The Importance and Availability of Media in a Portfolio

Many new debt buyers are shocked when they discover the limited availability of media in the debt buying industry, especially when dealing with the credit card portfolios. That comes as no surprise when you consider the fact that documents are needed to validate debt.

Media (aka: Documents, or Docs) would include any of the following: a copy of the debtor’s credit application, a copy of the disclosure statement and promissory note, copies of monthly statements, copies of vouchers, copies of any signed check that the debtor may have submitted as payment on the account, and, essentially, any signed documents that acknowledges an intent to pay the debt by your debtor.

It’s hard to imagine that any credit lending institution would fail to keep such items anything but well secured, but even with the potential of losing a claim against the debtor, it’s not uncommon to hear a response to your media request that the item(s) that you have requested are unavailable.

Why might you, as a debt buyer, need media? Undoubtedly, if you plan to be in the collection industry for any length of time at all, you will eventually need to deal with the issue of validating a debt at the request of a debtor. In addition to this validation request, and assuming that your organization follows a more legalistic approach in your collection model, you will, in due course, begin qualifying accounts for suit, and may ultimately need to obtain media in order to validate the debt at the request of a judge or magistrate.

Personal and secured portfolios tend to offer a far greater likelihood of acquiring media than do credit card portfolios. It’s not uncommon for the media (or a high percentage of the media) to be a part of the portfolio sale when you deal with personal loans. Media almost never comes with credit card portfolios. More often than not, you are forced to pay a fee for each piece of media that you request when it comes to dealing with credit cards. Some places charge as much as $15.00-20.00 per item.

When dealing with credit card portfolios, you will rarely obtain anything beyond a copy of an application, and the last few statements on file. In many cases, the application is not available, so you’re forced to take an affidavit in its place. This is usually okay when you’re attempting to validate the debt for a default judgment, but does little for you when a debtor, judge, or magistrate specifically requests a copy of the application.

Signed vouchers are never available. Not ever. So don’t expect them. In most cases, vouchers are only kept on file by the original lender for 3 months, and most likely not even available when the account charges off. Don’t despair, though. When your debtor request a "complete breakdown of charges," you can always quote Chaudhry v. Gallerizzo, United States Court of Appeals for the Fourth Circuit, 174 F.3rd 394, 406 which provides that:

"… verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. Consistent with the legislative history, verification is only intended to eliminate the…problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid…There is no concomitant obligation to forward copies of bills or other detailed evidence of debt."

As a debt buyer, don’t be discouraged when you have trouble with this aspect of debt buying, especially when you’re dealing with debt that you’re buying at less than two cents on the dollar. Just take it in stride, and know that the price is that low because the portfolio has "issues." It’s not uncommon for older portfolios to have a number of issues, so you’ll simply need to look for other advantages in the portfolio that will balance out the fact that there may be little or no media available.

Debt buying entities that exercise more of a legalistic approach to their collection efforts may want to concentrate on buying portfolios that have a history of providing higher percentages of media. Some states require more complete records than others, and you may want to avoid buying accounts from lenders who have a low percentage of providing media. For example, a debt buyer that often pursues accounts in a particular state that is known to require applications may want to avoid buying BankFirst accounts. BankFirst applications are rarely available.

One final thought, do you check each purchase contract that you sign to see if it addresses the availability of media? Just checking…

Rick Shell has a solid background in collections. After earning his Bachelor of Arts degree in Criminology and Criminal Justice at the Ohio State University in 1987, Rick accepted a collection position with G.C. Services in San Diego, CA with the idea in mind that the position was just a temporary job until he decided what he wanted to do in life…little did he know that a career had been born.

In 1991, Rick accepted a collection position with Credit Consultant, Inc (now known as NCO Financial Systems) and within a year was running the Columbus operation. For over a decade, Rick ran this highly successful agency. In 2001, he and his partner, John Pratt, decided to form their own agency, and it became known as Locate Services, LLC.

With John, Rick has written a book for debt purchasers titled Debt Purchasing: An Investor’s Guide To Buying Debt.