Selling Debts
By L. Jed Berliner, Springfield Bankruptcy Attorney on Jul 1, 2007 in Debt Collector Abuses, Personal Finance
Some interesting facts are mentioned “Collecting Consumer Debt in America” by Robert M. Hunt in the Federal Reserve Bank of Philadelphia’s Second Quarter 2007 Economic Research. In no particular order:
- Our federal government began the debt-selling business as we now know it when the FDIC started selling off the unsecured loans of failed savings and loan institutions in the early 1990’s. However, large-scaled collection efforts by the debt buyers failed back then because of inadequate technology, primarily the absence of sophisticated telephone calling systems, databases, and the Internet for locating debtors..
- Debts sold for an average of 4.5 cents on the dollar in 2005.
- Collection of five year old debts can pay off because borrowers’ incomes may have improved.
- High interest and fees at the first sniff of default are tools to encourage prompt payment from limited resources by making nonpayment more painful. (There’s actually a rationale for them, besides simple greed. Well, maybe.)
- Abusive practices are a another tool to increase the pain of continued defaults.
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