Most of those people who cannot afford to pay their monthly minimum credit card payment become potential victims of the consumer debt collection industry. However, a growing number of consumers have found a law to protect themselves against credit card debt collectors.
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.
Consumer debt collection has grown and prospered with the expansion 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.
4.75 percent of bank cards were delinquent in the first quarter of 2009, according to the American Banking Associate.
These statistics indicate debt collectors are awash in millions of delinquent credit card accounts.
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 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).
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 properly dispute and request validation or those who put up no resistance?
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.
Consumer debt collection has grown and prospered with the expansion 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.
4.75 percent of bank cards were delinquent in the first quarter of 2009, according to the American Banking Associate.
These statistics indicate debt collectors are awash in millions of delinquent credit card accounts.
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 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).
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 properly dispute and request validation or those who put up no resistance?
About the Author:
Matt Highlander has researched the legal nonpayment strategies for dealing with credit card debt. If you cannot afford to pay, read his Credit Card Debt Survival Guide
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