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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

#181

Post by michaelochurch »

jqm wrote: post #178

Very interesting article. I'm sensing a collective consumer opportunity. Form a group, take donations, buy the bad paper (for pennies on the dollar) and forgive all the debts on it. No doubt many of the people would be simple deadbeats, but lots of them are probably just people who ran into problems, and something like this would help clear up their credit and give them a new start. What a gift! I'd kick in $25 for s…

lots of them are probably just people who ran into problems, and something like this would help clear up their credit and give them a new start.

Unfortunately, once your account is in collections, your credit rating is damaged and paying the debt off doesn't improve it much. While that's arguably "fair" (the original creditor still got screwed, losing 60-95 cents on the dollar) it leaves the debtor with minimal reason to pay the debt, unless successfully sued, resulting in a judgment. As the OP discusses, most third-party collectors have lost proof of the debt and won't be able to successfully sue the debtor. Full recovery of the credit rating would be sufficient incentive for many people to repay, but that's not an option.

The fact that you can't get your credit rating back (at least, not to what it was) is one of the problems with the system as it stands currently. If there was a system whereby people could make the original creditor whole and recover their credit rating, that'd probably better (if shitty for third-party collectors).

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

#182

Post by michaelochurch »

learc83 wrote: post #172
UrMomReadsHN wrote: post #150

Earlier quoted context omitted.

Its hard to impossible to rent an apartment around here with a low credit score. That wasn't the case several years ago. I am guessing it will just keep getting more prevalent so you may have to live in your parents garage util 30 while waiting for that old debt to drop off your credit report.

Can't you just offer to pay a larger deposit or several months up front?

Can't you just offer to pay a larger deposit or several months up front?

Can't you just offer the landlord occasional use of your boat and promise to pull family connections (everyone has them, no?) to get White House internships for his kids?

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

#184

Post by dllthomas »

patio11 wrote: post #165
dllthomas wrote: post #154

Earlier quoted context omitted.

I wonder if you could tie it to disrupting credit reporting.

That's an interesting angle. The troublesome part is that credit reporting is a two-sided B2B marketplace. You need to convince people to report debts to you AND convince lenders to make lending decisions based on your reports. On top of this, you have to have a B2C facing function for FDCPA and FCRA compliance, and they're very toothy rules to fall afoul of.

All certainly true. I was thinking an interesting angle would be to provide better visibility to the debtors - no limits on the number of times you can check, notifications when things are reported - which might both make the data more accurate (and thus more valuable, one would hope) and make getting in touch with people easier, and make the whole thing less awful.

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

#185

Post by pesenti »

shkkmo wrote: post #55
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.

It's not 1/12th of the debt, it's 1/1200th of the debt.

It's actually 12 basis points... that is 0.12%.

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

#186

Post by michaelochurch »

UrMomReadsHN wrote: post #142
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…

Here is something you might not understand or know. Nowadays your credit score affects more than you realize. It used in many places as a measure of trustworthiness. You can have trouble renting an apartment (depending on the market and landlord) with debt that went to collection. Also you pay more in insurance premiums. Your potential employer may pull your credit report as part of a background check and decide not…

Your potential employer may pull your credit report as part of a background check and decide not to hire you because you didn't feel like paying your debt.

In many jurisdictions, they have to disclose that they're doing so. Fake a competing "exploding" offer to put time pressure on them. They'll write you an offer (if they're interested) quickly. Then, if they rescind the offer later because they don't like what they see on a credit check, threaten to sue for promissory estoppel. Whether or not you're likely to win, they'll settle in order not to be known as a company that rescinds offers. Walk away with a severance, without even having set foot on the job site.

I'm not saying that people should let their credit scores go to shit just to avoid paying small debts. It's rarely worth it to welch on a debt. However, in the case of employment, there is a strategy if you think you're at risk of losing job opportunities based on a credit report. (That said, I've never heard of anyone in tech getting dicked on bad credit. But in our scummy/chummy industry, rescinded offers over reputation issues are not uncommon and those can usually be turned into 3-5 months' pay.)

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

#187

Post by jqm »

michaelochurch wrote: post #181
jqm wrote: post #178

Very interesting article. I'm sensing a collective consumer opportunity. Form a group, take donations, buy the bad paper (for pennies on the dollar) and forgive all the debts on it. No doubt many of the people would be simple deadbeats, but lots of them are probably just people who ran into problems, and something like this would help clear up their credit and give them a new start. What a gift! I'd kick in $25 for s…

lots of them are probably just people who ran into problems, and something like this would help clear up their credit and give them a new start. Unfortunately, once your account is in collections, your credit rating is damaged and paying the debt off doesn't improve it much. While that's arguably "fair" (the original creditor still got screwed, losing 60-95 cents on the dollar) it leaves the debtor with minimal reaso…

Ya, I'm sure you are correct. It was a bit of a flippant idea. But... it would still remove _some of the stain from their credit and at least prevent them being victimized by scummy collectors like those referenced in the article.

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

#188

Post by learc83 »

michaelochurch wrote: post #182
learc83 wrote: post #172

Earlier quoted context omitted.

Can't you just offer to pay a larger deposit or several months up front?

Can't you just offer to pay a larger deposit or several months up front? Can't you just offer the landlord occasional use of your boat and promise to pull family connections (everyone has them, no?) to get White House internships for his kids?

I'm not saying paying extra is feasible for someone without much money, but this whole comment thread was a response to one guy who basically said credit doesn't matter much if you aren't poor.

Going with the implicit assumption that we're talking about someone who's making a pretty good bit of money, but who has a bad credit rating, I'm only arguing that it's not impossible to rent an apartment.

I love your blog by the way.

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

#189

Post by vinceguidry »

UrMomReadsHN wrote: post #150
vinceguidry wrote: post #80

Earlier quoted context omitted.

Not so idiotic. I ran up a modest amount of debt in my early twenties, never paid any of it. Fast forward ten years. Found a decent job, look to buy a car, come to find out my credit report is mostly empty. Most everything had dropped off. Capital One gave me a credit card, I've been building up credit and savings over the last year. If you have the discipline to say, "no new debt," which isn't that hard to do after…

Its hard to impossible to rent an apartment around here with a low credit score. That wasn't the case several years ago. I am guessing it will just keep getting more prevalent so you may have to live in your parents garage util 30 while waiting for that old debt to drop off your credit report.

Just live with roommates in your twenties. Much cheaper, easier, and you always have someone to hang out with. I rented an apartment once, still got a roommate.
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