Interesting Statistics on JDB's - Portfolio, Encore (MCM), Asset

[zaiman14]

Among the signs of the industry's growth:

Asset Acceptance Capital, one of the nation's largest debt buyers, saw its revenues quadruple between 2001 and 2005, to $252.7 million, while profits rose from $18.9 million to $51.3 million.

In the same period, profits at Portfolio Recovery Associates rose more than six-fold, from $5.6 million to $36.8 million. Revenues quintupled, from $32.3 million to $148.5 million.

Encore Capital Group experienced similar sharp increases with $221.8 million in revenues in 2005, compared to $47.8 million in 2001. The company rose from a $10 million loss in 2001 to a profit of $31.1 million in 2005.

Arrow Financial Services, at one time the country's largest debt buyer, was acquired by Sallie Mae in 2004, making the student lender the nation's largest collection agency.

What they pay/how it breaks down

Asset Acceptance

Debt worth: $4.2 billion

Paid: $102.3 million OR 2.4 cents on the dollar

Encore Capital Group

Debt worth: $5.9 billion

Paid: $195.6 million OR 3.3 cents on the dollar

Portfolio Recovery Associates

Debt worth: $5.3 billion

Paid: $149.6 million OR 2.8 cents on the dollar

Source: 2005 SEC filings.

The amount that companies pay for bad debt depends on the type of account and its age. Interestingly, all the growth has led to increased competition, Legrady said, which has bid up prices for old debt. Since 2003, "fresh" debt -- the kind that has recently been written off by the original creditor and not yet placed with a collection agency -- costs a penny or two more for each dollar of face value.

But the price is still pretty cheap. In general:

Debts that are delinquent but not yet charged off by the original creditor can be purchased for up to 12 cents on the dollar, Legrady said.

Accounts that have recently been charged off: 7 to 9 cents on the dollar.

Accounts that are slightly older and on which a collection agency or two has already taken a whack: 1 to 3 cents on the dollar.

Years-old, out-of-statute debts: A penny or less.

[MO Learning]

So, if the debt purchaser tries to collect and refuses to (or can't) validate, it passes the debt to another CA ... or back to the OC.

If the debt is eventually passed back to the OC, none of the FDCPA violations apply once the OC takes you to court, correct?

[zaiman14]

I would think that when a JBD buys a debt the OC has already charged it off and gotten the tax break. So the only way it would go back to the OC is if they assign it - then maybe take it back. I'm not that well versed - but I do know that JDB's buy the debt outright.

[hiblues]

if a debt is in a JDB hands MOST of the time it is OOS (out of statute) and

too old to report to the CRA's, so in MOST cases validating is a moot point.

I will say it again.. IN MOST CASES, (but not all)

Just C&D it and it disappears ( in most JDB cases)

[Bodhi]

Hiblues, the only problem with that logic is that it does make it on to many peoples reports. MCM is probably the worst with this and most people really do not understand their rights with regards to this illegal practice and get caught in that net.

[MO Learning]

The case I'm working has had several debts passed to several JDBs ... none of which have validated. When they are DV'd, they pass it on. These accounts are years from SOL in MO - or I guess we'd be in court.

Sorry...to side-track your topic!

I appreciate your stats and find them quite interesting; the fact that they are making SO MUCH $$$ means that too many people don't know how to deal with this problem, get embarrassed and don't deal, or give-up/give-in.

I came to learn here because a JDB obtained my SSN by skip-tracing...put in on a court case in another MO county - which gave it to another individual with my same name. She, of course, found my credit more favorable than hers and gave into the temptation ... so ID Theft eventually resulted. I, of course blame the JDB more than her! (Maybe I'm tainted that way.)

This board, and whoever started it, and the members that spend countless hours helping others...certainly have saved lives - or should I say "life" for many people!

I hear the federal debates and hope Congress (at some point) does something to clean up some of this mess!! So much power in the hands of CRAs that see only OCs, JDBs, and CAs as their customers. Using our information as their "commodity"!!

Thanks for sharing this research!

[hiblues]

responding to BODHI---

I said, IN MOST CASES!!!! when dealing with a JDB....

The term Junk Debt Buyer infers buying debt that is:

A- OOS, and

B- older than 7 years so they cannot report to the CRA's.

If they re-age and report it to a CRA...

than you would sue for a violation, not DV.