Most of those people who cannot afford to pay their monthly minimum credit card payment become potential victims of the consumer debt collection industry. But, 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 reckon there is a debt collector for every debt, when the reality is there is only a debt collector for every simple-to-collect credit card debt.
Consumer debt collection has grown and prospered with the expansion of the credit card industry.
Consumer credit went from $133.7 billion of in 1970 to $2.5 trillion of debt in November 2007, according to the Federal Reserve and Business Week.
According to ACA International, a consumer debt collection trade group, each year debt collectors return more than $40 billion to the U.S. economy.
There were 173 million credit cardholders in the United States in 2006, According to the U.S. Census Bureau.
4.75 percent of bank cards were delinquent in the first quarter of 2009, according to the American Banking Associate.
The point is, there are millions of delinquent credit card accounts to go around to ambitious debt collectors.
The Federal Reserve compels credit card companies to budget for terrible debts. The credit card companies usually sell those terrible debts after they are written off to junk debt buyers for no more than 10 cents for each dollar of debt. Given that bargain, junk debt buyers do not expect to collect on 100 percent, or even 50 percent, of the accounts they buy, nor do the collection agencies and collection attorneys who work for them.
If a consumer resists collection attempts (after they learn how to properly do so), it is simply not profitable for collectors to place more time into chasing them for their debt, when they can place that time in getting the simple returns from other people who place up no resistance. The Honest Debt Collection Practices Act (FDCPA) is the key to resistance.
According to the FDCPA the debt collector must say 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 stop collection attempts until they properly validate the debt. As original creditors credit card companies are not covered by the Honest Debt Collection Practices Act. But, 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 place up no resistance?