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The Nasty World of Buying Debt

Buying and selling debt is a sleazy business in the U.S. We touched on the subject briefly in another article. In this issue, we’ll tell you how it’s normally done.

Who Buys Debt?

A debt buyer is a company that purchases debt from the original creditor with which you owe the debt. The debt is normally not put up for sale by the original creditor unless it’s been in default for quite a while.

How The System Debt Buying System Works

The debt buyer will typically buy large chunks of debt in bulk – usually for mere pennies on the dollar. This way, the original creditor at least gets something for the debt and the debt buyer has made a minimal investment that can be easily recovered. Remember, the debt buyer is not a collection agency, which means the buyer is the final decision maker on what settlements to offer you or whether or not to pursue further legal action to collect.

Poor Regulation of Industry

While the debt buying industry has grown dramatically in the U.S., it remains poorly regulated. Examples include:

  • In half the country, no license is required to buy debt
  • There is little paperwork involved in collecting debts
  • When debts are sold, there’s no requirement for accuracy of the information

What You Should Do If You’re Sued by a Collector

If you’re sued, the first thing you should do is carefully read the documents that are sent to you. Why? Normally, debt buyers sue many people at the same time, so any documents may have incorrect information or may be incomplete – errors that can be grounds for dismissal of the suit against you. The next thing you should do is respond as outlined in the summons. If you do not respond, the debt buyer will win without even have to show up. Also, because most debt buyers do not expect you to fight back, making counterclaims or pointing out mistakes in their paperwork will often go a long ways towards reducing or erasing your debt.

If You’re Facing Crippling Debt, Call The Oswalt Group

Our team here at The Oswalt Group can walk you through the various options available to you as well as answering any questions or concerns you have about your debt. Call us at 602-225-2222 for a free initial consultation.

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