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“No-Doc” Debt Often Leads to Incorrect Collection Data

Michael Rapp Feb. 27, 2015

It is a common problem in the debt collection industry: debt buyers often purchase debt in bulk, with little to no information attached. The result is debt collectors attempting to collect from consumers who do not owe. Quite frequently, when collectors attempt to collect incorrect debt, the consumers have since paid it off, but due to the lack of correct documentation, they are still asked to pay up.

According to The Center for Responsible Lending, nearly 1 in 7 adults are contacted by debt collection agencies and only 6% of debt purchased by large collectors came with any sort of documentation.

As the article from The Center for Responsible Lending notes, the problem is made worse by court rulings that approve incorrect debt collection attempts even when documentation is nonexistent.

The occurrence of companies using predatory, and in many cases, unlawful debt collection practices has substantially increased in recent years. The FTC reports that it received over 200,000 debt collection complaints from consumers in 2013 alone. Most of the debt was credit card-related, but a decent number of complaints also included attempts to collect medical and student loan debt that had been paid off.

It is widely held that the debt collection industry is out of control and needs to change. In particular, federal regulators are working to improve the debt collection process, most notably the accuracy and amount of documentation provided by collectors.