Are Debt Buyers Reluctant To Buy Paper Because Of Regulatory Compliance Issues?

The main way which debt buyers stay in business is by purchasing paper debt.  They will purchase for a lower amount than what is owed and when they collect on the full debt or partial debt, the profits go to them.  One of the problems currently with that business plan is that collection agencies are feeling a bit reluctant when given the option of buying that debt.  That is because many states have increased the amount of regulations a company would have to follow when doing so.  That reluctance of buying debt has translated to some companies going out of business. 

Why The Reluctance?

Collection agencies and collection attorneys do have to pay a lot of attention to the regulations in every single state.  The problem is that every state will have its own regulations when it comes to paper debt and those regulations can change at any moment the legislature meets.  The agencies or attorneys have to be on top of these regulation changes or otherwise they can risk hefty fines depending on the state they are dealing with.  That is why you will see a lot of businesses focus on a few states as opposed to the entire country. 

Why Collection Law Firms?

 

Collection law firms have been active getting a different type of debt and they are better suited to do so because lawyers are used to dealing with a large amount of paperwork.  That means that all the regulations that pass, not only will they be able to read it and get on top of it, but they will also understand it.  This allows them to follow any type of regulation changes right away instead of going through different stages trying to understand what it means.  Collection attorneys are better prepared for any changes that can come their way with different types of accounts and from different states.