Buyers Of Bad Debt Bide Time As U.S. Consumers Fret

[Purveyor]

By Sweta Singh - Analysis

NEW YORK (Reuters) - The worst is yet to come for debt-laden, cash-strapped and increasingly jobless U.S. consumers.

At least that is the view of major debt collectors -- many of which are holding off on acquiring much in the way of troubled consumer debt from banks and other institutions, betting that it will get cheaper as the economy languishes.

With unemployment and defaults on the rise, companies like Portfolio Recovery Associates Inc (PRAA.O), Asset Acceptance Capital Corp (AACC.O) and Encore Capital Group Inc (ECPG.O) hope to be able to grab bad debt portfolios at fire-sale prices later this year.

Once they acquire debt portfolios such firms aggressively pursue at least partial repayment from troubled borrowers, badgering them via phone calls, text messages and emails.

"Once they decide to buy the portfolios and get a sizable amount, the portfolios could be lucrative for the companies over a number of years," Sameer Gokhale, an analyst at Keefe, Bruyette & Woods said.

These companies could be setting themselves up for big future profit gains should debt prices fall as they would stand greater chances of getting better returns once the economy firms up.

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REUTERS: http://www.reuters.com/article/reutersEdge/idUSTRE56L58R20090722

[ixion]

1. all you need to do is look at companies like this to realize

that there are no green shoots.

[dixiegrrrrl]

2. Hah ! We'll fool them. We can pay them down the road with worthless dollars.

Yayyyyy...

uh.....

hmmmmm.

[Xithras]

3. The one real advantage of hyperinflation...

...is that debt is fixed.

[dixiegrrrrl]

5. Yep..every month writing that mortgage check is costing me less.

Talk about mixed feelings.

[Sen. Walter Sobchak]

4. Portfolio Recovery Associates and Encore are a fucking blast

I don't think I have ever observed an industry so blatantly and fearlessly engage in illegal activities, including but no limited to:

1. Attempted to collect debts discharged in a bankruptcy
2. Attempting to obtain a default judgements fraudulently
3. Attempting to collect debts known to be illegitimate
4. Perjury and Forgery, usually to get around the statute of limitations and report old claims as new for credit reporting purposes
5. Threats of violence, deportation, incarceration,
6. Harassing people at their place of employment
7. Unauthorized bank transactions resulting in exorbitant fees for victims.
8. Threatening lawsuits over debts outside the statute of limitations.