These sophisticated collection agencies use intimidation, harassment tactics, and flaws in the credit reporting system to push people into paying up.
And they’re succeeding.
It’s becoming a multi-million dollar business.
And I see it getting bigger over the next few years as more as more banks now realize the real value of their bad debt and begin auctioning off their bankrupt debt portfolios.
So don’t be surprised if you begin seeing collection notices on debt that was discharged in your bankruptcy. In fact, count on it.
Take the case of Van Rathavongsa reported in Business Week.
The Raleigh, North Carolina, factory worker filed bankruptcy in 2002. One of the debts the judge canceled, or “discharged,” was $9,523 Rathavongsa owed to Crapital One. But Crapital One continued to report the factory worker’s discharged debt to credit reporting agencies as an active balance.
This kind of failure by creditors to update credit reports happens all the time. In September 2003, when Rathavongsa tried to close on a mortgage for a new house, his would-be lender said he would either have to pay Crapital One or show proof from the credit-card company that the debt had been discharged.
Despite several calls and a letter from his attorney, he says, Crapital One never revised the credit reports. To obtain the home loan, Rathavongsa eventually did what many consumers in this situation do. He gave in and paid Crapital One $9,523 he no longer legally owed.
