Have you ever heard of a “debt buyer?” Chances are you have not. A debt buyer is a particularly insidious type of debt collector. Debt buyers purchase charged off debt from original creditors such as credit card companies, lenders on repossessed automobiles or payday loan lenders. The debt buyer purchases charged off accounts for pennies on the dollar and then pursues the debtor for the entire amount.
Debt Buyer Example
In tough times you are unable to pay your credit card bill totaling $6,000.00 for more than 3 months. Unbeknownst to you, the credit card company charges the debt off its books and sells the account to a debt buyer for $100.00. Months or years down the road you are sued for $6,000.00 by a company you have never heard of, Portfolio Recovery Associates or LVNV Funding, for example. You recognize the amount of debt that you owe but you do NOT recognize the people suing you. Then you learn that even though Portfolio Recovery Associates has only paid the original creditor $100.00 for your $6,000.00 debt, Portfolio still gets to pursue you in a lawsuit for the entire $6,000.00. You think “that can’t be right,” but it is and it happens to people in this country every day.
John Olivers Big Giveaway
Enter a hero with a white hat, albeit a snarky comedian trying to make a point. John Oliver was a long time “correspondent” on The Daily Show with Jon Stewart. A British comedian with a reputation for lampooning the absurdities of life, John Oliver now appears on HBO in his own show each week. In last week’s episode, John Oliver created a fake debt buying company (sneakingly called CARP, a bottom feeder) and was able to promptly purchase 15 million dollar’s worth of charged off medical debt (comprising the debt of 9000 people who had been able to pay their medical bills) for a grand total of less than $60,000.00. He then took this debt that he had purchased and, on national television, FORGAVE THE DEBT for the 9000 people who owed it!!!
For a consumer bankruptcy attorney like me who fights against this type of creditor on behalf of my clients, this is a thing of beauty. There are those who would say it was not right that the 9000 people who owed this debt did not pay it. However, we do not walk in their shoes and we do not know what has occurred to cause these folks to be unable to pay their bills. Did they lose their job due to an illness that resulted in the medical bill? Do they work at a low paying job that does not provide reasonable health insurance? I find the more interesting question to be, from our original example, why debt buyers are allowed to collect $6000.00 when the debt buyer only paid $100.00 for the account originally. Thank you, Mr. Oliver, for shining a light on a unseemly way to make a dollar on the backs of working Americans. Good job!
An experienced bankruptcy attorney can help a person who has been served with a collection lawsuit from a buyer who has purchased the account for pennies on the dollar. If you are considering a filing for bankruptcy relief and wish to consult with a qualified bankruptcy attorney about your options, please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation.
Carla M. Handy is the Managing Partner of the Bond & Botes Law Offices in Gadsden and Anniston, Alabama. She holds a Bachelor of Arts from Auburn University, and a Juris Doctorate from the University of Alabama School of Law. She has been helping families navigate consumer bankruptcy cases since 1994.Read her full bio here.