers used phony names and created fake official-looking documents that they mailed to consumers. They threatened to arrest consumers, suspend their driver’s licenses, and hit them with hefty fines and lawsuits.

WSA racked up enough complaints with the Federal Trade Commission (FTC) to warrant a closer examination of its business practices. As a result, the FTC and FBI sued WSA for violating the laws set up to govern collection practices.

Debt Buyers File Lawsuits Against Consumers, Then Garnish Wages

Debt buyers frequently violate the Fair Debt Collection Practices Act (FDCPA). Many debt collectors have received their fair share of lawsuits and fines for unethical practices. Those who are following the law are still bringing a huge amount of lawsuits against consumers for failing to pay their debts. The sheer volume of these suits, according to Oliver, has made debt buyers “one of the heaviest individual users of state court systems across the U.S.”

The companies aren’t particularly concerned about their attorneys being prepared to argue cases. In fact, they actually bank on the consumer not even showing up to court, and they’re often right. Oliver’s research showed that as many as 95 percent of these cases went unanswered. In those instances, the court often automatically finds in favor of the debt buyer, which then has the court’s blessing to collect. Many states give these collectors power to garnish a consumer’s wages in order to pay off the debt.

Some States Have Made Laws Favorable to Debt Buyers

Some states have made laws easier on debt buyers. Oliver highlighted Arkansas’ HB 2028, which was signed into law in 2013. The senator who introduced the bill casually claimed that all it did was define the term “credit card.” However, Oliver pointed out that it included debt buyers in the definition of “creditor,” and it established a “presumption of correctness” in favor of the claims of debt buyers.

Many states also have lax licensing laws for these companies. They don’t require a debt buyer to have any sort of license to buy old debt, and some states don’t require a license for a company to collect on that debt.

Oliver affirmed the alarming ease of buying debts by creating a fake collections company and quickly receiving an offer from a creditor to buy nearly $15 million dollars’ worth of out-of-statute debt (or, debt that is so old that the debtor cannot be sued for the amount owed) for about $60,000.00. Because his company was established in a state that didn’t license debt buyers, he only needed to come up with the payment and he could own the names and personal details of 9,000 consumers.

How Ohio Consumer Law Attorneys Can Help

If you are one of the many people who struggle to pay debt, and you find yourself at the mercy of a debt collector, remember that you have rights. The Ohio consumer law attorneys at Luftman, Heck & Associates know you work hard for your money, and you shouldn’t just hand it over the minute a collection agency threatens you. If you are being harassed by a debt collector, contact us today for a free consultation. Call (888) 726-3181 or email us at advice@ohiodebthelp.com.