Why Are THEY Calling Me?
We get a lot of telephone calls from clients and potential clients that are being contacted by a company they claim they have never done business with. These individuals often believe they are the victims of identity theft or that the company that is contacting them is attempting to defraud. Although identity theft and fraud is a possibility, one of two other situations is more likely.
First, when an account is in default for a certain amount of time, the original creditor will attempt to collect the debt in house. If these collection efforts fail, then they will likely send the account to a third party debt collector. At this point, the original creditor still holds (owns) the account they have just hired a third party to attempt to collect the debt. If this collection agency is able to collect the debt then the collection agency takes its percentage from the proceeds and passes the remainder to the original creditor. If this collection agency is unable to collect the debt most likely it will terminate collection efforts and “send” the account back to the original creditor. At this point its likely that the account will get sent to another collection agency in an attempt to collect the debt. This scenario could happen as many as four times. This is likely the reason you have been receiving letters from different companies collecting the same debt.
If the collection agencies are all unable to collect the debt, then most likely the debt will be sold to a debt buyer or a debt purchaser. Debt purchasers purchase debt portfolios, groups of many similar accounts. The debt purchaser pays pennies on the dollar for the debt. Most frequently the debts that are purchased are credit card debts. At this point, the debt purchaser will either try to collect the debt in house or will again refer it to another collection agency for another attempt at collections.
I’ve heard stories from my clients where they will pay a debt collector and some how the account will eventually be sold to a debt purchaser. This is why it is important to (1) get all settlement proposals in writing and (2) to make sure you know what account you are actually paying off in case that same account pops up in the future. Finally, when you pay off a certain account, I advise my clients to do so via money order. Mainly this is because it is generally a bad idea for collection agencies to have your banking information. Before you send in a payment, keep copies of the money order and the settlement letter to prove that you complied witht he settlement offer. If you receive a collection letter from another company once you paid off the account, make sure the new company isn’t trying to collect the old debt.
Jeffrey Hyslip
