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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

#51

Post by eli »

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…

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.

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

#52

Post by mindslight »

yonran wrote: post #2

When the collectors call the debtors, can the debtor demand a paper trail to prove that the collector is the actual owner of the debt? Why should a debtor pay any amount of money to a random person who calls them and says they bought an old debt?

That's what it really comes down to. At the end of the day, receiving a call from a "debt collector" is no different than receiving a call from "Windows Support" or "Oil Fund of Nigeria" (or even sweepstakes / political campaigns).

When enough seemingly-personal details match, gullible people get tricked into sending money. The only thing that solves this problem is for people to stop entertaining unsolicited calls of any form. How much are VOIP rates these days? Last time I looked, it took something like $50 to leave a short message for everyone in a phone prefix (10 kilopeople).

In the case that one possibly does have an unpaid debt and wants to resolve it, then call up the original creditor and follow the debt's legitimate path from the source. And when you finally have someone to pay, insist on written documentation from every party in the chain, absolving you of the debt.

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

#53

Post by shkkmo »

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 about a non-profit that purchases this debt and then targets the debtors with the tools and support to get them back on their feet to the point where they CAN pay off the debt?

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

#54

Post by zem »

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?

this guy sems to be trying: http://blogs.hbr.org/2013/08/the-debt-collection-company-th/

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

#55

Post by shkkmo »

eli wrote: post #51
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…

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.

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

#56

Post by eli »

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.

OK, I agree that part is a little ridiculous but only in the "why bother" sense.

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

#57

Post by Terr_ »

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.

That seems simple and fair at first, but I think it actually creates more problems than it solves.

First, you get a horrible incentive to not repay debts:

1. A relatively innocent and good-natured Bank lends a jerk $1.00

2. The jerk refuses to pay it back, knowing the bank can't transfer it to someone who isn't a pushover without giving him a steeply-discounted offer first

3. In response all loan requirements and interest rates rise for everybody

Secondly, it fucks up the negotiations, because would-be buyers can infer something when the creditor doesn't snap up their own debt:

1. The Bank offers the debt for $0.10

2. The debtor doesn't repay because he legitimately can't scrape up that much

3. The Bank offers the debt for $0.10, but nobody wants to buy it, because they can infer that the debtor has nothing

4. The Bank offers the debt for $0.09... (begin loop)

Thirdly, it's a logistical nightmare. The Bank can't just combine the debt of it's 1000 deadbeat debtors and sell it off to a debt collection agency for a lump sum. No, it needs to send 1000 mailing notifications and 1000 second-notifications and wait 30 days, etc... And then 120 of them buy their own debts, and the bank can't re-price it's set of 880 accounts without sending 880 mailing notifications (begin loop)

Fourth, what happens if it's not a straight sale? Suppose the Bank barters your debt to a collection agency for a thing (like privately-held stock) in the collection agency? You can't buy your debt because you can't provide what the Bank is looking for... And then the bank can just sell whatever-it-is later.

TLDR: Exploding legal complexity combined with shady/manipulative actions from everybody.

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

#58

Post by opendais »

shkkmo wrote: post #53
opendais wrote: post #35

Earlier quoted context omitted.

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

What about a non-profit that purchases this debt and then targets the debtors with the tools and support to get them back on their feet to the point where they CAN pay off the debt?

http://rollingjubilee.org/ ?

That is likely close enough.

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