In finance, default is failure to meet the legal obligations of a loan, for example when a home buyer fails to make a mortgage payment, or when a corporation or government fails to pay a bond which has reached maturity. A national or sovereign default is the failure or refusal of a government to repay its national debt.
The Fair Debt Collection Practices Act (FDCPA), Pub. L. 95-109; 91 Stat. 874, codified as 15 U.S.C. § 1692 –1692p, approved on September 20, 1977, is a consumer protection amendment, establishing legal protection from abusive debt collection practices, to the Consumer Credit Protection Act, as Title VIII of that Act. The statute's stated purposes are: to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy. The Act creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the Act. It is sometimes used in conjunction with the Fair Credit Reporting Act.
The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., is federal legislation enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. It was intended to shield consumers from the willful and/or negligent inclusion of erroneous data in their credit reports. To that end, the FCRA regulates the collection, dissemination, and use of consumer information, including consumer credit information. Together with the Fair Debt Collection Practices Act (FDCPA), the FCRA forms the foundation of consumer rights law in the United States. It was originally passed in 1970, and is enforced by the U.S. Federal Trade Commission, the Consumer Financial Protection Bureau, and private litigants.
Credit card debt results when a client of a credit card company purchases an item or service through the card system. Debt grows through the accrual of interest and penalties when the consumer fails to repay the company for the money they have spent.
Debt collection or cash collection is the process of pursuing payments of money or other agreed-upon value owed to a creditor. The debtors may be individuals or businesses. An organization that specializes in debt collection is known as a collection agency or debt collector. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed. Historically, debtors could face debt slavery, debtor's prison, or coercive collection methods. In the 21st century in many countries, legislation regulates debt collectors, and limits harassment and practices deemed unfair.
NCO Group, Inc., based in Horsham, Pennsylvania, United States, is a business process outsourcing company and collection agency that provides accounts receivable management, customer relationship management and back office solutions for its clients. Founded in 1926, it was a publicly traded company from 1996 through 2006, when it was purchased by One Equity Partners (OEP), the private investment arm of JP Morgan Chase & Co., and other co-investors.
Debt settlement is a settlement negotiated with a debtor's unsecured creditor. Commonly, creditors agree to forgive a large part of the debt: perhaps around half, though results can vary widely. When settlements are finalized, the terms are put in writing. It is common that the debtor makes one lump-sum payment in exchange for the creditor agreeing that the debt is now cancelled and the matter closed. Some settlements are paid out over a number of months. In either case, as long as the debtor does what is agreed in the negotiation, no outstanding debt will appear on the former debtor's credit report.
Capital Acquisitions and Management Corporation (CAMCO) was a United States debt collection agency and subsidiary of Risk Management Financial Services, Inc., that was fined and closed down for repeated violations of the Fair Debt Collection Practices Act (FDCPA). Its closure marked the first time a Federal Trade Commission investigation shut down a collection company.
A debt buyer is a company, sometimes a collection agency, a private debt collection law firm, or a private investor, that purchases delinquent or charged-off debts from a creditor or lender for a percentage of the face value of the debt based on the potential collectibility of the accounts. The debt buyer can then collect on its own, utilize the services of a third-party collection agency, repackage and resell portions of the purchased portfolio, or use any combination of these options.
A bad check restitution program (BCRP) is a program in the United States that works to retrieve funds from bad check writers in order to repay moneys owed to the recipients of the checks. In other words, these are debt collection operations. Many of these programs are operated by private companies that add fees that may exceed $200, regardless of the amount of the check. They call these operations "bad check enforcement," or "bad check restitution," or "bad check diversion." Sometime, these programs are actually run in house by real prosecutors. The private companies send check writers letters which state basically, that to avoid being prosecuted, the check writer may enroll in an expensive diversion program. In most instances, the prosecution threats are false and made only to coerce payment of high fees.
Asset Acceptance is an American debt buyer. Its primary business is the purchasing of defaulted debts from lenders and subsequent collection of those debts through normal debt collection activities. The corporation is headquartered in Michigan.
Credit One Bank, N.A., headquartered in Las Vegas, Nevada, is a bank specializing in credit cards for borrowers with low credit scores. It is owned by Sherman Financial Group, which runs one of the largest buyers of consumer debt in the United States. Despite the similar names and "nearly identical" logos, Credit One is not affiliated with the much larger Capital One.
William R. Bartmann was the founder and CEO of CFS2, Inc, a consumer financial recovery company based in Tulsa, Oklahoma. From 1986 to 1999, Bartmann served as CEO of Commercial Financial Services Inc., the nation's biggest debt collection company. One officer of the company was accused of being involved in accounting fraud and the company filed for Chapter 11 bankruptcy though allegations of wider fraud were later determined to be untrue.
Encore Capital Group, Inc. is a publicly traded debt buyer based in the United States. The company is headquartered in San Diego, and operates throughout the United States. The firm is a publicly traded NASDAQ Global Select company (ECPG), a component stock of the Russell 2000, the S&P SmallCap 600, and the Wilshire 4500.
Aktiv Kapital ASA is a Norwegian debt investment company with operations in nine countries. It is the largest purchaser of non-performing consumer credits in Europe and Canada. The company purchases assets from banks and other financial institutions, adding value for lenders through unique insights, flexible approach and international presence. The company was founded in 1991 and has grown through a number of acquisitions. It is listed on the Oslo Stock Exchange and controlled by John Fredriksen.
Phantom debt or zombie debt is a debt that is old, defaulted, or not owed and is somehow still being pursued for collection to be paid by the presumed debtor. It generally refers to debt that is more than 3 years old, is long forgotten about or belonged to someone else – like someone with the same name or a deceased parent. The amount owed can grow to hundreds or thousands of dollars more than what was originally owed. An example of this is from George Lovelock. George missed an 11 cent Verizon bill and seven years later it had grown to $4,000.00.
The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, for-profit colleges, and other financial companies operating in the United States. Since its founding, the CFPB has used technology tools to monitor how financial entities used social media and algorithms to target consumers.
Midland Credit Management, Inc. is an American debt buyer and debt collection company headquartered in San Diego, California, and has offices throughout the United States as well as in India and Costa Rica. It is a wholly owned subsidiary of Encore Capital Group. It is one of the largest debt collectors in the United States.
Navient Corporation is an American student loan servicer based in Wilmington, Delaware. Managing nearly $300 billion in student loans for more than 12 million debtors, the company was formed in 2014 by the split of Sallie Mae into two distinct entities: Sallie Mae Bank and Navient. Navient employs 6,000 people at offices across the U.S. As of 2018, Navient services 25% of student loans in the United States.
Jessica Silver-Greenberg is a business reporter for The New York Times whose investigative reporting on consumer financial issues has been cited in the U.S. Supreme Court and the U.S. Congress.
