Even debt collectors are affected by the current financial downturn, according to Conde Nast Portfolio. A Jan. 27 article from the magazine says the debt collection industry currently has two big problems that are driving down profits. One is that you can't get blood from a stone -- that is, many debtors simply don't have the money to pay them. The other is the "credit crunch." Retailers and lenders have raised their standards for granting credit, which means borrowers are less likely to get into debt in the first place. And if debt purchasing companies need to borrow money themselves to buy more bad debts, they may find they suddenly can't get a loan.
As Southern California debt settlement attorneys, we don't expect any of our clients to shed a tear for debt collectors. However, we do see a potential advantage for our clients. People with too much debt don't always realize it, but they can and should negotiate with bill collectors to settle their debt for an amount they can afford. Collection agencies are frequently willing to settle the account for a discount just to get some payment -- after all, if the consumer goes into bankruptcy, they probably get nothing. And like all businesses, debt collection agencies are more likely to make this kind of compromise when they don't have a lot of other revenue coming in. This means consumers may be able to get deeper discounts -- with some smart negotiation.
However, troubles in the debt collection industry could also backfire on debtors by encouraging even more aggressive collection techniques. Even when the economy is good, debt collectors can be extremely invasive. A federal law called the Fair Debt Collection Practices Act and many state laws forbid debt collectors from using humiliation, threats and harassment to get paid, but these laws are frequently violated. Falling revenues could incentivize debt collectors to be even more abusive, which means consumers should be on guard for violations of their legal rights. If a creditor or collection agency is caught violating the Fair Debt Collection Practices Act, victims may sue it for $1,000 per violation, plus attorney fees and any actual financial damages it caused.
Howard Law has an active Fair Debt Collection Practices Act practice, in which we help consumers sue to protect their rights to be free of bullying and harassment by debt collectors. Our Southern California debt settlement attorneys also help consumers find a permanent solution to their debt problems by negotiating with creditors to reach a settlement our clients can afford. Even if you believe bankruptcy is your only option, we may be able to help you find a solution with a less drastic effect on your credit and your life. To learn more at a free consultation, please call us as soon as possible at 1-800-872-5925 or contact us online.