From MSN by way of Business Reform
While there are legitimate home based collections businesses, this article talks about a new breed of renegade companies flaunt legal protections offered debtors under the law such as the “statute of limitations” and use new technology to harass people into believing they have a remaining obligation to pay.
A decade ago, most people who reneged on debts could rest easy after several years passed, since few creditors tried to collect on old bills, particularly for small amounts.
Today, however, collecting on old debts is a rapidly expanding industry. Aggressive companies can buy charged-off credit card accounts from the original lenders for pennies on the dollar. Then, they use credit scoring and other new technologies to identify which debtors are most likely to pay. The players in this “junk debt� market range from fly-by-night outfits to well-established companies funded by Wall Street investors.
It’s a business that barely existed 10 years ago. In the last three years, it’s been growing at a 30% annual rate, according to credit industry analyst Sean McVity of Keefe, Bruyette & Woods.
Among the worst practices attorneys have seen:
*Suing or threatening to sue over debts even though the statute of limitations has long expired.
*Illegally “re-aging� debts on credit reports. The collectors tell credit bureaus that an old debt is, in fact, a new one. The goal: To extend the seven-year limit on reporting negative items and put more pressure on the consumer.
*Promising to delete a negative mark from the consumer’s credit report in exchange for a token payment. Not only does the collector fail to follow through, but the payment can revive the statute of limitations and lead to a lawsuit. Even if the collector does back off, the unpaid debt could be sold to another company that might renew collection activity.
*Bait-and-switch credit cards. Some credit card companies have offered borrowers low-rate credit cards and then tacked old, charged-off debts — often purchased from other lenders — onto the balance. The card issuers typically insist they disclosed that the old debts would come with the cards, Szwak said, but the borrowers say no such disclosure was made.
*Verbally abusing and harassing consumers. My readers have reported being cursed, berated and called repeatedly despite requests to stop — all violations of federal laws.
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