‘Buyers’ Give Old Debts New Life

[David A. Szwak]

St. Petersburg Times
‘Buyers’ give old debts new life

Uncollected debts used to die away, victims of time and creditors’ ability to write them off. But with a new breed of debt buyers, the past may haunt you.

By SCOTT BARANCIK, Times Staff Writer
Published June 3, 2006

Used to be, banks didn’t waste much time chasing credit card deadbeats.

Their staffs would hound debtors by phone for six or seven months, then invite outside collection agencies to take a crack. Few debtors were sued. Those who hunkered down long enough could escape without paying.

Not anymore. In the brave new world of debt, unpaid bills never die. Today speculators are buying thousands of these aging accounts at a time and extracting payments the original lenders could not.

Some debt buyers are hauling consumers into court and getting permission to garnish their wages, empty their bank accounts or even seize their cars. Others are convincing debtors to pay down old bills that are no longer legally enforceable.

The amount of written-off credit card debt sold to debt buyers in 2004 $63-billion worth, according to the Nilson Report was 100 times the amount sold in 1993. This year, a Las Vegas convention hosted by the Debt Buyers’ Association trade group drew 1,400 debt buyers, sellers, brokers, resellers and lawyers.

Other credit issuers are selling their unpaid bills, too, including such retailers as Radio Shack, Wal-Mart and Bally Total Fitness, and hospitals, auto lenders and utilities.

Asset Acceptance, one of five publicly traded debt buyers, operates a 52,000-square-fbot collections center in Riverview. In 2000, the Michigan company sued 25 debtors across Pinellas, Hillsborough, Pasco, Hernando and Citrus counties. Last year, it sued 3,855.

Over the same period, the types of lawsuits debt buyers usually file small-claims breach of contract, monies due or accounts suits —— rose 56 percent across Pinellas, Hillsborough and Pasco counties.

A morning cattle call at the Tampa courthouse shows why.

Courtroom 306

Hillsborough County Judge Charlotte Anderson reviews small-claims lawsuits every Wednesday. This morning’s docket allots 150 minutes for 165 pretrial hearings, more than half involving debt buyers.

In every case, the debt buyer has a lawyer. Not a single accused debtor does. Only two put up a fight. Sandra A. Thompson, accused of stopping payment on a $2,003 credit-card debt in 2001, tells the judge the debt was erased in bankruptcy court. The plaintiff agrees to dismiss Thompson’s case on the spot.

Michael A. Johnson says he has “no recollectionâ€