Dirty Debts Sold Dirt Cheap

84 Pages Posted: 14 Apr 2013 Last revised: 19 Sep 2015

See all articles by Dalié Jiménez

Dalié Jiménez

University of California, Irvine School of Law; Harvard Law School - Center on the Legal Profession

Date Written: March 2015


More than 77 million Americans have a debt in collections. Many of these debts will be sold to debt buyers for pennies, or fractions of pennies, on the dollar. This Article details the perilous path that debts travel as they move through the collection ecosystem. Using a unique dataset of 84 consumer debt purchase and sale agreement, it examines the manner in which debts are sold, oftentimes as simple data on a spreadsheet, devoid of any documentary evidence. It finds that in many contracts, sellers disclaim all warranties about the underlying debts sold or the information transferred. Sellers also sometimes refuse to stand by “the accuracy or completeness of any information provided.” After discussing potential explanations for these issues, the Article suggests that lax regulation and a collective action problem prevents the market from self-correcting. It concludes by recommending that the Consumer Financial Protection Bureau declare the collection of consumer debts sold in this way as an unfair or deceptive act or practice.

Keywords: debt collection, debt purchasing, debt buyers, consumer credit, fair debt collection, FDCPA, consumer law, contract illegality, private law, Rule 11, sanctions, mislead

Suggested Citation

Jiménez, Dalié, Dirty Debts Sold Dirt Cheap (March 2015). Harvard Journal on Legislation, Vol. 52, pp. 41-124 (2015), Available at SSRN: https://ssrn.com/abstract=2250784 or http://dx.doi.org/10.2139/ssrn.2250784

Dalié Jiménez (Contact Author)

University of California, Irvine School of Law ( email )

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United States

HOME PAGE: http://www.law.uci.edu/faculty/full-time/jimenez/

Harvard Law School - Center on the Legal Profession ( email )

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