With increasing frequency, consumers are reporting that debt buyers - companies that buy the right to collect defaulted credit card debt for pennies on the dollar - are refusing to negotiate reasonable payment plans, and instead are demanding payment of the full amount claimed.
The major debt buyers are huge companies that know how to make a profit, but their rigidity makes no sense to me.
Clients remark: "If I could pay that much money, I wouldn't have defaulted in the first place.
" Here's why it doesn't make sense [and I invite anyone to enlighten me]: The credit card issuing banks - Chase, Capital One, Bank of America, etc - will often work with debtors in default, meaning: they'll take less than the full amount owed on a credit card and/or offer payment plans.
These companies are likely to prevail if a lawsuit is required to enforce payment, because they typically have sufficient documentation (evidence) to prove their case.
On the other hand, I have yet to see a debt buyer prove their case.
To prevail in court, they must prove that they own the debt.
The only way to do this is by producing (1) a valid bill of sale or assignment document from their predecessor in interest and (2) a witness at trial from the assigning/selling company who can testify to the authenticity of the evidence offered.
This is an expensive proposition, since the predecessor in interest is often an out of state company.
So, until debt buyers start flying in out-of-state witnesses to testify at trial - hint; it ain't gonna happen any time soon - I will continue to believe that, if challenged, they cannot win.
Nevertheless, it is these companies - the ones with the weakest cases - that are forcing litigation by refusing to negotiate with consumers As far as I can see, there are a couple of possible explanations for this strategy: First, in spite of the dearth of spare change around, these collectors are persuading enough people to cough up the full balance to make their hard ball tactics profitable; and second, consumers who don't pony up and are sued, often don't respond, leading to inexpensive default judgments, wage garnishments and bank account levies.
The common factor in each explanation is that consumers don't know their legal rights, and lack the training to mount an effective defense.
If consumers knew two things, ONLY TWO, they could turn this collection strategy on its head, and avoid stressing out all the while.
Here's the first thing they need to know: Debt buyers do not have evidence of ownership of your account, and therefore,if properly challenged, they cannot prove their case against you in court.
And here's the second: the effectiveness of their threats is determined by your reaction to them.
It's worth reading again.
Thus, if you know they cannot win - and conversely that you can and should - there is absolutely no reason to believe that their threats will come to pass.
So, if they're only blowing smoke - they are - and you know it, where is the stress in that? If you keep these two points in mind, you'll handle the stress of collection calls more effectively.
J