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"Zombie debt"

Posted: Fri Sep 27, 2013 12:27 am
by JamesVincent
This is almost the opposite of this forum since it involves not debt elimination, but the rehashing of old debt, or non-existent debt. I ran across an article earlier about a company called Midland Funding LLC. Apparently they are a "debt collector". The only problem is they don't necessarily collect valid debts. They buy whole books of debtors names from companies and then go collect on them, whether the debt was previously paid or not.

But of course, as a business owner, Eulberg spends money too. In 2006, he bought two Dell computers for the office for about $1,700.

The debt was paid shortly thereafter, and he didn’t think about it again for six years.

“All of a sudden, there’s this company called Midland Funding saying they bought debt from Dell,” Eulberg said.

Midland Funding bills itself as “one of the nation’s biggest buyers of unpaid debt.” It’s a so-called junk debt collector — trying to get money owed years ago, or in some cases, debt that has already been paid or disposed of — like Eulberg’s computer debt.

Re: "Zombie debt"

Posted: Fri Sep 27, 2013 1:33 am
by LaVidaRoja
I was assigned the phone number of a prior dead-beat who had run up various debts. I started getting calls from the collection agency. I suspect (based on the State statute of limitations) that the debt was already expired -- non-collectible. However, after explaining once or twice that I was NOT the debtor, and did not know their whereabouts, I got a bit angry. I got the full name and location of the company. I then wrote a letter to the company, and to their agent for service in my state, explaining that I had told them that this was not the debtors number, and had been assured they would not call again, and that they had called again. I told them that any future calls would result in legal action. Since I doubt the collectible amount was as much as they had to pay their local agent for looking at my letter, I got no further calls. UNTIL about two years later. The original company had NOT expunged my number, merely put a "Do not call" directive on it. They had sold the debt yet again. I probably should have threatened action against the first company, but I merely sent a letter (with a copy of my prior correspondence) to the second company. I informed the second company that since they did not have an agent in my state, I had not sent the correspondence to the State Secretary of State at that time. I never heard back.

Re: "Zombie debt"

Posted: Fri Sep 27, 2013 9:12 am
by Jeffrey
There's probably a thousand stories like that.

Re: "Zombie debt"

Posted: Fri Sep 27, 2013 10:55 pm
by Judge Roy Bean
Jeffrey wrote:There's probably a thousand stories like that.

Tens of thousands at least.

The problem is, the buyers of the alleged debt have found they can scam a lot of people out of money regardless of the actual status. To them, it's just another opportunity.

I've mentioned this in the past - there is a completely artificial debt economy at work here. If a debt is actually "written off" and that amount offsets an income tax liability on the company's balance sheet, why does it even still exist?

The original creditor may get some loss offset by selling the alleged debt for some fractional amount, but the buyer of that alleged debt can simply make up an amount they think they can gouge out of their targets.

Right now, inflated medical bills are routinely unpaid by insurers and insurers fight tooth-and-nail to avoid paying even legitimate charges, thus the patient is ultimately left with the amount owing. Soon the debt is sold off to collectors then to scavengers like Midland - and there is no possibility for the average consumer to fix the original problem once the debt is sold. The situation is so out-of-whack that credit ratings involving "medical charge offs" are routinely ignored by lenders.