Understand Consumer Bankruptcy and Debt Buyers

consumer bankruptcyIf you are one of the many millions of people who are fighting off consumer bankruptcy, the actions of the debt buyers industry could be part of your problem. In fact, you could have debt credited to you that isn’t your debt or even debt that you had forgiven but hasn’t been removed from your records. According to the Federal Trade Commission’s latest report on the debt buying industry, this is a problem that could be even more widespread than was previously thought.

The report, called The Structures and Practices of the Debt Buying Industry may sound dry, but it has some vital information for anyone facing consumer bankruptcy over past unpaid debts. Some of the findings were surprising even to the Federal Trade Commission, and they feel are a cause for concern.

Consumer Bankruptcy Driven By Debt Selling Practices

One area that the report focused on was how debt is sold and the kind of information disclosed to debt buyers. They found that although buyers received enough information to validate the debt initially, many other details were not released with the debt that could help to pinpoint how much of the debt information is erroneous. They generally do not receive:

  • Specifics of the collection history of the individual debts
  • Whether individual debts have been disputed in the past
  • Account statements or terms of credit on individual debts

Although account statements can be requested, there is generally a limit as to how many records can be requested and how long they have to request them. After that time they will have to pay for these records, which can often limit the amount of information a debt buyer is willing to gather.

And since all debts are sold “as is” there is no recourse for a buyer to take if the information turns out to be wrong or the debt already discharged in some way. This means that often only the most aggressive loan buyers will purchase debt and that they will often pursue those individuals that are poised to file for consumer bankruptcy even if they don’t know whether that debt has been taken off the books.

Unverified Debts and Consumer Bankruptcy

The Federal Trade Commission has come to the conclusion in this report that only a little over half of all disputed debts are even verified. With around a million disputed debts going through the system every year, this means that around a half a million debts are being bought by debt buyers who then are attempting to collect on them, without having any verification this is correct information.

 

The FTC observed that when considering unverified debt sales, these companies more than likely are from “collectors seeking to recover from the wrong consumer or the wrong amount.”

 

So where does that leave you and me? If you have been considering a consumer bankruptcy filing of a Chapter 7 bankruptcy because of old debts, particularly credit card debt, you should know that it is important to have your file investigated. You may find that a fair portion of that debt has either already been written off by the company that was owed or you disputed and won this case long ago.

Get Professional Help Assessing Your Debt

This is a particular area where Robert Peter’s background as both an accountant and a lawyer who specializes in bankruptcy is a big help. Understanding the legal ramifications of a financial problem is complicated. If you have outstanding debt that is keeping you up late at night, contact us for your free consultation to find out how we can help. Don’t let hounding debt collectors keep you from having the kind of life you deserve. Find out how you can restart your life debt free with our free ebook Myths, Secrets and Truth About Bankruptcy in Florida. Don’t be afraid to ask for help to get what you need. You don’t have to live with the burden of personal debt, find out what your options regarding consumer bankruptcy are and start making plans for a new life today.