A junk debt buyer is a collection agency which has purchased a portfolio of delinquent or charged off accounts from credit card companies, or other collection agencies. Credit card debt accounts for nearly 70% of the accounts sold to junk debt buyers, followed by auto loans, telecommunications debt and other retail accounts. Some of the better known junk debt buyers are Asset Acceptance, NCO Group, Portfolio Recovery Associates, RJM Acquisitions, Cavalry Portfolio, Unifund, Midland Funding, First Select, and Sherman Acquisitions.
Junk debt buyers purchase debts on which other debt collectors have failed. Usually, the debts are too old to be sued upon, or the debtor is judgment-proof, or the debtor cannot be located, or the debt has even been discharged in bankruptcy. Because the accounts are inherently hard to collect, junk debt buyers pay only pennies on the dollar for the debt.
Junk debt buyers are collecting on debt that other collection agencies have deemed worthless. If a debt collection agency has deemed your debt worthless, you can pretty much rest assured that it is! The junk debt buyer usually has no documentation of the underlying debt either. That is why they can’t or won’t “validate” the debt.
Most of these accounts are not collectable in court, if any competent attorney shows up on the consumer side (it is another story if you represent yourself). The debt collection agency’s only hope is to shame, harass, or trick the consumer into paying. That is accomplished through false threats of suit, getting you to make a small payment to extend the statute of limitations, re-aging the debt with the credit reporting agencies, calling with unreasonable frequency, and calling friends or family. Yes, we should all pay our debts, but there are laws to protect you from harassment, including the Fair Debt Collection Practices Act (FDCPA), and California’s Rosenthal Fair Debt Collection Practices Act.
Consumers who have suffered debt collection harassment should contact a consumer attorney in their area. Certainly, if you have been sued, make sure you respond on time and don’t try to represent yourself. If you just want to get rid of a collector, send a cease contact letter. There is not much they can do to you after that.
Alec Trueblood is a consumer attorney in Los Angeles, California, who specializes in debt collection abuse and harassment, car repossessions, defending credit card and other debt lawsuits, and class actions. The Trueblood Law Firm, 10940 Wilshire Blvd., Suite 1600, Los Angeles, California 90024. (310) 443-4139.