San Diego, CA - Indebted consumers
and also those consumers who were once indebted are the
target of a new assault by Junk Debt Buyers! Junk Debt
Buyers are collection agencies that purchase bad debt -
they are working for themselves because they now "own" the
debt. "Contingency" collection agencies work as
agents for another company to collect a debt. A junk
debt buyer may also be in the contingency collection
business OR they may contract with a contingency agency.
Junk Debt Buyers are a multi-billion dollar industry and
are responsible for a large number of debt collection and
credit reporting violations of law.
Some Top Junk Debt Buyer Industry Players (Some of these
companies may be owned in part by others):
Asset Acceptance (AAC)
Sherman Acquisitions/Sherman Financial Group/Alegis
Portfolio Recovery Assoc.
Encore Capital Group (parent of Midland Credit Mgmt)
Risk Management Alternatives (RMA)
JBC & Associates
Arrow Fin. Svcs. (majority interest acquired by Sallie Mae
CAMCO (Capital Acquisitions & Mgmt Co)
Cavalry Portfolio Services
Phoenix Asset Acceptance
First Select Corporation (part of Providian)
Collins Financial Services
Oliphant Financial Corp.
OSI Portfolio Services
Following are the types of Fair
Credit Reporting Act/Fair and Accurate Credit Transactions
Act (FCRA/FACTA) and the Fair Debt Collections Practices
Act (FDCPA) violations typically practiced by junk debt
1) Re-aging accounts to attempt to force settlement on
"time barred" or out of statute accounts. The actual date
that the debt becomes delinquent is supposed to be
reported to credit reporting agencies under FCRA/FACTA
within 90 days of the delinquency.
Re-aging is the practice of reporting a bad debt account
as more recent than it really is. Re-aging causes the FICO
score to drop dramatically since the scoring model
interprets the re-age as a more recent default.
Junk Debt Buyers (JDB's) press for payment of some amount
to bring the debt back under the statue of limitations
after which they can sue you and have a chance of winning.
It is important to note that state statute of limitations
(SOL) for collections are different from FCRA/FACTA
statues of limitations for reporting.
2) Misreporting the legal status (e.g., an open
that was actually discharged in bankruptcy) and also the
misreporting the "open date" and "date of last activity"
on an account. JDBs also purchase debts that are outside
the statue of limitations for lawsuit, but not outside the
statute of limitations for reporting, like to report this
debt as a revolving account, which is illegal.
3) Various California Penal Code violations (e.g.
consumers not being notified if their calls are being
monitored or recorded) are also likely violations in
almost all fifty states.
4) Multiple listings of the same debt: Junk debt buyers
are often responsible for multiple reporting of the same
debt as these change hands among buyers and sellers.
Usually, these same debts are reported by the original
creditor as well.
5) Collectors pretending to be lawyers. Springboard warns
counselors and consumers alike that it does not improve a
credit score to settle an old debt unless the item is
completely deleted (not just reported as "paid in full") -
it makes it worse since the delinquency/charge off will now
be reported as more recent!
What to do if you are contacted by someone claiming to own
one of your past debts:
- Don't assume you are wrong - assume instead that your
rights are being violated
- Keep all letters, account statements, and court records
(even from years ago)
- Do not provide the collection agency/JDB with updated
- Never acknowledge a debt with a collector or agree to
any payment until the agency "validates" the debt (past
billing statements are not considered proof).
- Don't accept credit card "offers" that come with an
offer for settlement or request a payment in any other way
- Monitor your own credit report - call 877-322-8228 to
get your free annual credit report (not available yet in
some states). You may also go to AnnualCreditReport.com
but BEWARE of imposter websites that are "phishing" to
steal your identity.
- Contact an attorney that specializes in lawsuits for
FCRA/FACTA and FDCPA violations
Federal Trade Commission summary of consumer rights on
Fair Debt Collection
What debts are covered?
Personal, family, and household debts are covered under
the Act. This includes money owed for the purchase of an
automobile, for medical care, or for charge accounts.
Who is a debt collector?
A debt collector is any person who regularly collects
debts owed to others. This includes attorneys who collect
debts on a regular basis.
How may a debt collector contact you?
A collector may contact you in person, by mail, telephone,
telegram, or fax. However, a debt collector may not
contact you at inconvenient times or places, such as
before 8 a.m. or after 9 p.m., unless you agree. A debt
collector also may not contact you at work if the
collector knows that your employer disapproves of such
Can you stop a debt collector from contacting you?
You can stop a debt collector from contacting you by
writing a letter to the collector telling them to stop.
Once the collector receives your letter, they may not
contact you again except to say there will be no further
contact or to notify you that the debt collector or the
creditor intends to take some specific action. Please
note, however, that sending such a letter to a collector
does not make the debt go away if you actually owe it. You
could still be sued by the debt collector or your original
May a debt collector contact anyone else about your debt?
If you have an attorney, the debt collector must contact
the attorney, rather than you. If you do not have an
attorney, a collector may contact other people, but only
to find out where you live, what your phone number is, and
where you work. Collectors usually are prohibited from
contacting such third parties more than once. In most
cases, the collector may not tell anyone other than you
and your attorney that you owe money.
What must the debt collector tell you about the debt?
Within five days after you are first contacted, the
collector must send you a written notice telling you the
amount of money you owe; the name of the creditor to whom
you owe the money; and what action to take if you believe
you do not owe the money.
May a debt collector continue to contact you if you
believe you do not owe money?
A collector may not contact you if, within 30 days after
you receive the written notice, you send the collection
agency a letter stating you do not owe money. However, a
collector can renew collection activities if you are sent
proof of the debt, such as a copy of a bill for the amount
What types of debt collection Practices are prohibited?
Harassment. Debt collectors may not harass, oppress, or
abuse you or any third parties they contact.
For example, debt collectors may not:
- use threats of violence or harm;
- publish a list of consumers who refuse to pay their
debts (except to a credit bureau);
- use obscene or profane language; or
- repeatedly use the telephone to annoy someone.
Debt collectors may not use any false or misleading
statements when collecting a debt.
For example, debt collectors may not:
- falsely imply that they are attorneys or government
- falsely imply that you have committed a crime;
- falsely represent that they operate or work for a credit
- misrepresent the amount of your debt;
- indicate that papers being sent to you are legal forms
when they are not; or
- indicate that papers being sent to you are not legal
forms when they are.
Debt collectors also may not state that:
- you will be arrested if you do not pay your debt;
- they will seize, garnish, attach, or sell your property
or wages, unless the collection agency or creditor intends
to do so, and it is legal to do so; or
- actions, such as a lawsuit, will be taken against you,
when such action legally may not be taken, or when they do
not intend to take such action.
Debt collectors may not:
- give false credit information about you to anyone,
including a credit bureau;
- send you anything that looks like an official document
from a court or government agency when it is not; or use a
Unfair Practices. Debt collectors may not engage in unfair
Practices when they try to collect a debt.
For example, collectors may not:
- collect any amount greater than your debt, unless your
state law permits such a charge;
- deposit a post-dated check prematurely;
- use deception to make you accept collect calls or pay
- take or threaten to take your property unless this can
be done legally; or
- contact you by postcard.
What control do you have over payment of debts?
If you owe more than one debt, any payment you make must
be applied to the debt you indicate. A debt collector may
not apply a payment to any debt you believe you do not
What can you do if you believe a debt collector violated
You have the right to sue a collector in a state or
federal court within one year from the date the law was
violated. If you win, you may recover money for the
damages you suffered plus an additional amount up to
$1,000. Court costs and attorney's fees also can be
recovered. A group of people also may sue a debt collector
and recover money for damages up to $500,000, or one
percent of the collector's net worth, whichever is less.
Where can you report a debt collector for an alleged
Report any problems you have with a debt collector to your
state Attorney General's office and the Federal Trade
Commission. Many states have their own debt collection
laws, and your Attorney General's office can help you
determine your rights.
Internet Forums and Resources:
CollectionIndustry.com (here's where to learn how debt
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation). The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely.
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.
The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org). CASDRAP disbanded in 2010, shortly after the web site project was completed. In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.
The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.
Visit the ICFE's other web sites at: www.financial-education-icfe.org and studentdebthelp.org. Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G, a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.