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Understanding 1st Party and 3rd Party Collectors

I have been following the How to Fight Debt Collectors series and noticed that the articles are all geared towards third party collections. For 3 years, I worked as a first party collector in the collections department for a mortgage company.

During that time, I learned a lot about debt, people, and collection law. I did some things that may have been considered shady but I never broke the law. The reason is in the distinction between 1st party and 3rd party collections.

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What are Junk Debt Buyers?

So many bills!Junk Debt Buyers, also called JDB’s, engage in the business of buying distressed assets at pennies on the dollar and then try to collect on that debt. Sometimes they try to go after the full amount, sometimes they’ll accept a settlement amount of 50% or less. It’s not a bad business to be in, except they suffer from one very crucial weakness a smart debt collection fighter knows. When challenged, they can rarely obtain any sufficient documentation of the debt. In other words, they can’t validate the debt after someone has sent a debt dispute letter!

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When Debt Collectors Violate the FDCPA

DebtAs we learned in this classic abusive debt collection story, and Craig’s awesome response, debt collectors are often unfamiliar with the law. Not only are they unfamiliar with it, they routine violate it… which means you get to collect from them.

Want an example? Let’s say you call a collector to check on the status of your dispute. They decide to solicit payment from you… that collector has just violated the FDCPA and they now owe you at least $1,000.

Oh… it gets better.

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A Classic Debt Collection Story

Last week I asked email newsletter subscribers for their experiences with debt collection agencies. I’ve been fortunate never to have crossed paths with a debt collector so I was looking for stories to help put me in the shoes of those who have.

I read about stories of people paying off debts but through some clerical error, the debt was incorrectly sold to a collector. I read stories about legitimate debts that suddenly went to a collector and stories of people who simply didn’t pay up.

If you thought debt collectors only went after “deadbeats,” you’re wrong. There are as many stories of people current on their debts as there are those who are behind.

Here’s one story and Craig’s advice on what he would’ve done differently:
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What Constitutes Debt Validation?

DebtSo I sent a debt collection dispute letter, now what?

Well, now you wait.

In most states, the collector has 2 options:

  • They can cease all collection efforts and drop the issue completely, or,
  • They can get validation and try to collect again.

Unless they validate the debt, including all the fees the collection agency has added on, you don’t have to do anything. It’s in this phase that most debt collectors trip up and make mistakes, which will be to your advantage.

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Writing Your Debt Collection Dispute Letter

DebtThis is the second guest post in a special How to Fight Debt Collectors series on Bargaineering.com.

Writing a debt collection dispute letter is the first line of defense against a debt collector. Make them prove that the debt is legitimate before you do anything. Just because they have your name doesn’t mean the debt is legitimate. If you don’t remember it or you remember paying it off, a dispute letter can help you resolve it quickly.

Once you know who is calling you and what they are likely to do, it’s time to push back with a properly worded dispute letter.

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How to Research Debt Collectors & Understand the Law

DebtThis is the first guest post in a special How to Fight Debt Collectors series on Bargaineering.com.

So you’ve received a debt collection call or letter…

In this day and age where you have rampant foreclosures, layoffs and job losses, it is simply inevitable that an individual may come across a debt collector, and frankly even without these external factors, it may just happen by a chance wrong number or even being related to someone going through a hard time financially. Many people have questions and are unprepared to deal with this, but after reading this series of articles, you will be. I will detail the key steps you should take to secure your rights, aggressively defend yourself, and ultimately make the debt collectors pay YOU to go away. This is not your typical “just pay your bills and get a second job” column, so please read on.

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How the Fair Debt Collection Practices Act Protects Debtors

The Fair Debt Collection Practices Act has been around in different forms for several decades, but is rarely well-known by the average consumer. While I won’t be covering each and every piece of information in the document, I do want to summarize some of the key sections.

If you are currently struggling with debt and have fallen behind, there is a large chance you are dealing with collectors on a regular basis. In this situation, it is vitally important that you have a firm grasp on your rights. Violations of these rights occur on a daily basis, fueled by the lack of knowledge from the average consumer.

I’m Current On My Debt. Why Should I Care?

Even if you aren’t struggling with debt, I’d be willing to bet there is someone in your life who is. Nothing gets my blood boiling more than stories about debt collectors taking advantage of people in desperate financial situations. If someone you care about finds themselves in this situation, you will be glad you have the information to help them!

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