(WA) State's hands tied over 'debt buyers'

[icymist]

Friday, July 23, 2004

State's hands tied over 'debt buyers'

By CANDACE HECKMAN
SEATTLE POST-INTELLIGENCER REPORTER

The state has no direct authority over companies that have been calling consumers and insisting they pay direct debts that might not be valid because state laws regulating collection agencies do not apply to so-called "debt buyers."

That finding, made last week by the state Collection Agency Board, means that out-of-state companies that buy old debts and try to collect on them are not required to be licensed and therefore can contact state residents without the oversight normally given to collection agents.

<snip>

Debt buying has emerged over the last decade as creditors try to recoup losses without spending a lot of money trying to collect their own debts. Instead of continuing to hire third-party collection agencies, many creditors sell debts for pennies on the dollar to companies such as CAMCO, which in turn try to collect for themselves.

<snip>

But debt buyers do fall under federal authority.

CAMCO and its affiliate RM Financial in March settled charges brought by the Federal Trade Commission over unfair and deceptive collection practices. Both companies deny they had engaged in any wrongdoing but paid $300,000 to settle the alleged violations.

More at this

[icymist]

1. Has anyone at the DU have run-ins with these companies?

I've heard horror story's of old settled debts dating back as far as twenty years ago being 'magically' brought back up by these creeps. Check out the link in the story for an article about these.

[Gin]

2. I know someone who did collections for one of these companies..

they can collect 20 year old debts because people don't know there are statutes of limitations and get scared..and pay at least a precentage of the old debt.

[icymist]

3. So, by what you're saying, these company's power is....

that most American citizens don't know the law concerning these debts and that the company is willing to break that law? Doesn't sound like a company that'll be in business very long.

[SemperEadem]

9. never mind.. got my reply in post #4

[banana republican]

4. Most states have a statute of limitations

governing the length of time companies have to collect. Usually about six years.

[icymist]

6. What these company's have been doing is buying the old debt...

before the limitations for collecting them have expired. They then file a law-suite in some obscure court where the debtor probably cannot appear. Then the company (now those owed the money) sits on this for years, stacking up interest charges until a substantial amount has been accrued. Ignoring Federal laws, these (so-called) company's then aggressively go after the debtor.

Check out this related story from May at this

[banana republican]

8. Screw them

Put you home in a Family Limited Liability Partnership(you will need a lawyer). when the bad guys sue you all that they would get would a charging order; they would not have any say in the management of the family limited partnership (e.g. whether or not cash is distributed).

So after doing that you may want to sell the home on Dec. 31st 200X at a gain of 250K. Well It just so happens that that gain get reported to the IRS on the FORM 1065 to the bad guys and they have $250K of taxable income. But guess what; the bad guys don't have any say in the distribution of cash so they don't have any cash to pay the IRS.

Bottom Line: The bad guys get stuck with 250K in taxable income. The good guys make no distributions of cash and buy a new home. The bad guys get stuck with $250K in ordinary income taxed at the maximum rate.

find a good accountant/CPA/Tax Attorney and screw the SOB's

[bleedingheart]

5. No one will care about this until it really starts to hit the middle class

cuz when it happens to the poor the mantra is.."if they only paid their bills this wouldn't happen"...but when it happens to them..."This is an outrage!"

[progressivebydesign]

7. Okay.. then CHANGE the laws!!

I mean, the State of Washington is not that large.. our legislators CAN get something like that passed pretty quickly. Now WHO has the fortitude to DO something about this??? How in the WORLD a company that buys a debt then "COLLECTS" on it is NOT a "collection agency" is just beyond me... Ah.. beaurocratic bullshit.