The Wall Street Journal recently published a great article about the credit card collection industry (Click here to read the full article). I think many Georgia consumers would be shocked to learn that in many cases, they have struggled to pay credit card debt to collectors who paid pennies on the dollar to purchase the right to harass and squeeze money from them.
When the credit card collection company calls a Georgia consumer, they will try to guilt the person into making payments. The song usually goes something like this, “You made these charges. Its your responsibility to pay us back the money you charged on this account. You used this money and now you have to pay us back!”
The truth is that the original credit card company wrote off the bad debt and sold it the collection company for mere pennies. I’ve seen consumers from Rome, Calhoun, Dalton, Cartersville, Hiram, Dallas and Chatsworth empty their life savings trying to pay these credit card collection companies. Some people will withdraw all of the 401k retirement. Others will take out a second mortgage on their house. I’ve even seen cases where they pawned their wedding rings to try to pay the credit card collection company. In these cases, I wish that these people had only come to see me sooner.
Was it the original credit card company that benefited from these sacrifices? The answer is no. The company that benefited paid pennies on the dollar for the right to collect. In the situation where a person is unable to pay the credit card collection company, they will file a lawsuit to garnish your paycheck. When the collection company collects on the full amount of the debt, they make millions.
The Journal reports that one credit card collection company, Encore Capital Group Inc. (Midland is a unit of this company that we often see here in Georgia), filed 245,000 collection lawsuits last year and “nearly half of its $487.8 million in gross collections came from legal actions. That is down from the 474,000 suits it filed in 2008 when the financial crisis created an explosion in bad debt. But Encore expects the number of lawsuits to climb this year because of the sluggish economy.” The article goes on to report that “Encore, the largest publicly traded debt buyer by revenue, filed the most lawsuits last year. the San Diego company posted $33 million in profit last year, up from 139% from 2008. While the Standard and Poor’s 500 stock index rose 23.5% in 2009, Encore’s stock soared 142%.”
Any Georgia consumer who is struggling with credit card collection companies should meet with a bankruptcy attorney and learn about their rights. Why not meet with a bankruptcy attorney before you loose everything you own? With Chapter 13 or Chapter 7, you may be able to wipe out all of your credit card debt.
3. How much does it cost to file?
4. How do I stop a garnishment in Georgia?