Are you being hounded by a debt collector?

I am being sued by a debt collector.  This is something I have never had to deal with before, and I am finding it interesting.

The good thing about this is I don’t owe the money, so the anxiety, fear and shame of being hounded by one of these bottom-feeders is not weighing too heavily on my mind.

But in the research I am doing to fight this lawsuit, I’m learning some interesting facts.  First, debt collecting is big business in the United States.  Though individual statistics that describe the depth of the problem among all Americans throughout all the states are not easy to come by, here are some from New York City:

  • Debt collection cases equal 50% of the NYC civil case load
  • In 2009, there were approximately 241,195 cases filed, a number that surpassed the number of housing cases filed
  • About 90% of these cases were filed by debt buyers, or the people that come after you for the money you allegedly owe and eventually sue you
  • Only 1% of the people who are sued (like myself) are represented by an attorney when they go to court

In my research on this topic, it appears the problem is growing at a phenomenal rate; many people are being sued by debt collectors and the cases filed against people are at an all time high.

Why are people being sued by debt collectors?  For many, going into debt with credit cards and not being able to pay the balances are one main reason.  Other reasons include not paying your utility bills (gas, water, electric, cable, etc.), car loans, gym memberships, cell phone, medical debt, etc.

How does a person wind up in the often times cruel clutches of a debt collector?  By not paying your bills is the short answer.

If you have credit card debt that has become unmanageable (a fancy term for not being able to pay the bill every month) and you have taken the unwise step of ignoring your monthly statements and deciding to not pay the bills, you will shortly be contacted by the credit card holder, either by phone, mail or email, that you have missed payments and that you need to solve this deficiency.

If you fail to respond to any of the credit card issuer’s requests, they will continue to try and contact you for a certain amount of time.  After this, the credit card company will tire of contacting you as the debt becomes older and older and may then sell it to a debt collector or debt buyer.

These can be companies that buy these old debts in mass quantities for pennies on the dollar.  What this means is this:  for illustrative purposes, assume you owe Discover Card $2,000 and were contacted by them for months in order to receive payment from you.  You never responded after their repeated attempts.  All goes quiet after a period of time and you start to think that maybe Discover got tired of hounding you and now everything will be okay; they forgot about you and nothing more will come of it.

This is wishful thinking, of course.  What is probably happening is that Discover is bundling up many other bad loans like yours and might then sell them to the aforementioned debt buyer (DB) for as low as 2 or 3 cents on the dollar.  The DB may pick up that bad loan you stiffed Discover on for only $40 or $60; if they can collect anywhere close to the $2,000 that you originally owed, they come out smelling like roses.

In my next post, I will discuss more on this problem of what to do when you are being hounded by debt collectors.



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