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Then why would anyone pay their bills if they can buy their debt back for 1/10th of what they owe?
I can also just wait out the debt period, until it passes the statute of limitations, and not pay anything at all - but I don't, because I prefer having a decent credit score and businesses who will do business with me.
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In addition to the credit issues the other commenters noted, there is the issue of taxes in the case of "chargeoffs." One will get an income statement from the credit issuer for the fraction of the debt they write off. Odds are if one is in the position of having debt collectors come after them they'll be unlikely to afford the taxes on the "income."
Sometimes the debt is bullshit, but it might be easier to buy it for a small percentage than to pay it off. We get letters for a medical debt that's factually wrong, but by the time we convince Debt Agency N that we don't actually owe it, they've sold it off to Debt Agency N+1 for 1/10th of what they claim we owe them (which is already 1/10th of what was originally 'owed'.) It would be well worth paying 1/100th of th…
You only have 30 days to do a so-called "timely" validation, but you can force past CA's to validate as well -- the only hitch is that they can continue to collect on you while they validate, something they cannot do if you demand timely validation.
One more tip: Don't sign your name on letters to CAs, and don't ever give them ANY information they don't already own. Ever. Especially your bank account information. If you do decide to pay them (hopefully strategically as part of a pay-for-deletion-from-credit-report arrangement), don't pay them on a bank draft. And send it certified mail return receipt requested.
When the collectors call the debtors, can the debtor demand a paper trail to prove that the collector is the actual owner of the debt? Why should a debtor pay any amount of money to a random person who calls them and says they bought an old debt?
No. Debt is not a crime in the USA. And it is generally more profitable for collectors to sell your debt on to the next collector than to take any sort of civil legal action against you. Some exceptions include IRS and Student Loans.
As the article indicated, the best reaction (assuming you don't intend to pay) is to hang up.
I think that borrowers should have the right of first refusal when their debt is sold. For example, if you're about to sell $1.00 worth of my debt to someone for $0.10, first you must offer it to me at the same cost: $0.10.
Then why would anyone pay their bills if they can buy their debt back for 1/10th of what they owe?
If self-purchase looked on a credit report just like settlement-for-less-than-full-amount (and was taxed like forgiveness), there'd still be considerable reason to in order to maintain creditworthiness.
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Well, at a bare minimum, credit scores.
Most people on HN exist in a very different world from the unbanked population. Credit scores mean nothing to these people. Many can't even get approved for a checking account and rely primarily on cash equivalents and prepaid products.
This is one of the most unbelievable articles I've ever read. If you didn't read it all the way through, do so over lunch or something; it's amazing. The idea of "millions of dollars" worth of debt being traded for around on thumb drives, and that all those thumb drives really contain are excel spreadsheets is mind boggling . Those people in those spreadsheets are real people , and they're being completely duhumanize…
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This is the worst possible advice a person could give. Collectors can and will go to court to get a Judgement (capital-J), which allows them to garnish wages (among other things) and in some cases is actually worse than declaring bankruptcy. "If you have a lot of cash" speaks volumes about where you're coming from, though. Congratulations on being one of the very privileged few in this country who can afford to do wh…
They pursue a judgement on sums up around thousands of dollars where the charges are clearly valid. There is no way that's going to happen on some piddly $400 amount that you have documented is substantially BS. What I'm talking about is people I've seen in recent threads freaked out about some comcast charge affecting their credit report. Don't waste a minute of your time dealing with them or the credit bureaus. Jus…
Father was a personal injury lawyer. Son was a debt collector. Solid family values over at the Seigels.
Of course, there are a lot of scumbags in both professions, but I don't see any reason why there can't be decent people there as well.
Advice from someone who works on debt collection software for a living: never, ever let a check bounce. Returned checks operate in a legal loophole that circumvents most of the consumer protection afforded to regular debt. Collection agencies can begin pursuing it immediately, can begin reporting it to the credit bureaus immediately, and the interest rate they're allowed to charge on it is ridiculous.
Do you think its financially viable to run an ethical debt collection agency?
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Most people on HN exist in a very different world from the unbanked population. Credit scores mean nothing to these people. Many can't even get approved for a checking account and rely primarily on cash equivalents and prepaid products.
Then wouldn't these individuals not even care to pay f their debt at .10 to the 1.00?
And some people, no. No they wouldn't care. Like most people, it depends on life situation.