How to Get Credit Card Debt Collectors to Focus Their Energy Elsewhere
Saturday, September 26th, 2009
Most of those people who cannot afford to pay their monthly minimum credit card payment become potential victims of the consumer debt collection industry. However, a growing number of consumers have found a law to protect themselves against credit card debt collectors.
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.
Over the last 30 years the credit card industry has grown exponentially and the consumer debt collection business has as well.
The Federal Reserve and Business Week report $133.7 billion of consumer debt in 1970 increased to $2.5 trillion of consumer debt in November 2007.
Each year debt collectors put more than $40 billion back into the U.S. economy, according to ACA International, a trade group for the debt collection industry.
According to data from the U.S. Census Bureau, there were 173 million credit cardholders in the United States in 2006.
4.75 percent of bank cards were delinquent in the first quarter of 2009, according to the American Banking Associate.
These statistics indicate debt collectors have millions of delinquent credit card accounts to collect from.
Credit card companies must comply with Federal Reserve regulations by keeping reserves to for bad debts. Bad debt is part of their business. After these debts are written off, junk debt buyers bid on blocks of delinquent credit card accounts. If successful, they pay no more than 10 cents for each dollar of debt. With that discount rate junk debt buyers and the collection agencies and collection attorneys who work for them only need to collect 30 or 40 percent of the debts to make money.
If a consumer resists collection attempts (after they learn how to properly do so), it is simply not profitable for collectors to put more time into chasing them for their debt, when they can put that time in getting the easy returns from other people who put up no resistance. The Fair Debt Collection Practices Act (FDCPA) is the key to resistance.
The Fair Debt Collection Practices Act covers the behavior of collection agencies, junk debt buyers, and collection attorneys. The FDCPA treats attorneys as debts collectors, if they are collecting consumer debt. The consumer must be notified in writing by the debt collector of their right to dispute the debt and have it validated, according to the FDCPA. Copies of original documentation that verifies a debt are considered proper validation by the FDCPA. The FDCPA gives the consumer the right to tell the debt collector to stop collection activity until they have validated the debt.
Should the debt collector invest their time with those who properly dispute and request validation or those who put up no resistance?
