If you’re one of the millions of people in this country struggling with debt, then you may have had the unfortunate experience of having to deal with a junk debt buyer.
These bottom-feeding companies, also known as “bad debt” or “zombie debt” buyers, make huge profits by purchasing delinquent or charged off debt for cents on the dollar and then aggressively collecting on it.
Sadly, the practices of this new industry are becoming more and more common, and junk debt collection agencies can range in scale and operation from small privately-owned businesses to million-dollar, publicly-traded companies.
The best way to deal with junk debt collection agencies
While there is no one way to deal with junk debt buyers, having a better understanding of how they operate can help you determine the best path to take.
Here are a few things to remember when negotiating with junk debt buyers:
- How they make money and what that means to you. Junk debt buyers function by purchasing old credit card debt, car loans, phone debts and retail accounts. Because the creditor has already tried to collect unsuccessfully, junk debt buyers usually pay pennies on the dollar for your debt. Since they pay so little for the debt, they will almost always settle for significantly less than you owe.
- The statute of limitations. The statute of limitations for most debt falls between 3 and 6 years. That means if the collector of the debt has not filed a lawsuit against you within that time, you’re in the clear. If you’re certain the statute of limitations for your debt has expired, then you can ignore the junk debt buyer’s demands.
- Making payments. Junk debt buyers will try to sign you up for a payment plan. But beware, if you make a payment to a debt collector after the statute of limitations has expired on your debt, you are essentially initiating a new debt with a new contract. If the junk debt buyer reports this to the credit bureau, any late payment will damage your credit score and it will also make it easier for the buyer to sue you.
- When to make a deal. When the debt in question is a recent legitimate debt and you have valuable assets that you could lose if you’re sued, you should consider trying to eliminate or pay down your debt.
- Legal interest and lawsuits. It’s common for junk debt buyers to sue, and if you ignore the suit it’s possible for a judge to decide in favor of garnishing your wages or levying money on your bank account.
Contact a skilled bankruptcy attorney in New Mexico
Being contacted repeatedly or even sued by a collection agency can be a stressful experience. Having a knowledgeable bankruptcy attorney on your side who knows debt and bankruptcy law can help you determine your best options to get your debt under control.
At New Mexico Financial and Family Law, we have the experience and dedication necessary to help you get back on track financially.
For a free consultation, contact us online or give us a call at (505) 503-1637.