Riverside County Bankruptcy Lawyer Blog
There is a company in Newport Beach called MacDowell & Associates which has earned a notorious name throughout Southern California as a debt collection agency who sues debtors across the region. This region is likely to affect areas such as Santa Ana, Riverside, Anaheim, and maybe even down to Temecula. If you have received any correspondence from this company or any other debt collection agency, you may want to contact a lawyer before making any response to the agency. Many uneducated debtors will unknowingly make a payment to a debt collection agency even though that debt has already expired and may cause the debt to reset its expiration and give legitimacy back to the debt. When debt has already expired but a debt collection agency tries to get money back from the debtor regardless, it is called a Zombie debt collection agency.
What are Zombie Debt Collectors?
“Zombie debt collectors” refer to collection agencies or debt buyers that attempt to collect on old, often expired, or previously settled debts that may no longer be legally enforceable. These debts are sometimes referred to as “zombie debts” because they can seemingly come back to life after a period of inactivity.
Here’s how the process typically works:
Expiration of Statute of Limitations: Every debt has a statute of limitations, which is the legally defined time limit within which a creditor can sue a debtor to recover the debt. Once this period expires, the debt becomes time-barred, and the creditor loses the legal right to sue for payment.
Debt Sale: After the statute of limitations has expired, some original creditors may sell these old debts to debt buyers or collection agencies for a fraction of the original amount.
Collection Attempts: The new debt owner, often referred to as a “zombie debt collector,” may attempt to collect on these expired debts, even though they are no longer legally enforceable.
It’s important for consumers to be aware of their rights and to understand the statute of limitations on debts in their jurisdiction. They should also be cautious when dealing with debt collectors and should not make any payments or acknowledge the debt without verifying its legitimacy.
If a debtor makes a payment on a time-barred debt or acknowledges it, it could potentially restart the statute of limitations, giving the debt collector a new opportunity to pursue legal action. In some cases, consumers might be able to dispute or challenge the validity of the debt if it’s beyond the statute of limitations. Additionally, various consumer protection laws, such as the Fair Debt Collection Practices Act (FDCPA) in the United States, provide guidelines on what debt collectors can and cannot do when attempting to collect a debt.
We are not suggesting that if you are being sued by Macdowell & Associates that you are the victim of a Zombie Debt collector, however we want to take the opportunity for you to understand the difference between regular debt collection and zombie debt collection so you can understand for yourself what your rights are. All debt collectors are not fun for debtors to deal with and so we want to describe how debt collection works in general.
Who are debt collectors and how do they work?
Collection agencies are third-party companies hired by creditors to recover funds owed by individuals or businesses who have not paid their debts. These agencies specialize in debt collection and use various methods to pursue and collect the outstanding amounts. Here are some key points about collection agencies:
- Role and Function:
- Collection agencies act as intermediaries between creditors (such as credit card companies, banks, or medical facilities) and debtors.
- Their primary function is to recover unpaid debts on behalf of the original creditor.
- Types of Debts:
- Collection agencies handle a wide range of debts, including credit card balances, medical bills, personal loans, utility bills, and more.
- Working Relationship:
- Typically, collection agencies work on a contingency basis, earning a percentage of the amount they successfully collect. The original creditor may sell the debt to the collection agency at a reduced rate, and any amounts collected above this rate become the agency’s profit.
- Communication Methods:
- Collection agencies use various communication methods to reach debtors, including letters, phone calls, and, in some cases, email or text messages.
- They must adhere to regulations such as the Fair Debt Collection Practices Act (FDCPA) in the United States, which outlines permissible and prohibited practices in debt collection.
- Credit Reporting:
- In some cases, collection agencies report delinquent accounts to credit bureaus, which can negatively impact a debtor’s credit score.
- Negotiation and Settlement:
- Debtors can sometimes negotiate with collection agencies to settle the debt for less than the full amount owed. This is known as a debt settlement.
- Legal Action:
- If traditional collection methods are unsuccessful, collection agencies may pursue legal action to obtain a judgment against the debtor. This could lead to wage garnishment or other means of enforcing the debt.
- Challenges and Criticisms:
- Collection agencies often face criticism for aggressive tactics, harassment, and violations of consumer rights. Regulations aim to address and prevent such practices.
- Consumer Rights:
- Debtors have rights under various laws, such as the Fair Debt Collection Practices Act (FDCPA) in the U.S., which protects consumers from abusive or unfair debt collection practices.
It’s essential for both creditors and debtors to be aware of their rights and responsibilities when dealing with collection agencies. Communication and negotiation can sometimes lead to mutually agreeable solutions for resolving outstanding debts.
We are an experienced law firm that can help you with debt settlement issues. Whether you are being sued by MacDowell & Associates or any other debt collection agency we call us for a free consultation. We can advise you whether your debt is active or has already expired and help you avoid the pitfalls of zombie debt collection. If you have a lot of debt eventually you will be sued and contacted aggressively by a debt collection agency whether it be Macdowell & Associates or any other firm. Debtors that are unable to pay all their debt may consider a Chapter 7 or a Chapter 13 bankruptcy. We have filed thousands of bankruptcies in Riverside county and can help you decide if it is the right choice for you.
MacDowell & Associates
Newport Beach, CA
Suite 290
3636 Birch
Newport Beach, CA 92660- 2632