What is the name of your state (only U.S. law)? any state in the US ... This is a generic question not about a specific case.
I've had a case like this myself (it was dismissed), and have seen a few reports of cases that may possibly be like this (a couple even on this forum).
What I suspect may be happening is something I'd like to ask about the general legality on, primarily with regard to federal law that may apply, but where appropriate, any state law the commenter knows about.
I label this practice "speculation collection". Maybe you have a better name for it.
A junk debt buyer (JDB) would normally pay some number of cents on the dollar for a portfolio of debts. Cash is tight and so maybe recovery rates are falling. What may be going on in the JDB business is "tasting" debts without committing to them. Instead of paying perhaps 10 cents on the dollar for a bunch of debts, maybe they pay 1/10 cent per dollar for a short term option on the debt. The option allows them to then buy the debts (maybe individually) at any time up to a later date specified in the option contract.
The JDB gets the data file and proceeds to see which debts are worth buying. But instead of just making some collections calls, they start right off filing a civil action in the hopes of getting a default judgment. If they can get the judgment, maybe they go ahead and buy the debt.
If this deal is done in the form of a term options contract, is it legal for the JDB to proceed with civil action on it, even though they do not actually own the debt (yet) and possibly intend to dismiss every action that is challenged?
And what if there is no options contract in effect, but the JDB has the debt info and would intend to buy the debt if they get a judgment?
Or, what if the JDB is planning to sell the judgments back to the original creditor?
I've had a case like this myself (it was dismissed), and have seen a few reports of cases that may possibly be like this (a couple even on this forum).
What I suspect may be happening is something I'd like to ask about the general legality on, primarily with regard to federal law that may apply, but where appropriate, any state law the commenter knows about.
I label this practice "speculation collection". Maybe you have a better name for it.
A junk debt buyer (JDB) would normally pay some number of cents on the dollar for a portfolio of debts. Cash is tight and so maybe recovery rates are falling. What may be going on in the JDB business is "tasting" debts without committing to them. Instead of paying perhaps 10 cents on the dollar for a bunch of debts, maybe they pay 1/10 cent per dollar for a short term option on the debt. The option allows them to then buy the debts (maybe individually) at any time up to a later date specified in the option contract.
The JDB gets the data file and proceeds to see which debts are worth buying. But instead of just making some collections calls, they start right off filing a civil action in the hopes of getting a default judgment. If they can get the judgment, maybe they go ahead and buy the debt.
If this deal is done in the form of a term options contract, is it legal for the JDB to proceed with civil action on it, even though they do not actually own the debt (yet) and possibly intend to dismiss every action that is challenged?
And what if there is no options contract in effect, but the JDB has the debt info and would intend to buy the debt if they get a judgment?
Or, what if the JDB is planning to sell the judgments back to the original creditor?
