Debt collecting is becoming a popular form of investment. Because there are so many people struggling with debt these days, investors are seeing potential in creating a new company to perform debt collection by buying old debts from other companies for pennies on the dollar and then aggressively attacking consumers for repayment. In many cases, the debts they are pursuing are debts written off long ago. These types of newly-formed debt collection agencies are known as scavenger debt collectors.

The Art of Scavenging

While you think that an old debt is no longer an area of concern, you may be surprised when a new letter arrives in your mailbox collecting on an old debt. This industry is a multi-million dollar business and several of these companies have even ended up on the Fortune 500 list. So it goes without saying that these scavenger debt collectors will stop at little to get their investment back. Very few of these companies will call themselves debt collectors. Instead they use the term “litigation firm” to put additional fear into the debtors. They have been known to be unreasonably aggressive in their debt pursuit tactics and many times will violate the Fair Debt Collection Practices Act. Some will go so far as to proclaim they are not obligated to abide by the regulations set forth by the government but the reality is they definitely have an obligation. It is this bluff and many worse that scare people into paying the full amount of their previously written off debts. Since the scavenger's only pay pennies on the dollar to buy the old debts (say...$70 for a $1000 debt plus interest), they have a huge potential to make an extraordinary amount of money by pursuing the whole debt, plus interest and fees.

Dealing with the Scavengers

When you are contacted initially by a scavenger collector, you will likely be told they are a litigation firm that is currently working on the paperwork to pursue legal action against you. They will tell you that before the paperwork is completed they wanted to give you one last chance to make good on your debts. The debt collector will state that if you are unwilling to pay the debts in full, they will proceed with a lawsuit. Typically, the caller will present his/herself as an attorney or a paralegal without technically saying so. The collector will likely concoct a story about how important it is that you pay your debts in full, and if you propose that you don't have enough money to satisfy the debt, they will try to goad you into saying how much money you do have. They will likely agree to accept a smaller percentage of the total balance but may say they have to talk to other investors to find out if the deal is acceptable. If the call ends there, the collector will follow up the next day and give you an amount to pay within a specific time period – usually just a few days.

Refusing Payment

If you refuse to make any payment, the investment company could possibly turn you over to a real attorney, who will continue to intimidate you into paying the full amount due. The difference between a scavenger collector and a real lawyer is that the lawyer can not state they plan to sue unless they really have such a plan. If you do receive a letter from a legitimate law firm, you need to take it seriously. The likelihood that the debt collector will sue you is rather slim unless they conduct an asset search on you and find that you have assets which they can seize.
If you have an encounter with a scavenger debt collector, it is important you do not admit you owe the debt or make any agreements out of intimidation. Simply state that the statute of limitations has run out on the debt and request they no longer contact you. If contact continues, send the request in writing via certified mail. Never admit to any information about the old debt because in doing so, you may restart the statute of limitations, giving them the right to sue you for the money.