How Did A Debt Collection Agency Get a Judgment Against Me for an Old Debt?
You might me surprised to find out that all the old, unsecured debts you never paid and thought you got away without paying never really go away. They are always out there, being sold and resold and resold again to companies that operate as scavenger debt collection agencies. These agencies purchased your really old debt for just pennies. Literally pennies. For example, say you owed a big credit card company $2000 ten years ago and you didn't pay the debt and the credit card company wrote it off as uncollectible, and you thought the debt was gone. Well, it isn't. A scavenger debt collection agency purchased it for pennies on the dollar -- so they paid about $20 to the original credit card company for the right to collect the $2,000 you owed that company ten years ago. But the scavenger debt collection agency isn't just going to try and collect the $2,000 you owed the original creditor; they are going to tack on all sorts of interest, fees, late fees and other bogus charges, so that when the debt collector contacts you ten years later, he (or she) claims you owe them $6,000, but if you send them a payment today by Western Union they will gladly accept $3,000 as payment in full. They will make you feel lucky that you are getting away with only paying $3,000. Getting a $3,000 return on a $20 investment should explain why they are so aggressive in their debt collection tactics.
Many scavenger debt collectors operate within actual law firms. Some attorneys have discovered that it is quite lucrative to purchase these old debts for pennies on the dollar and hire a few professional debt collectors to send people scary letters threatening a lawsuit so that the debtors will pay as much as they possibly can as quickly as they can to avoid getting sued by this big, scary, mean attorney. And their tactics seem to work a lot of the time. And if there tactics don't work, some of these attorneys actually do sue for old debt even though they don't legally have the right to collect it because it is out of statute. These attorneys are being awarded thousands of summary judgments in courts all over the country for old debt that they have no right to collect and they're getting away with it. This is because the debtors they sue don't fight back. They don't show up in court to defend themselves. Whatever you do, when you are notified by a debt collection agency or attorney for an old debt, do not just ignore them. Fight back. Here are some tips on fighting back:
Send the debt collection agency (or attorney) a certified letter, return receipt requested, telling them the debt is out of statute and they can not legally collect it. You don't have to argue with them over the phone over and over, day after day. Just send the letter. If they do sue you, show up in court with the letter and the post office receipt that proves they received it. Don't let them get a summary judgment because you decide not to show up at the courthouse. Tell the judge that the debt is out of statute and hopefully, you have old statements or other documents proving that the debt is old.
If the debt collection agency is operating from within a law firm or you received a threatening letter from a lawyer or law firm, send them a certified letter telling them the debt is out of statute and if they continue their collection efforts you will file a complaint with the Attorney General in the state you live in and the bar association in the state where the attorney practices and with the Attorney General in the state where the attorney practices. And if they persist, then you should go ahead and take the time to file the complaints. But what is likely to happen is that the mere threat of filing a complaint with the bar association will scare the attorney away and he or she will not bother you again. However, they will sell your debt to yet another debt collection agency and you will have to start the process all over again. This could go on for years.
Why is this legal? I don't know. It shouldn't be legal. If you want this practice to stop, you should contact the Attorney General in your state as well as the Federal Trade Commission (ftc.gov) and tell them about your experience and that you don't think debt collectors and attorneys should be allowed to collect old debt that is out of statute. You should also contact the politicians who represent you at both the state and federal level. You can find your federal representatives at house.gov and senate.gov. If enough people complain, laws will be enacted to stop this practice.