Scavenger debt collectors are companies that purchase old debts for pennies on the dollar and attempt to collect that money, sometimes after the statute of limitations has expired. Since the original creditor does not believe he can recoup the loss, he sells it to a scavenger collection agency and cuts his losses.
Unfortunately, debt-collection scams have become increasingly common over the last decade, and it is sometimes difficult to recognize scavenger debt collectors. They might sounds legitimate and send consumers official-looking documents, but they often do not have the authority to collect on their debts.
Scavenger Debt Collectors are Usually Not Lawyers
Many times, a scavenger collection agency will contact a consumer and claim to be a “litigation form” or “attorney’s office” in order to strong-arm collection of the debt. In most cases, this is either a lie or an exaggeration of the truth, and these cases rarely go to trial.
Consumers who receive threats of litigation should attempt to verify the scavenger debt collector’s information. If, when pushed, they are reluctant to give contact information or paperwork on the debt, this is a sign of a scam. Consumers should never pay for a debt they cannot verify.
Admission of Debt is a Mistake
What many consumers do not realize is that, in some states, admission of owing a debt can restart the statute of limitations. If a consumer says, “Yes, I remember owing that debt,” a scavenger collection agency may then have the ammunition it needs to proceed with a lawsuit.
According to BCS Alliance, scavenger debt collectors are infamous for attempting to collect debt that has already passed the statute of limitations. Since they have purchased the debt for pennies on the dollar, their risk is less, and they will make a healthy profit if they can collect the full sum from the consumer.
Consumers who are contacted by a scavenger collection agency should avoid admitting ownership of a debt, at least until they have obtained the necessary validation of the debt. Otherwise, they could wind up owing money they should not have had to pay.
Creditors Make Mistakes
Thousands of people are guilty of loan default every year, and records are not always as complete or as clear as they should be. Names are often confused; for example, there are many people in the U.S. named Jane Smith. If one Jane Smith defaults on a loan, another Jane Smith might eventually be mistaken for the other and accused of owing a debt.
Confusion concerning loan default is more common as time passes. Scavenger debt collectors might not have all the information in front of them, and therefore are prone to harassing innocent individuals. This is yet another reason not to admit ownership of a debt.
Options for Handling Scavenger Debt Collectors
Consumers who have been harassed by scavenger debt collectors have a few options available to them. First, it is a good idea to write a cease and desist letter. When a scavenger collection agency calls at all hours of the day it can interrupt life in numerous ways. Consumers should write a letter to the agency demanding that all future communication be conducted in writing.
It might also become necessary to hire an attorney. A lawyer can assume responsibility for communicating with the agency and might be able to convince them to back off. However, this is an expensive solution.
The final option is to argue with them. The least-attractive option is to engage a scavenger debt collector. This takes time and usually produces no attractive results, and can actually place a consumer in a negative position. It is usually best to communicate in writing.
How to Recognize a Scavenger Collection Agency
Although they might behave the same way as a legitimate or primary creditor, there are a few ways to tell when they are scavengers:
- They are trying to collect on a very old debt
- Offers to settle the debt for a much lower amount than the original are presented immediately.
- They threaten litigation during the initial communication.
- They call themselves something other than a collection agency (e.g. litigation firm, bad debt attorneys, etc.)