Consumer debt collectors! Credit Card debt collectors! There ought to be a law against them! Fortunately, there is a law, and educated consumers have learned how to use it to fend off these debt collectors by making their job difficult.
Time is money for a credit card debt collector, who is in the business of collecting unsecured consumer debt, most of which happens to be credit card debt. These consumer debt collectors and collection attorneys work on a percentage of what is collected. Most people think there is a debt collector for every debt, when the reality is there is only a debt collector for every easy-to-collect credit card debt.
Consumer debt collection has grown and prospered with the expansion of the credit card industry.
Consumer credit went from $133.7 billion of in 1970 to $2.5 trillion of debt in November 2007, according to the Federal Reserve and Business Week.
According to a trade group for the debt collection industry, ACA International, each year debt collectors put more than $40 billion back into the U.S. economy.
According to data from the U.S. Census Bureau, there were 173 million credit cardholders in the United States in 2006.
According to the American Banking Associate, in the first quarter of 2009, 4.75 percent of bank cards were delinquent.
The point is, there are millions of delinquent credit card accounts to go around to ambitious debt collectors.
The Federal Reserve compels credit card companies to budget for bad debts. The credit card companies usually sell those bad debts after they are written off to junk debt buyers for no more than 10 cents for each dollar of debt. Given that bargain, junk debt buyers do not expect to collect on 100 percent, or even 50 percent, of the accounts they purchase, nor do the collection agencies and collection attorneys who work for them.
Debt collectors make the same empty threats to both resistant and non-resistant consumers holding credit card debt. Usually, however, they only follow-up with more threats and intimidation with the non-resistant majority of delinquent credit card account holders. The secret is learning the correct response to those initial threats and how to use the Fair Debt Collection Practices Act (FDCPA).
While credit card companies are original creditors not covered by the Fair Debt Collection Practices Act, collection agencies, collection attorneys and junk debt buyers are subject to that federal law. According to the FDCPA a debt collector (Attorneys collecting consumer debt are considered debts collectors by this law.) must notify the consumer in writing of their right to dispute the debt and have it validated. Validation means the collector must send copies of original documentation verifying the debt. The FDCPA also says the consumer can instruct the debt collector to cease collection attempts until they properly validate the debt.
Should the debt collector invest their time with those who properly dispute and request validation or those who put up no resistance?