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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

#101

Post by kefka »

forca wrote: post #63
ams6110 wrote: post #26

I was called by a collector once. Old medical bill, the clinic had sent it to an old address and the mail forwarding had expired. Why they never called or tracked me down I don't know, but they eventually sold it to a collector who had no trouble finding my phone number. When they called I was confused at first, then remembered and realized it was legit, paid it, end of story. They were utterly professional and court…

Medical debt rankles me like nothing else. The US, supposedly the most advanced nation on Earth has the worst notion of all: health care for profit. Simply evil. Health care is a basic human right. Full stop. Health care should never be based on one's ability to pay. Never. I pray I see socialised medicine in the US in my lifetime. If Hilary Clinton gets elected, the push for this will be stronger than the thin edge…

>Medical debt rankles me like nothing else. The US, supposedly the most advanced nation on Earth has the worst notion of all: health care for profit. Simply evil. Health care is a basic human right. Full stop. Health care should never be based on one's ability to pay. Never.

An injured person has no capitalistic value. They are injured, and can either work limitedly or not at all. Therefore, they are worth little to nothing.

Why would a capitalistic government like ours care about someone who will be a drain on the "system"? I's better to send them in the insurance mill or die in the ER.

yay usa.

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

#102

Post by BallinBige »

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.

As a startup founder who develops payment software to collection attorneys, this story really resonates!

Every account has a story behind it and the BEST way to collect is to personalize the settlement experience in a compliant, secure way

Having been in the space for only a few years, the depiction of the industry -pre 2010- seems incredibly accurate from what clients tell us.

Modern interpretation of the FDCPA is desperately needed. In 2014, contacting consumers via cell phone and email is against the law or at best a very grey area.

Sending letters via snail mail are mandated over email. Moreover, ACH payments are still preferred over Card payments… IMO, a 3-5 day settlement time should NOT be the standard way to move money in any industry.

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

#103

Post by downandout »

blhack wrote: post #34

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 duhumanize…

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

It seems that the particular deal you're referring to was a fraudulent transaction. It had been sold (at least) twice, and having paid $41K for $50M worth of debt, the agency lost money on it. It doesn't sound like legitimate deals are offered this cheaply.

However, you are right that insanity runs rampant in the industry, even among the banks themselves. There is an interesting documentary called "Queen of Versailles". In it, time share king David Siegel is shown telling friends at a party that he offered to keep making interest only payments on an $18M debt he owed until the economy improved. The bank said no, and that they were going to auction the debt. He sent a third party under his control to the auction, where he was able to purchase his own entire $18M debt for $3.2M. He concludes the conversation saying "I'm glad they did it, but who the hell makes decisions like that?"

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

#104

Post by kazinator »

opendais wrote: post #35
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?

What does your question mean? Let's assume that we accept that "it is financially viable to run a possibly unethical debt collection agency". So then you must be thinking of some behaviors that the agency will not engage in, which will cut into its profitability compared to an agency which will do those things, possibly to the extent of making it not financially viable. What behaviors do you have in mind?

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

#105

Post by forca »

prostoalex wrote: post #93
forca wrote: post #63

Earlier quoted context omitted.

Medical debt rankles me like nothing else. The US, supposedly the most advanced nation on Earth has the worst notion of all: health care for profit. Simply evil. Health care is a basic human right. Full stop. Health care should never be based on one's ability to pay. Never. I pray I see socialised medicine in the US in my lifetime. If Hilary Clinton gets elected, the push for this will be stronger than the thin edge…

Um, there are more not-for-profit hospitals than there are for-profit hospitals, which doesn't dramatically change the pricing equation. http://www.aha.org/research/rc/stat-studies/fast-facts.shtml One man's profit is another man's stash for bonuses and building a new wing of the hospital.

The goal is zero profit in health care.

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

#106

Post by opendais »

AdmiralAsshat wrote: post #79
opendais wrote: post #35

Earlier quoted context omitted.

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

You'd have to first define what constitutes "ethical" as distinct from "legal". If you're of the opinion that the very practice of collecting debt is scummy or unethical, then no. Assuming you will allow for at least SOME form of "ethical" debt collection, we'd have to narrow down what kinds. For instance, just off the top of my head, you've got: - Commercial Debt - Medical Debt - Student Loans - Bad Checks Within th…

I'm aware they are in it to make money and I don't mind them operating with reasonable margins. It just sounds like hundreds of them are willing to use the "make the debtor's life as miserable as possible" tactic.

I was mainly thinking of a cost plus model of debt repayment when I said "ethical". Trying to squeeze every last penny out of people who are [mostly] decent folks who just fucked up is the main part that bothers me, honestly.

Thank you for taking the time to answer. :)

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

#107

Post by jbigelow76 »

opendais wrote: post #62
dllthomas wrote: post #49

Earlier quoted context omitted.

It might depend on what you mean by ethical. Certainly there's a world where treating people well makes them more interested in cooperating with you and that leads to a higher collection rate. I have no idea whether we inhabit that world.

Doesn't use the shady, illegal tactics + settles for less than the dollar value of the debt. For instance, they buy it for $.05 and settles for whatever the debtor can reasonably pay that covers costs plus a reasonable margin, like 100%. So they buy it at $.05 and let the debtor pay it off for $.10 + the collector's cost. I'd guess that is something like 25-50% of the value of face value of the debt.

You idea of doesn't sound tenable. The "ethical" agency would need an extremely high conversion rate. Something probably in the 75% neighborhood, to cover operating expenses, the 25% that doesn't convert and then a little left over for profit.

Judging by the value of write off debt (pennies on the dollar) the implicit conversion rate of collecting is probably closer to what you might see on a Facebook advertising campaign (3-5 percent??). To make that work the agencies need to charge close to the original charge off amount.

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

#108

Post by BallinBige »

fred_durst wrote: post #67
eli wrote: post #51

Earlier quoted context omitted.

Sure, but on the other hand, let's say you run a small business. At some point you have customers who don't pay. What do you do? Write it off as a total loss? 1/12 is better than nothing.

I feel like I would be safe saying 99%(if not all) of this paper is not small business paper. These are the debts that are sold off in large parcels by banks and credit card companies. Small businesses typically use flat fee collection agencies and rarely charge of the debt like this. Part of the reason is because to a small business charging off $10K in debt is going make them a couple hundred bucks at most. There i…

Whats interesting is that most small collection agencies are getting squeezed out, due to the high cost of regulation.

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

#110

Post by opendais »

jbigelow76 wrote: post #107
opendais wrote: post #62

Earlier quoted context omitted.

Doesn't use the shady, illegal tactics + settles for less than the dollar value of the debt. For instance, they buy it for $.05 and settles for whatever the debtor can reasonably pay that covers costs plus a reasonable margin, like 100%. So they buy it at $.05 and let the debtor pay it off for $.10 + the collector's cost. I'd guess that is something like 25-50% of the value of face value of the debt.

You idea of doesn't sound tenable. The "ethical" agency would need an extremely high conversion rate. Something probably in the 75% neighborhood, to cover operating expenses, the 25% that doesn't convert and then a little left over for profit. Judging by the value of write off debt (pennies on the dollar) the implicit conversion rate of collecting is probably closer to what you might see on a Facebook advertising cam…

You are probably right. I just wish there were better options, I suppose.
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