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JDB Who Buy Debt - Legal Question


Sarris
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I was wondering if a person could mount a successful defense against a Junk Debt Buyers or CA who buys a debt for pennies on the dollar on grounds that they did not buy the entire debt at face value thus are only entitled to the recovering the amount they paid for the debt.

In other words, JDB buys a $5,000.00 out of SOL debt for $50.00 then sues you for the full 5k should not get the 5k but only $50.00 as that is what they paid for the debt.

The defense would be that by buying the debt, they acknowledge that the debt is only worth the amount for which they purchased it.

If they did not expend 5k to buy the debt, then why should they be paid 5k for the debt?

I think a good lawyer could make a solid case if he applied himself. Hell a class action lawsuit could set a presidence and end this JDB crap before it seriously explodes onto the US market. When they are compelled to show who much they actually paid for a debt, I think most presiding judges and or juries are going to rule in the favor of the defendent. I mean who want to give free money to some sleezy a$$ JDB?

Thoughts?

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Sadly Sarris, existing laws says that when the junk debt buyer purchases the debt, they are intitled to collect the full amount.--plus whatever else they can legally tack on.

But its not all gravy for those folks------often the purchase comes with a total inability for the purchaser to validate the debt. So they are forced to run away from any consumer who requests debt validation. And the price of junk debt is rising and consumer are getting wiser. And the new bankruptcy laws may reduce the supply of junk debt.

Many are thrilled to collect in only one time in over twenty tries. Until the laws change , those sleezes will be with us. For now, consumer outreach is the best strategy-----makes sure everyone DV's them and they will soon be out of BIZ. Will any come to their funeral?

The other key is to kite their expences. After they runaway write your AG.

Make them spend some bucks for the priveledge of telling your AG how wholesome and cuddly they are.------I sure did. Sue them if possible.

And above all tell your friends and neighbors how to chase them away unpaid. Its the reason I am on these forums.

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I understand your reasoning...

But business doesn't work that way... Or at least not in a free market...

Prices fluctuate on just about everything... And supply and demand dictate the terms... Just because something "costs" a certain price, does not necessarily mean it is worth it...

It can be overvalued or undervalued... And that is the magic of the free market...

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The other key is to kite their expences. After they runaway write your AG.

Make them spend some bucks for the priveledge of telling your AG how wholesome and cuddly they are.------I sure did. Sue them if possible.

What do you mean by this statement. I never heard of Kiting your expenses.

Can you help me understand?

Thanks,

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To Radio Guy,

First, it is kiting their expenses, not kiting your expenses.

But to explain--------in my particular case the junk debt buyer was extra special flaky. The debt they bought came from a bankrupt company with numerous fraud allegations against it. It was quite apparent they did zero

due diligence.------one DV letter chased them away unpaid and unloved.

Then I wrote my Attorney General-----cost me about a dollar in postage.

I laid out my case why the AG should go after them. I called them every name in the book------but note I said I have to feel this is the case rather than saying this is the case-------big difference----with the former way of stating it they can't sue me---its just a factual reporting of the emotional state they left me in.

Said dollar yielded-----a two page letter from the corporate council of said junk debt buyer------its apparant they had to research the case---and not only did they promise my AG I would never be bothered over that matter again, it also yielded some new information about their lack of due diligence. Plus the junk debt buyer spent a few paragraphs telling my AG how ethical they were-----which hardly explains all the other complaints my AG has on that company---But my AG ended up kicking it as a factual dispute.

But at the end of the day, my dollar had to have cost the junk debt buyer at least $150.00 of labor----and time an attorney can't spend bothering other consumers. And my AG has another reason to pay attention to the next person who complains about that company.

If I had any faith in the BBB I would have sent a packet their way. Lots of people to complain to-----when it get investigated it wicks far more money out of their pockets than it does out of yours.-------I had already established they lacked ANY documentation and so I could complain with total inpunity.------if everyone did it--they would be out of business.

So let me do a before and after box score-----

Before----they sent three letters costing 29 cents each hoping to collect--if they fail they are out a buck or so.-----no big deal if they fail.

After ----they still sent three letters costing a buck------then had to spend an estimated $150. to field the resulting complaint.-----they still collect nothing but its a rather dramatic kiting of their cost of failure. ( and throws a big monkey wrench into their business model if its common practice )

Hope that explains what I mean by "kiting their expenses"

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Sarris: In order for any business to remain profitable they ... well ... have to make a profit. So insisting that a JDB could only attempt to collect the exact amount they paid for the debt wouldn't make sense. However, the profits they have the potential of making on some debts is outrageous.

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breathing_easier makes a very good point.

What is ignored is the question of if a junk debt buyer has any right to make a profit------or if they serve any good social purpose in a just society.

On one hand-----if the original creditor can't collect on some of the credit they extend it increases their costs of doing business. And hence have to increase prices paid by other paying consumers to offset that loss and still remain profitable.------or the original creditor can hire a collection agency

to collect the debt----but the original creditor still benefits some when the collector collects.-------but if the original creditor does not get stiffed, in theory, they could offer lower prices for the same goods and services.

But if they sell that debt for damn near nothing to a junk debt buyer they get damn near nothing to offset their bottom line loss. And then gets nothing if the junk debt buyer collects.

The only arguement that could be made for social purpose for a junk debt buyer might be that a consumer paying a junk debt buyer keeps some group of people gainfully employed.------but that arguement vanishes when you consider that social gain that group could could make to society as a whole if they were gainfully employed elsewhere in the economy producing goods and services.

Face the facts----some ocupations are not good for this economy. And they should be labeled as such------parasites that benefit no one but themselves.

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CA's and JDB's are the jackals of modern society, they earn their living on the misfortunes of others, ond on the backside of our currently artificialy induced (booming) economy. Yes there is a downside to a booming economy especially when fueled by consumer lending practices that have bordered on irresponsible.

that being said I do think that some type of reforms are in order when a JDB can buy a debt for $50 and demand to collect $5000+ we have a problem that will create an even longer lasting effect on our economy than our current amount of consumer default has already heaped upon us. Basically a jackal is going to keep people that are behind from ever contributing to our economy in a positive way.

Of course our current situation has more to do with the greed of the Credit companies than with JDB's, they really didn't have to hand out all those credit cards did they? I'm getting a dozen offers a week with a score in the high 500's or maybe low 600's by now, Personally I think that a JDB would have a much better business if they only set their goals at three or four times what they actually paid for an account, how many of you out there wouldn't settle a $5000 account for $200-250 that's still a pretty good ROI for (the JDB's)the money, and it's helps the consumer get settled quicker and move on.

for now the answer in dealing with these people is of course DV at thirty day's(or just under) and deny ,deny ,deny) JDB's by definition are looking for a very high ROI for as little work as possible, make them work they move on.

ROI = return on investment

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I aagree Hoefsmed,

ROI= return on investment.

When ROI<0 =out of business.

So we need every legal means to attack junk debt buyers ROI so we get to less than zero.

Its my theory that their chief vulnerability is their near current zero cost of running away.------Since running away is already the most common outcome by close to 20 to 1, increasing that running away cost is the most desired goal and what these boards should target.

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Distressed debt is purchased in portfolio blocks for anywhere between $0.005 - $0.05 on the dollar. For each dollar purchased at a nickel, the industry average actually collected is $0.17. It' s a fabulous business model and debtors do negotiate settlements. Unfortunately most do not know how and get ajudicated for the face amount. Credit card contracts allow for legal assignments even as non holders in due course, meaning even though it's junk debt, it's still considered valid and collectible. UNIFUND, one of the largest JDB's is a LLC group of investors looking to make fat profits on the misfortunate. These guys do get killed in bankruptcy court in nearly every case!

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Ok, then I want to start my own JDB investment group so I can buy old debt, and contact the people who ran the debt up, and offer to sell it back to them for a small fee. No threats, no nasty comments, just an offer to sell them their old debt so that no one else can come after them for it.

I would turn a profit, and provide a valuable service to the community. Additionally, if they decide to make payments, no contract, I would upon conclusion of their final payment, offer to make a prositive comment in their credit file. No negative comments ever. If they decide not to buy back their debt, then so be it, its a tax write off. If they do then great. At least if they ever want to, they will know where they can. Run it as a non-profit organization for even more tax benefits.

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I'm with you

How hard could it be to set up a collection agency but instead of buying Junk advertise and have the debtors come to you and ask you to buy their JD's for them, you make a little profit they get a paid in full letter from you the legal owner of the debt.

of course if you bought blocks of JD's you get stuck with a lot but if you only bought debts that debtors wanted to settle quickly you'd do alright. in theory anyway

As far as I know there isn't a law that a CA can't be an advocate for the consumer, if you were to buy somethign that the debtor didn't wan't to settle just put it back on the block, no haraasment etc.

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Unfortunately buying junk debt is like looking for a Murphy Bed at Sanford & Son's. You pay cash, you have no idea what you're getting, the OC washes their hands of it, and the JDB is stuck with it. I have yet to see one JDB sell debt to another JDB. IF anyone has seen it please post.

For the couple JDB's I've experienced (A$$et Acceptance and Merchant's Guide) I wrote them nastygrams and telling them to FOAD, and not heard anything since. That was almost a year ago now.

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Junk debt buying works like this:

You buy $100,000 of old debt for $4,000. You do not know what you are getting. You can contact the debtors and offer to settle for whatever you want, as you are now a JDB. You are going to be subject to the FDCPA and state's laws on collecting like any other CA. Even if you DO settle, the settlement is not binding on the OC. Since you do not know ahead of time which accounts you are buying, there is really no way of taking "preorders"

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That's not quite accurate. Portfolios are acquired for a fractional amount on the dollar and the OC relinquishes all rights to the accounts they sell or transfer to a JDB. They then write off the remainder to profit and loss. The OC furnishes all records on the accounts along with the account agreement and any signed documents and information on the debtor. The investor meanwhile attempts to collect on the balance originally owed and oftentimes attempt to represent themselves as holders in due course when in fact they have acquired the debt as uncollectable junk for the purposes of making a hefty profit. In bankruptcy these guys must fold the tent.

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That's not quite accurate. Portfolios are acquired for a fractional amount on the dollar and the OC relinquishes all rights to the accounts they sell or transfer to a JDB. They then write off the remainder to profit and loss. The OC furnishes all records on the accounts along with the account agreement and any signed documents and information on the debtor. The investor meanwhile attempts to collect on the balance originally owed and oftentimes attempt to represent themselves as holders in due course when in fact they have acquired the debt as uncollectable junk for the purposes of making a hefty profit. In bankruptcy these guys must fold the tent.

How was my statement in any way incorrect? If you settle with the JDB for a delete, how does that in any way bind the OC into a delete? And for your information, the JDB rarely gets any documentation with the debt, that is why DV works so well. I have a complete set of what the JDB gets, as I got it during the discovery phase of my lawsuit against WFFA. It is pathetic, most of the documentation is incomplete or missing.

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