A recent article in the American Banker highlights some of the problems with practice of selling old debts to debt buying companies. It appears Bank of America (just like many other banks) sold portfolios of credit card debt to CACH LLC. A portion of the debt sold was either discharged in bankruptcy or already repaid. The face value of the portfolio was $65 million but CACH bought the portfolio for 1.8 cents on the dollar.
The problem that these sales causes is the consumer is stuck in the middle. If the consumer repaid the debt already or it was discharged, the consumer rightfully believes the debt is done. But the company that bought the “debt” now decides to harass the consumer for payment or, even worse, sue on the debt. In most small claim courts, even though its suppose to be up to the company to prove the consumer owes the debt, in reality most judges are looking for the consumer to prove they don’t owe it. Talk about a nightmare for the consumer. The lesson here is we now need to keep all of our records forever because you never know when a debt is going to come back to life.
If you want to read the American Banker story, you can read it here: Bank of American Sold Card Debts to Collectors Despite Faulty Records.