How to Get Credit Card Debt Collectors to Focus Their Energy Elsewhere
Posted by: Guest Author / Category: Credit Card DebtMost 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.
Today most unsecured consumer debt that is up for collection is credit card debt. The consumer debt collection agencies and collection attorneys who pursue these debts work on commission. They do not get paid until some money is collected. Time is money for a credit card debt collector.
Over the last 30 years the credit card industry has grown exponentially and the consumer debt collection business has as well.
The Federal Reserve and Business Week report $133.7 billion of consumer debt in 1970 increased to $2.5 trillion of consumer debt in November 2007.
According to a trade group for the debt collection industry, ACA International, each year debt collectors put more than $40 billion back into the U.S. economy.
There were 173 million credit cardholders in the United States in 2006, According to the U.S. Census Bureau.
4.75 percent of bank cards were delinquent in the first quarter of 2009, according to the American Banking Associate.
These statistics indicate debt collectors are awash in millions of delinquent credit card accounts.
Credit card companies must comply with Federal Reserve regulations by keeping reserves to for bad debts. Bad debt is part of their business. After these debts are written off, junk debt buyers bid on blocks of delinquent credit card accounts. If successful, they pay no more than 10 cents for each dollar of debt. With that discount rate junk debt buyers and the collection agencies and collection attorneys who work for them only need to collect 30 or 40 percent of the debts to make money.
Debt collectors make the same empty threats to both resistant and non-resistant consumers holding credit card debt. Usually, however, they only follow-up with more threats and intimidation with the non-resistant majority of delinquent credit card account holders. The secret is learning the correct response to those initial threats and how to use 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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Tags: credit card, credit card company, Credit Card Debt, credit card debt collection, debt collection