Look Out for Junk Debt Buyers!

One day over the summer, my husband picked up his mail and found a letter from a collections agency demanding a payment for a $145 past due bill.  He was perplexed, since he's fanatical about keeping current on all of his bills and didn't remember owing anyone $145.  Then he looked closely at the letter and saw that it was sent on behalf of LVNV Funding.  My husband didn't recognize LVNV Funding as a company he'd done business with before, so he consulted the Internet to see what kind of business LVNV Funding is.  Before too long, he got a clue as to what was happening.  LVNV Funding is a "junk debt buyer" and they were trying to get him back on the hook for mistakes he had made in his past. 

Junk debt is basically debt that has gone past its statute of limitations, was charged off in a bankrupcty, or has otherwise been settled.  There was a time when most creditors didn't bother to try to collect on junk debt because they figured it wasn't worth the effort.  But then someone got the bright idea that money could be made from old, out of statute debts and people who were once in bad credit hell and were trying not to go back.  Junk debt buyers learned that they could get enough people recovering from having bad credit to pay up and voila, a hot new industry was born.  

LVNV Funding is owned by a larger company that buys "junk debt" portfolios for pennies on the dollar. These outfits then try to collect on old debts that have already been settled.  They send letters, make phone calls, and otherwise try to scare people into making even one payment.  Just one payment is enough to re-age old debts so that they can legally be collected.  And again, these debts are purchased for just pennies on the dollar.  If the junk debt buyer gets even one small payment, that's often enough to recoup their losses and make a handsome profit.