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Debt Buying, Explained

Posted on : November 5, 2016
Debt Collection Attorney Washington

If you’ve ever received a letter from a debt collector, it’s likely that you actually received a letter from a debt buyer — a business that purchases debts from other firms at a discount and then collects the debt themselves. This is a practice that is valid, but debt buyers do have specific regulations they must follow. Here’s what you should understand about debt buyers and how they can impact your finances.

Why Do Firms Sell Debt?

Is it advantageous for a business to sell debt at a reduction to debt buyers? Many businesses do this for exactly the same reason they occasionally offer “resolutions” to debtors. They consider that putting the debt to bed, so to speak, and receiving as much cash as possible up front, is the greatest method to reduce collection costs and move forward. Continuing to attempt debt collection on money owed with no payments or minimal payments may be more expensive to them over time.

Do Debt Buyers Actually Purchase Debt?

It may not make sense at first for a company to buy debt. But a debt buyer who buys a debt at a reduction — usually for just a couple of cents on the dollar — can then collect the debt in full from the debtor and has made a substantial gain, particularly when the debtor pays promptly. Ideally for the debt buyer, this happens before they have invested lots of time and cash to collect the money owed.

What Laws Must Debt Buyers Conform To?

A debt collector or debt buyer may not threaten a debtor with a lawsuit if the statute of limitations is up, nor can a debtor harass by calling in a brief time or calling after hours. They are also prohibited against many other unscrupulous debt collection activities under the Fair Debt Collection Practices Act.

When to Reach Out to a Bankruptcy Lawyer

It is necessary to follow the history of the debt if you’ve received a collection letter from an organization that you’ve not done business with. You can contest it with the aid of a seasoned bankruptcy attorney if you not owe the debt. Or, a bankruptcy attorney may be able to halt collections and either have the debt put on a restructured payment plan or discharged with a Chapter 13 or Chapter 7 bankruptcy, respectively.

Call Beecher and Conniff Bankruptcy Lawyers today at (904) 354-6604 for more information.

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