Many consumers are contacted by debt buyers who buy the rights to collect their overdue accounts/debt. However, not many consumers realize this growing section of the debt collection industry may offer them a chance to slash their delinquent debts by as much as 70%.
These Debt Buyers purchase large bundles of unpaid debts with face values that often total millions of Rand. These are those accounts that banks, other lenders and creditors give up trying to collect.
These debts are bought at hugely discounted prices, possibly going as low as 10 cents in the Rand. Not a bad buy.
Are they allowed to buy the debts of other consumers? Yes. Most credit applications include a clause whereby you grant the creditor/lender permission to sell your debt should you default with your payments in the future.
But you should not actually accept that someone has bought your debt merely because they say so. You probably do not even know them. Begin by questioning whether the debt is legitimate and accurate. Ask them to provide proof of the purchase, such as a copy of the actual signed purchase agreement. If they proclaim that they bought the debt, then ask them to provide proof thereof. And ask for a statement from the CREDITOR from inception to date so that you can substantiate their claim. You must check that the amount they are claiming is in line with what was actually owing on your account and not an inflated amount.
Once you know the name of the debt collector go to www.hellopeter.com and check to see what experiences others have had with them. By doing that you will be more equipped to deal with them. If they are not listed, then try and get them to verify their legitimacy.
These buyers carry a risk, and they know that can only expect to recover a fraction of the original amounts owed. Their target is to recover from 2 to 3 times more than they paid. And then they will seemingly still be making a nice, fat profit.
The bottom line: Debt buyers can turn profits that meet their goals by collecting merely 16% to 24% of the original face values. That knowledge can be useful to smart debtors who choose to negotiate a settlement for less.
Debt Buyers have more flexibility in negotiating with consumers as they now own the debt, and consistently offer discounts of 40% discount to settle the debt.
However, the consumer should be cautious when negotiating with debt buyers and collectors. Often many of these debts have prescribed which means that the debt no longer exists, and they should not be collecting it. But as most consumers are unaware of Prescription of Debt, they agree to pay this when in fact they need not be pay it. See the article on Prescription of Debt for more information.
Who buys these debts? These seem to be bought mainly by firms of attorneys who seem to specialize in debt collecting. And then of course, there are other debt collecting companies who also dabble in this seemingly lucrative industry.
When you are contacted by such a debt collector who has bought your debt, they will either offer you a reasonable discount or offer payment plans, that are intended to suit your needs and affordability. Do not just accept whatever they propose. They want their money and will normally be quite flexible when collecting it. So, negotiate with them.
If you need help, call, or send us a message.