man looking over debt notices

What Is a Debt Buyer?

Debt buyers are companies that purchase debts from original creditors. Major debt buyers include companies like Midland Funding LLC and Portfolio Recovery Associates. If you’ve been sued for an outstanding debt, there’s a good chance the entity that filed the lawsuit is a debt buyer. In this article, we discuss the debt buying industry and the methods debt buyers use to collect debts. 

How Debt Buyers Operate

Debt buyers purchase debts from creditors through a bidding process, purchasing each debt for pennies on the dollar. Specifically, debt buyers pay approximately four cents to eight cents for each dollar of debt. For example, a debt buyer might pay around $40 to purchase a delinquent account with a balance of $1,000. In addition, the older the debt, the less expensive it is, as older debts are less likely to be collectible. The type of debt also influences the price debt buyers pay for it. Mortgage debt, for example, is worth significantly more than utility debt. It’s important to remember that debt buyers are legally allowed to collect the whole debt.  If they pay $40 for $1,000 of your debt they are allowed to sue you for $1,000,  but your lawyer can negotiate a discount – sometimes a big discount. 

Debt Collection Methods

Debt buyers employ a number of methods to collect debts. Most frequently, debt buyers contact debtors via written correspondence and telephone. During this stage of the debt collection process, debt buyers attempt to convince debtors to voluntarily pay what they owe. Sometimes, however, debt buyers have trouble locating debtors. When this is the case, they use computer software and private investigators to track down debtors. Debt collectors also sometimes report delinquent debts to credit bureaus to pressure consumers into paying, as delinquent accounts can seriously harm a consumer’s credit score. 

How to Deal with Debt Buyers 

As noted above, debt buyers initially attempt to collect debts from consumers via phone calls and letters. If this doesn’t work, however, debt buyers have no problem going to court to collect a debt. If you’ve been contacted by a debt buyer or have been served with a debt collection lawsuit, you should contact a California debt collection lawsuit defense attorney for guidance. 

Contact a California Debt Collection Lawsuit Defense Attorney 

If you’ve been sued by a debt collector, you should have a California debt collection lawsuit defense attorney on your side. At the Fullman Firm, our experienced debt collection defense attorneys have the experience and knowledge to defend your debt collection lawsuit. When you choose us to take on the debt collector in your case, we will do everything in our power to ensure a successful result. Please contact us as soon as possible to schedule a free consultation.