Paying a Debt Buyer Doesn’t Earn You Brownie Points

THE MINDSET OF “ITS MY DEBT SO I SHOULD PAY IT NO MATTER WHAT” WITHOUT SERIOUS CONSIDERATION OF THE POTENTIAL FINANCIAL CONSEQUENCES IS A FOOLISH ONE

There are a lot of people out there who are of the mindset that they must pay off all their debts regardless of their legal liability to do so or limitations on the collectability of the debt itself such as expiration of the statute of limitations, insolvency, etc.  I am not shaming anyone for wanting to be an honest person who pays their debts, however, it goes without saying that someone who does so without considering the fact that their earnest effort to make good on those obligations is recognized really only to just that person when it comes to a debt being collected by a debt buyer.

THE ORIGINAL CREDITOR DOESN’T CARE IF YOU MAKE GOOD ON THOSE PAYMENTS TO A DEBT BUYER OR IF YOU EVER PAY BACK THAT DEBT AT ALL.  

Do you really think that original creditor who lent you the money really cares now about you being a good person and making good on your obligation to pay back the debt?  Hell no.  In fact, that bank may not even exist anymore for reasons due to is own poor financial decisions and careless and risky behaviors, like for example, Washington Mutual.  If they are still around,  they’ve probably long since written off the debt and sold it to a junk debt buyer meaning they have no interest in that debt whatsoever.

The poor bank didn’t do so bad itself on that debt in the first place. When that account was open with the original creditor, you likely found yourself struggling to keep up with those minimum payments all while the fees kept mounting.   Remeber those exorbitant interest rates, some up to 32.99%, the late payment fees, over the limit fees, and whatever other fees were on top of that?  How much of that final charge off balance was really principal?  I mean, how much of that was truly just money you borrowed from the original creditor without the other fees tacked on? It’s likely that your principal balance was something well under what the charge off amount added up to just because of those damn fees.

Maybe you’re thinking, “Yea, well I made the agreement under those terms to pay the debt back and that’s what I’m going to do.”  Well, that’s fine and dandy if you’d like to do that but I find it quite foolish when one doesn’t step back from the situation and realize how badly they may have been taken advantage of.  If you are trying to pay off any and all debt you’ve ever accrued regardless of who owns it, it is simply important to realize that you may be doing that just for the satisfaction of knowing that you did it thinking you are creating a better financial life for yourself.  Nobody else is going to care.

So, the bank charged the debt off meaning, they cleared it from their accounting books as noncollectable.  Do you really think that’s the end of the story for that debt?

BANKS RECEIVED TAX WRITE OFFS, BAD DEBT INSURANCE, AMERICAN TAXPAYER BAILOUTS,  AND THEN SOLD THE DEBT IN PORTFOLIOS TO DEBT BUYERS

After charging off the debt as noncollectable, the bank likely received tax credits for the bad debt.   Then the bank may have collected “bad debt insurance” on that noncollectable debt which is protecting their investments.  Further, the American taxpayers footed the bill for the bank bailout which resulted in a massive gift to the bank for their “troubles”.  Lastly, the bank collected some nominal amount of money for selling those bad debts bundled into thousands and sold to debt buyers.  The bank moved on from their bad investment and so should you.

MAKING ADMISSIONS ABOUT THE DEBT AND PROMISES YOU CAN’T KEEP CAN GET YOU IN FINANCIAL HOT WATER FOR YEARS TO COME

You could be making more financial problems for yourself if you make certain admissions to debt buyers or other debt collectors about  how, “I know its my debt and I want to pay it off” and start making “earnest” payments toward it.  Guess what…the debt collector isn’t going to think you are a superhero or  genuinely commend you for being an honest person.  The truth is, they work on commissions and stand to gain financially from encouraging you that you are doing the right thing.  They are also likely recording that telephone call so they can use it against you in court if you aren’t able to make good on those payment agreements with them.  The debt buyer has likely purchased that debt from the original creditor for 3 or 4 cents on the dollar and is going to try to collect the full face value of the debt and tack on more fees and interest they are likely not even entitled to.  If you feel so inclined to pay those extra fees and costs, well that’s fine and dandy with them as well.  If you sign new agreements with these debt collectors or debt buyers including consent judgments and you default on that agreement for whatever reason they are likely going to move forward collecting the entire amount of the debt forcefully by wage garnishment or bank levy.  Don’t subject yourself to that financial catastrophe.  If you are being sued and the debt collector offers you a payment plan, avoid at all costs signing any consent judgment agreement that gives them a judgment if you default.  A judgment is collectable for 7 years in Georgia and is RENEWABLE meaning this could haunt you for many many many years to come all while collecting ridiculous interest and fees.

MAKING NEW PROMISES ABOUT PAYING AND MAKING PAYMENTS MAY RESTART THE CLOCK ON STATUTE OF LIMITATIONS OR CREDIT REPORTING LIMITATIONS

Did you know that making new promises to pay on an old debt or even making a payment toward a debt where the statute of limitations has passed can “re-start” the clock on the statute of limitations and/or credit reporting limitations?  Think carefully before making even an earnest payment toward a debt to a debt collector.  That small payment could restart the statute of limitations on a debt.  Perhaps the statute of limitations has already expired for this particular debt, meaning they could not legally sue you to collect the debt. By making a payment or making a new promise to pay you may be starting that clock making yourself vulnerable to being sued on that debt for years to come.  Not to mention new payments might mean extended credit reporting for years to come as well.  Weren’t you trying to recover from that all old bad debt in the first place?  Why in the world would you want to subject yourself to such financial vulnerability all out of a sense of duty to pay off a debt that the original creditor has nothing to do with now anyway?

WHAT IF THE DEBT BUYER COLLECTING THE DEBT DOESN’T EVEN OWN THE DEBT?

Think about this:  you know you owe Chase Bank some money from a credit card charged off a few years back.  Debt buyer A contacts you about your Chase account and you agree to pay them because you feel that you did owe Chase Bank, right?  So, they give you this sweet settlement offer and you make good on paying that debt off.  Only problem is, six months down the road, some other debt buyer is sending you letters and calling you saying that they own the debt from Chase Bank and they are now trying to collect the money from you.  Do you think you can just go back to debt buyer A and tell them of the mix up and they will gladly say, “oh, were so sorry for the mistake” and refund your money?  Hummmm, good luck with that.  The most likely result of that situation would be you being shit out of luck for paying a debt buyer without demanding proof that they own the debt.  Sure, maybe you could get a lawyer and go after them for your money back but can you even imagine how much time and effort that would take?  In the mean time, debt buyer B still wants his money and doesn’t care if you paid debt buyer A out of mistake.  So just because you did have a some debt outstanding from an original creditor and a debt buyer comes around demanding payment, doesn’t mean you should just take their word for it and pay it out of a feeling of obligation to do so.  You deserve some proof that they actually own the debt.  The truth is, they are not likely to give you any and they want you to just take their word for it.

BEING AN HONEST AND RESPONSIBLE CONSUMER DOES NOT MEAN YOU HAVE TO BE A FOOLISH OR NAIVE CONSUMER

Just remember, you can still be an honest person by moving forward with your financial life and taking control of your finances to avoid any future defaults, charge offs and debt collection matters.  Being an honest person does not mean you must be a foolish person by trying to do the right thing but ignoring the realities of the situation.  Be prudent about meeting your present obligations and be realistic about what debts you can pay debt.  Demand proof from debt buyers that they own the debt they are collecting.  Demand they prove that they are entitled to those interest, attorneys fees, and/or court costs they are claiming.  If they are unwilling to substantiate their claims in writing to you that should be a red flag.  Don’t be a sucker.

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