What You Should Know About Junk Debt Buyers

If you’ve had a debt sent to collections, you may have encountered a junk debt buyer. These companies use underhanded tactics to either intimidate debtors into paying or into paying debts that should already have been dead. If you suddenly start getting calls, letters, or legal notices about an old debt to some company you’ve never heard of, you may be dealing with a junk debt buyer. Below, we discuss junk debt buyers and the shady tactics they use. If you are dealing with unlawful collections activities, call a savvy Ventura debt relief and consumer protection attorney for help protecting your rights and exploring your debt relief options in Southern California.

What Is a Junk Debt Buyer?

A junk debt buyer is a company that buys defaulted debt from credit card companies. They also buy debt from other collection agencies.

For example: Let’s say you rack up a $5,000 credit card bill. You’ve stopped making your monthly payments. The credit card company has tried to get you to pay, charged you interest, and perhaps even hired a debt collection company to bully you into paying. At some point, they realize they can’t get you to pay. Instead of filing a lawsuit, they sell your debt (likely in a bundle with other debt) to a junk debt buyer.

Junk debt buyers buy debt for pennies on the dollar. Credit card companies are willing to sell the debt cheaply because they’ve already tried and failed to collect the debts they are owed; it might even be discharged or past the statute of limitations. From the perspective of the credit card company, they might as well make some money rather than no money. From the perspective of the junk debt buyers, if they manage to collect some or all of the debt on at least a few of the accounts they purchase, they can make back their investment and more.

Junk debt buyers are not debt collectors. Debt collectors are third-party contractors that creditors hire to collect debt payments they are owed. Junk debt buyers may use similar tactics as shady debt collectors–harassing phone calls, in-person visits, misinformation, mountains of mail–or they may hire debt collectors to work for them.

Shady Tactics Used by Junk Debt Buyers

Junk debt buyers use a number of different tactics to get debtors to pay. Some of these tactics are unethical; some are flat-out unlawful.

Junk debt buyers may intentionally purchase debt that is “dead”–debt that was discharged in a Chapter 7 bankruptcy or that is past the statute of limitations (the legal time limit for bringing a legal action). For example, consider a debt that is past the statute of limitations, meaning the credit card company (and now the junk debt buyer) has no legal right to sue for collection. The buyer calls the debtor and demands repayment of the debt, perhaps even claiming they’d be happy to accept a small portion of the debt at first. The debtor complies, paying a portion of their debt. Because the debtor made a new payment, the statute of limitations is restarted and the debt buyer can pursue any legal action they like to collect on the debt that otherwise would have remained uncollectable.

Note that making that call to the debtor is likely illegal. California law prohibits creditors from attempting to collect any debt that is past the statute of limitations. It’s also unlawful to try to collect any amount not agreed upon by the consumer and the original creditor–the debt buyer cannot, for example, charge additional interest, service fees, collection fees, or other bogus charges.

If the debt was discharged in bankruptcy or is otherwise dead, the junk debt buyer might simply file a lawsuit–one that should fail on the law. The buyer, however, files hundreds of these lawsuits at once, against every debtor whose junk debt they purchased. There’s no way they could actually litigate all of these cases, of course. If anyone files a proper response to the complaint, pointing out the debt is dead, they’ll drop the case (or the debtor’s lawyer will get it tossed). But, they can bank on at least a few debtors either being intimidated into paying or ignoring the summons entirely. The debt buyer can then move for default judgment, and as the court has only the debt buyer’s side of the story, the court might order that the debt buyer wins automatically. Now, the debtor is stuck with a judgment against them.

Junk debt buyers may try to collect on debts that are legitimately still alive and due, but they might use improper collection practices to harass, intimidate, and bully debtors. Whatever their tactics, with the help of a consumer protection lawyer, you can fight back.

Protect Your Rights and Find Financial Freedom With Help From a Seasoned Southern California Consumer Protection and Debt Relief Attorney

If you are dealing with mounting debt and considering debt relief options including bankruptcy, please contact Rounds & Sutter for a free, confidential consultation. With offices in Ventura and Westlake Village, we represent clients throughout Southern California, offering tried & true legal counsel in the face of life’s challenges.