If a bank is going to sell a consumer's debt, the bank should be required to notify that consumer IN ADVANCE, and allow that consumer a fair chance to bid on and purchase his/her own debt, on terms just as favorable as the terms offered to any other debt buyer (which at present is usually pennies on the dollar).
Debt buyers contribute nothing to society. Yet, they are allowed to obtain windfall profits by pursuing impoverished consumers for the full face value of such debts.
This proposal would entail changes more extensive that just "notice" as it would require a change from bulk loan sales, to requiring an opportunity to purchase individual loan in certain circumstances.
Additional disclosures debt buyers (or sellers) should be required to make include the following:
1) how much was a debt sold for; and
2) If a debt buyer issues a 1099c issues with respect to a debt, then how much of a tax benefit are they claiming in connection with issuing the 1099c.
The first item should be disclosed for many reasons. For one thing, it impacts the fundamental fairness of the subsequent negotiation between consumer and debt buyer. Debt buyers and collectors may go on a tirade about personal responsibility and windfalls. However, it is at least debatable as to which-way such value judgments cut when a debt buyer is trying to get 100 dollars from an impoverished consumer on an account for which the debt buyer paid only 3 dollars. Debt buyers may say that their purchase price is not relevant to the legal rights they have purchased. However, a sense of fairness does matter in laws; it is why we humans make laws in the first place (or it least it is the polite justification for them). Thus if the price is not legally relevant to the rights the debt buyer is purchased, then regulations should be passed that make it legally relevant. In any case it is certainly relevant to the negotiation, insofar as it would impact what consumers are willing to pay, making it de facto relevant.
Second, debt buyers tend to issue 1099c's for the full face value of the alleged debt when the "forgive" it. This seems to imply a massive tax-fraud on the American public, because they are getting a tax-benefit that is worth far more than the asset that they purchased. This should be publicly disclosed to make it more difficult to get away with. If a debt buyer purchases a debt for 5-cents, then "forgives" the debt as being a $1.00 debt, issuing a 1099C for that amount, is the debt buyer claiming the full tax benefit of losing a $1.00 of income? Is that company really just buying $1 million dollar tax break for $10K? This is unfair for the consumers whose debts are implicated and also unfair for all of us who are supposed to benefit from tax revenues (i.e., all of us).
CollectionDefenseGuy
1
If a bank is going to sell a consumer's debt, the bank should be required to notify that consumer IN ADVANCE, and allow that consumer a fair chance to bid on and purchase his/her own debt, on terms just as favorable as the terms offered to any other debt buyer (which at present is usually pennies on the dollar). Debt buyers contribute nothing to society. Yet, they are allowed to obtain windfall profits by pursuing impoverished consumers for the full face value of such debts. This proposal would entail changes more extensive that just "notice" as it would require a change from bulk loan sales, to requiring an opportunity to purchase individual loan in certain circumstances.
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CollectionDefenseGuy
2
Additional disclosures debt buyers (or sellers) should be required to make include the following: 1) how much was a debt sold for; and 2) If a debt buyer issues a 1099c issues with respect to a debt, then how much of a tax benefit are they claiming in connection with issuing the 1099c. The first item should be disclosed for many reasons. For one thing, it impacts the fundamental fairness of the subsequent negotiation between consumer and debt buyer. Debt buyers and collectors may go on a tirade about personal responsibility and windfalls. However, it is at least debatable as to which-way such value judgments cut when a debt buyer is trying to get 100 dollars from an impoverished consumer on an account for which the debt buyer paid only 3 dollars. Debt buyers may say that their purchase price is not relevant to the legal rights they have purchased. However, a sense of fairness does matter in laws; it is why we humans make laws in the first place (or it least it is the polite justification for them). Thus if the price is not legally relevant to the rights the debt buyer is purchased, then regulations should be passed that make it legally relevant. In any case it is certainly relevant to the negotiation, insofar as it would impact what consumers are willing to pay, making it de facto relevant. Second, debt buyers tend to issue 1099c's for the full face value of the alleged debt when the "forgive" it. This seems to imply a massive tax-fraud on the American public, because they are getting a tax-benefit that is worth far more than the asset that they purchased. This should be publicly disclosed to make it more difficult to get away with. If a debt buyer purchases a debt for 5-cents, then "forgives" the debt as being a $1.00 debt, issuing a 1099C for that amount, is the debt buyer claiming the full tax benefit of losing a $1.00 of income? Is that company really just buying $1 million dollar tax break for $10K? This is unfair for the consumers whose debts are implicated and also unfair for all of us who are supposed to benefit from tax revenues (i.e., all of us).
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