Junk Debt Buyer Pennies

“In 89.3% of the cases we reviewed, debt collection litigation was initiated not by the original creditor but by a third-party debt buyer who had purchased the debt in question.

Third-party debt buyers typically purchase debt for pennies on the dollar.

In one recent sale, for example, Asta Funding, Palisades Collection, LLP’s parent company, purchased a debt portfolio of approximately $6.9 billion for $300 million, or 4.35 cents on the dollar.

After purchasing the debt, the third party may attempt to collect the full amount of the alleged debt by contacting the debtor or by bringing a lawsuit as an assignee of the original creditor.

Just twelve of the thirty-nine debt buyer plaintiffs who initiated lawsuits reviewed in this study are licensed by the New York City Department of Consumer Affairs.

The twenty-seven unlicensed debt buyers brought 257, or 42.8%, of the 600 lawsuits reviewed.”

“Debt Weight: The Consumer Credit Crisis in New York City and its Impact on the Working Poor” a report by the Community Development Project, November 2007