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Inside the Dark, Lucrative World of Consumer Debt Collection

nytimes.com

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Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#31

Post by pavel_lishin »

Iftheshoefits wrote: post #20
res0nat0r wrote: post #13

Earlier quoted context omitted.

Then why would anyone pay their bills if they can buy their debt back for 1/10th of what they owe?

In addition to the credit issues the other commenters noted, there is the issue of taxes in the case of "chargeoffs." One will get an income statement from the credit issuer for the fraction of the debt they write off. Odds are if one is in the position of having debt collectors come after them they'll be unlikely to afford the taxes on the "income."

Sometimes the debt is bullshit, but it might be easier to buy it for a small percentage than to pay it off. We get letters for a medical debt that's factually wrong, but by the time we convince Debt Agency N that we don't actually owe it, they've sold it off to Debt Agency N+1 for 1/10th of what they claim we owe them (which is already 1/10th of what was originally 'owed'.)

It would be well worth paying 1/100th of the original bill to not have to check the mail anymore, and throw that garbage away, but if we were to actually PAY the 1/10th settlement amount, it would open us to liability for the WHOLE amount.

tldr, I'm willing to be extorted, but not ludicrously so.

Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#32

Post by kaonashi »

enraged_camel wrote: post #6

I find it very scary that huge portions of our economy are basically houses of cards built upon more houses of cards. We're so desperate to generate circulation for money that we've invented an intricate set of rules where it's OK to pretend that you have money, as long as you promise to actually have it at some point in the future. And then of course another set of rules has to be invented to manage the risk of that…

That's the essence of loaning money; the central difference between medieval and modern economies.

Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#33

Post by dchuk »

a8da6b0c91d wrote: post #12
delinka wrote: post #4

Earlier quoted context omitted.

In the USA: Yes, the alleged debtor can insist on proof. The bad news: If collector mails the debtor, and the debtor doesn't respond for 30 days, the collector can report the debt to the credit reporting agencies. And we all know what a pain it is to get anything corrected on a credit report.

I don't understand why people freak out so much about their credit reports. I have no idea what my credit score is and don't care. I guess it's poor people who need credit to scrape by on a regular basis? If you have a lot of cash it seems like a completely empty threat. The bank is not going to care about your $400 unpaid comcast bill when writing you a mortgage. People who have declared bankruptcy twice are getting…

Credit isn't just for poor people

Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#34

Post by blhack »

This is one of the most unbelievable articles I've ever read.

If you didn't read it all the way through, do so over lunch or something; it's amazing.

The idea of "millions of dollars" worth of debt being traded for around on thumb drives, and that all those thumb drives really contain are excel spreadsheets is mind boggling. Those people in those spreadsheets are real people, and they're being completely duhumanized.

Also the fact that debt is being purchased for 1/12 of a penny is completely just...unbelievable.

Honestly this whole article reads like some dystopian nightmare. Shady former criminals trading peoples' lives around like it's nothing.

Horrifying.

Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#35

Post by opendais »

AdmiralAsshat wrote: post #15

Advice from someone who works on debt collection software for a living: never, ever let a check bounce. Returned checks operate in a legal loophole that circumvents most of the consumer protection afforded to regular debt. Collection agencies can begin pursuing it immediately, can begin reporting it to the credit bureaus immediately, and the interest rate they're allowed to charge on it is ridiculous.

Do you think its financially viable to run an ethical debt collection agency?

Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#36

Post by seanflyon »

a8da6b0c91d wrote: post #12
delinka wrote: post #4

Earlier quoted context omitted.

In the USA: Yes, the alleged debtor can insist on proof. The bad news: If collector mails the debtor, and the debtor doesn't respond for 30 days, the collector can report the debt to the credit reporting agencies. And we all know what a pain it is to get anything corrected on a credit report.

I don't understand why people freak out so much about their credit reports. I have no idea what my credit score is and don't care. I guess it's poor people who need credit to scrape by on a regular basis? If you have a lot of cash it seems like a completely empty threat. The bank is not going to care about your $400 unpaid comcast bill when writing you a mortgage. People who have declared bankruptcy twice are getting…

If you ever want to own a home, your credit score effects the rate at which you can borrow money which can make a mortgage much more expensive.

Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#37

Post by encoderer »

nostromo wrote: post #10

I think that borrowers should have the right of first refusal when their debt is sold. For example, if you're about to sell $1.00 worth of my debt to someone for $0.10, first you must offer it to me at the same cost: $0.10.

Worst. Moral hazard. Ever.

Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#38

Post by opendais »

nostromo wrote: post #10

I think that borrowers should have the right of first refusal when their debt is sold. For example, if you're about to sell $1.00 worth of my debt to someone for $0.10, first you must offer it to me at the same cost: $0.10.

The moral hazard involved [wait 181 days for them to sell it on all debts] is huge.

Its a workable system if and only if you are willing to basically cut off credit for anyone who hits that 181 days on a debt milestone. Because no one will loan to them again for years.

Re: Inside the Dark, Lucrative World of Consumer Debt Collection

#39

Post by a8da6b0c91d »

pavel_lishin wrote: post #23
a8da6b0c91d wrote: post #12

Earlier quoted context omitted.

I don't understand why people freak out so much about their credit reports. I have no idea what my credit score is and don't care. I guess it's poor people who need credit to scrape by on a regular basis? If you have a lot of cash it seems like a completely empty threat. The bank is not going to care about your $400 unpaid comcast bill when writing you a mortgage. People who have declared bankruptcy twice are getting…

> The bank is not going to care about your $400 unpaid comcast bill when writing you a mortgage. [citation needed] Sure, a single unpaid bill won't hurt you, but that's because it won't hurt your credit score much. If your credit score is low enough, your bank may still give you a loan to buy a house, but will demand a lot more money up front and charge you a much higher interest rate. If you can buy a house for cash…

I am telling you that people with multiple bankruptcies are getting the same rates on mortgages. It just doesn't matter like you think it does if you have a solid income and the down payment. The credit score is this bizarre hollow threat that has middle class people terrified into submission in many situations where they shouldn't submit.
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