America's appetite for borrowing money bloats U.S. consumer debt to a record high almost every month. As of September 2006, the tab stood at $2 trillion and was spurting at an annual rate of 10 percent. Through good times and bad, spending tomorrow's dollars today never goes out of fashion.
But all that borrowing produces a lot of financial heartburn. Every year, banks, retailers and other consumer lenders write off more than $70 billion in uncollectible debt, mostly hopelessly overdue credit-card balances. From there, the debts are bundled for auction and purchased by companies that pay next to nothing for the opportunity to take one more shot at collecting from debtors.
It is through that process that about $9 billion in secondhand debt has landed in the offices of third party debt collectors.
A decade ago, few creditors tried to collect on old accounts, figuring it wasn't worth the effort.
Today, however, collecting on old debts is a rapidly expanding industry. Aggressive companies can buy charged-off credit card accounts from the original lenders for pennies on the dollar or less. Then, they use credit-scoring and other new technologies to identify which debtors are most likely to pay. The players in this "junk debt" market range from fly-by-night outfits to well-established companies funded by Wall Street investors.
It's a business that's exploded in recent years as collectors discover gold in old bills. Debt buyers are expected to snap up $110 billion in face value of delinquent debt this year, said Paul Legrady, director of research for Kaulkin Ginsberg, a company that advises the debt collection industry. That's twice what was purchased in 2000.
Banks do not lend money they issue credit, your signature is what provides the credit. The bank does not take money out of their account and lend it to you. See:
The United States and The Federal Reserve
So how can a third party debt collector legally collect any money from you? He never gave you credit did he? There is no contract between you and him. The third party debt collectors are called bottom feeders see
Bud Hibbs Helps America Hold Debt Collectors to the Law!. Bud rates the 10 worst debt collectors in the country and discribes how they illegally collect deliquent credit card debt by using scare tactics.
You should also visit
educationcenter2000.com. The website has about 200 pages of information about the FDCPA and how to defend yourself when third party debt collectors try and collect old deliquent credit card debt from you.
Originally Posted by lawexpert
