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.
Depending on how he or she spends it, time is the debt collector’s friend or enemy. Ideally debt collectors would like to spend their time with consumers who are easy to collect from. Everyone knows an overdue credit card debt will bring a call or letter for a debt collector. What they do not know is with a proper consumer response to that communication, the debt collector will move onto a more likely target.
The consumer debt collection industry’s growth has mirrored the growth 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.
According to ACA International, a consumer debt collection trade group, each year debt collectors return more than $40 billion to the U.S. economy.
According to data from the U.S. Census Bureau, there were 159 million credit cardholders in the United States in 2000, 173 million in 2006.
According to the American Banking Associate, 4.75 percent of bank cards were delinquent in the first quarter of 2009.
These statistics indicate debt collectors have millions of delinquent credit card accounts to collect from.
The Federal Reserve compels credit card companies to budget for bad debts. The credit card companies usually sell those bad debts after they are written off to junk debt buyers for no more than 10 cents for each dollar of debt. Given that bargain, junk debt buyers do not expect to collect on 100 percent, or even 50 percent, of the accounts they purchase, nor do the collection agencies and collection attorneys who work for them.
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).
According to the FDCPA the debt collector 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. As original creditors credit card companies are not covered by the Fair Debt Collection Practices Act. However, the behavior of collection agencies, collection attorneys, and junk debt buyers is covered by this federal law.
Should the debt collector invest their time with those who properly dispute and request validation or those who put up no resistance?
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