Is Debt Buying The World’s Ickiest Profession?
It is normal to be indignant when a creditor calls you and pesters you about money that you owe them but have been unable to buy. There is a reason that movie audiences cheered during an early scene in the movie The 40-Year-Old Virgin where Catherine Keener’s character cusses out the caller who she thinks is a debt collector harassing her about a debt supposed owed by her ecommerce business (even though the caller turns out not to be a debt collector but a secret admirer). Consumers feel even more justified in their anger when the debt collector is a third-party collection agency, not a creditor from which the consumer ever borrowed money or financed a purchase. Third-party collections might be a sleazy business, but someone must profit from it, or else collection agencies would not be flourishing like they are. A Boca Raton debt lawyer can help you make debt collectors stop bugging you.
Why Would Someone Buy a Debt That No One Can Pay?
When a collection agency calls you, a logical response is, “Who are you, how did you get my contact information, and how is it possible that I owe you money?” In fact, collection agency representatives are supposed to be transparent with you about these matters when you ask. What usually happens is that the collection agency buys your debt from the original creditor and then tries to collect payment from you.
After a creditor tries for several months to collect payment from a borrower (a borrower in this case can mean a customer who bought a car and took out an auto loan, a patient who owes medical bills, or any other consumer who owes money to a company) but the borrower does not pay anything, the creditor might assume, correctly, that they are not going to collect any money from the borrower in the future, either. At this point, collecting a partial payment is better than not collecting any payment at all. Collection agencies may offer to settle the debt for a fraction of its original value, and the creditor may agree to the offer, because getting 20 percent of the original amount owed is better than getting nothing.
Thus, the collection agency buys the debt (by paying a fraction of its value) and then starts trying to collect payment from you, the consumer. If the consumer pays the collection agency anything more than the collection agency paid the creditor to buy the debt, the collection agency makes a profit. This means that collection agencies are often willing to settle debts for a much lower amount than the original creditor requested. For example, if your debt was $500 and the collection agency bought it for $100, then if you agree to settle it for $200, the collection agency has profited from buying the debt.
There Must Be a Better Way
Yes, you can settle your debts with collection agencies if you can afford it, but a debt lawyer could also help you find a better solution. Contact Nowack & Olson, PLLC for a consultation on your case.