Jessica Silver-Greenberg wrote about debt buyers at the end of last year, but the information is still timely.
Companies like Portfolio Recovery Associates, which used many affidavits, like the one pictured, from a person who died before the date on the affidavit.
Bad debts are sold in bundles of thousands or tens of thousands, sometimes in auctions.
Encore Capital Group and Asset Acceptance are other big players in this market.
It is a paperless world.
Usually, all they buy is a computer screen of an account number and a balance and someone who supposedly owes the debt.
Not a contract, signed by that person, not an accounting, a history of the use of, and payments on, the credit card or loan.
In lieu of actual records, affidavits are used in the lawsuits filed to collect the bad debts.
The affidavit verifies, under oath, that the amount in the lawsuit is the actual amount owed by the borrower.
One Denver attorney, David Larson, filed 47 suits against Portfolio Recovery Associates last year alone.
According to the, PRA paid $1.6 billion for the $52.9 billion of debt it owns.
So they do not need to collect on too many lawsuits to make big bucks.
Nevertheless, corner cutting is still too tempting for many of these companies.
They have an overwhelming advantage in court.
They have lawyers, which most consumers cannot afford.
You cannot get a court appointed lawyer to defend you in a collection case.
And the debt buyer company lawyer virtually always works on a contingency fee, getting a percentage of what is recovered.
So, no out of pocket attorney fee cost to the zombie debt buyer.
Over 90% of these lawsuits result in default judgments, meaning the consumer never files an answer or otherwise contests the case in court.
Then, in states like Michigan which allow wage garnishments, watch out!
Sometimes, that is the first time the consumer realizes she has been sued.
And she will have to pay money up front to get a lawyer to handle her case.
The Truth About Debt Buyers