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Beating Credit Card Debt Collectors at Their Own Game
Written by Matthew Highlander   
Saturday, 25 July 2009 17:09
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.
by MatthewHighlander


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.

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.

According to data from the U.S. Census Bureau, there were 159 million credit cardholders in the United States in 2000, 173 million in 2006.

According to the American Banking Associate, in the first quarter of 2009, 4.75 percent of bank cards were delinquent.

These statistics indicate debt collectors have millions of delinquent credit card accounts to collect from.

The Federal Reserve requires credit card companies to hold reserves for bad debts. The credit card companies profit from these debts after they are written off by selling them to junk debt buyers for no more than one penny on a dime, or 10 percent of their value. With that discount, junk debt buyers and their collection agencies and collection attorneys can be quite profitable by only collecting on 30 or 40 percent of the purchased accounts.

Debt collectors can make more money by pursuing delinquent credit card account holders who put up no resistance. Proper resistance to debt collection attempts usually causes debt collectors to look for less resistant targets. Effective resistance to credit card debt collectors relies on The Fair Debt Collection Practices Act (FDCPA).

According to the FDCPA the debt collector 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. As original creditors credit card companies are not covered by the Fair Debt Collection Practices Act. However, the behavior of collection agencies, collection attorneys, and junk debt buyers is covered by this federal law.

So, who should the consumer debt-collection commissioned professionals spend their time with, those who properly dispute and request validation or those who put up no resistance?

Information:

Matt Highlander learned how to frustrate credit card debt collectors and collection attorneys. If you cannot afford to pay, read his Credit Card Debt Survival Guide
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