| Be the Consumer Credit Card Debt Collectors Do Not Want to Collect From |
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| Written by Matthew Highlander |
| Wednesday, 05 August 2009 11:07 |
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Most people would simply rather pay their credit card debts than deal with collection phone calls and collection attorney letters. But, what about those who cannot afford to make monthly minimum payments on their credit card debt? Many fall prey to the debt collection industry. Some, however, become educated consumers and use the law to force debt collectors to spend their time with other, less knowledgeable consumers.
Most people would simply rather pay their credit card debts than deal with collection phone calls and collection attorney letters. But, what about those who cannot afford to make monthly minimum payments on their credit card debt? Many fall prey to the debt collection industry. Some, however, become educated consumers and use the law to force debt collectors to spend their time with other, less knowledgeable consumers. Today most unsecured consumer debt that is up for collection is credit card debt. The consumer debt collection agencies and collection attorneys who pursue these debts work on commission. They do not get paid until some money is collected. Time is money for a credit card debt collector. The consumer debt collection industry's growth has mirrored the growth of the credit card industry. According to the Federal Reserve and Business Week, the consumer credit industry increased from $133.7 billion of consumer debt obligations in 1970 to $2.5 trillion of consumer debt obligations 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. There were 173 million credit cardholders in the United States in 2006, According to the U.S. Census Bureau. According to the American Banking Associate, 4.75 percent of bank cards were delinquent in the first quarter of 2009. 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. 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 put up no resistance or with those who properly dispute a debt and request validation for it? DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Matt Highlander has researched credit counseling, debt settlement, debt collectors and collection attorneys. If you are seeking credit card debt relief, read Credit Card Debt Survival Guide Matt writes for the Guide. |
| Last Updated on Wednesday, 07 October 2009 18:03 |