Debt Buying in a Nutshell
When your original lender (a bank or credit card company, for example) gives up on collecting your debt, it may sell the debt to a so-called “debt buyer.” When these entities buy your debts, they only receive a few pieces of information, like your name, the amount you owe, and the reason for the debt. The lack of details in the typical report causes a wide range of problems.
Since they often receive inaccurate information, debt buyers routinely hassle consumers who have already paid their debts, or pursue the wrong debtors. To make matters worse, debt buyers often sell unpaid loans to other debt buyers, creating a lengthy chain of debt trading that creates even more confusion.
Protecting Yourself from Debt Buyers
As more and more debts are traded between faceless collection agencies with little regard for consumers, the odds that you’ll be contacted about a debt you no longer owe continue to grow. If this happens, consider taking these steps:
Write a formal letter. Send the debt collector a letter demanding proof that you actually owe the debt. If the debt isn’t legitimate, explain your grievance in clear, calm terms. Use certified mail so you have proof that you contested the debt in a timely manner.
Keep an eye on your credit report. If a debt collector pursues you for money you don’t owe, get a copy of your credit report to check whether the collector reported the phantom debt to the major credit bureaus. If they did, ask the credit bureaus to remove the faulty information immediately.
Answer any lawsuits. If a debt collector is bold enough to file a lawsuit against you, make sure to file an answer. If you don’t answer the lawsuit, the debt collector may win by default. For more information on fighting a debt collection lawsuit, contact a consumer rights attorney today.