Consumers Lose When Debt Buyers Illegally Offer Credit Cards To Pay Off Debt

debt-buyers-illegally-offering-credit-cards collections

Consumers Lose When Debt Buyers Illegally Offer Credit Cards To Pay Off Debt

Let’s face it, debt buyers – companies that purchase bad debt for pennies on the dollar – generally don’t have very good reputations. They’ll use illegal tactics such as contacting your family or your boss and showing up at your house at night to collect a debt – all of which violate the Fair Debt Collection Practices Act (FDCPA). Their behavior couldn’t get worse. Or could it?
Debt buyers offering “Free” credit cards
FDCPA attorneys have reported that debt buyer practices have reached an all-time low. They say that debt buyers are offering “free” credit cards which allow a debtor to pay off his or her debt – and possibly have some credit left over for personal use. The problem? Consumers aren’t getting the information that is required under banking disclosure laws and may be getting duped by debt buyers and credit card companies in the process.
Here’s how it works:
A debtor owes Citibank $5,000. Citibank can’t collect and sells it to a debt buyer for pennies on the dollar. The debt buyer then offers the debtor a credit card for $6,000 at a very high interest rate. While $5,000 of the new “loan” will be used to pay off the original debt, the debtor can then use the extra $1,000 as he or she wishes.
While that offer may appeal to many debtors, it’s a risky endeavor for many reasons, including:
Renewing the debt. Debt buyers simply don’t have enough information to prove their case in court. Having a debtor pay off his or her original debt by taking our a new credit card – regardless of whether the original debt was valid – may renew the old debt or create a new liability for the debtor altogether.
Resetting the statute of limitations. What many debtors don’t realize is that the statute-of-limitations resets if you transfer a debt balance to a new credit card, make a payment or declare in writing that you will repay the debt.
Acquiring more debt. These credits cards are generally offered at very high interest rates. That, as well as having access to additional credit at unknown rates, will likely put the card holder in even greater debt.
Play it smart
If you’ve been approached by a debt buyer to take out a credit card that will allegedly pay off your debt, play it smart and contact an experienced FDCPA attorney first. You may be entitled to money damages.
Don’t think that debt buyers are offering you a chance to get out debt. In reality, their “free” credit card offer is yet another tactic which allows them to collect on a debt that you may not even owe.

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