Just What Is Debt Buying Anyway?

Despite the fact that credit and debt are everywhere in our lives, forming some of the basic foundations of modern life – we simply could not exist in modern society without some forms of credit – many people do not understand debt buying.  But if you hold debts of any kind, you should be aware of what debt buying is and how the process could potentially affect you.

Debt buying is a process where a company purchases debts from another.  For example, say you owe a credit card company one thousand dollars.  The credit card company sells that debt to collection agencies or another entity, and the agency now own your debt.  You no longer owe the money to the credit card company, but to the agency.  Typically, creditors sell debts at a steep discount because they have been unable to collect on the debt and would prefer to get something rather than nothing.  On the other hand, companies purchase these debts because they will attempt to collect on thousands at a time – with the steep discount on the cost of the debt; even if only a small number of debts are cleared, they make a profit.

Debt Buying and You

You still owe the full amount when your debt is sold, even if you are unaware of the sale.  If attempts to collect on the debt are made by a new owner, there a few things every consumer should know:

• Check the details.  Collection agencies often launch thousands of collection attempts on purchased debt simultaneously, and numerous mistakes in paperwork – including an inability to prove ownership of the debt with origination paperwork – are common.  Often lawsuits concerning the debt can be stopped simply by pointing out paperwork errors.

• Always consult an attorney.  A lawsuit to collect on a debt, whether by the original creditor or a debt buyer, is still a lawsuit and you should behave accordingly.

Always remember: Debt buying changes the players in a debt situation, but not the rules.

The Amazing New Secret of the Debt Buying Industry

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Like all high-stakes industries, the debt buying industry is constantly evolving. Debt buying and collections agencies consistently update their strategies and tactics to further increase the chances of receiving money from debtors. For example, modern debt buyers have learned how to use social networking websites like Facebook and Twitter to remain in contact with debtors, to learn about a debtor’s lifestyle, and to develop relationships with debtors which lead to payment.

Not only are debt buyers using social media websites to perform their work better, they are also using these websites to determine whether a prospect is likely to pay off their debts in the first place.

One of the secrets to effective debt collection lies in being able to distinguish between debtors who are likely to pay off their debts, and debtors who are unlikely to honor their loan’s repayment terms and conditions. Determining whether a debtor is likely to pay back their account balance or not depends on a number of criteria every good collection agency will consider before taking on a case.

For example, an individual who has more than $75,000 in debt, an individual who is in jail, or an individual with no cash-flow and no prospect for building cash-flow is unlikely to pay back their debt, no matter what. On the other hand an individual who lives large, who clearly spends a lot of money on a daily basis, who has a relatively small level of debt, and who has plenty of personal assets and connections with other people who have personal assets, is a prime candidate for effective collections. Social networking and social media sites offer an exceptional way to evaluate these criteria.