Tuesday, September 16, 2014

Who's Collecting your Debt?

Image courtesy of graur razvan ionut
at FreeDigitalPhotos.net
The truth is you really don't know if it is the person who actually and lawfully owns it or someone who stole it like people steal identities. An article the New York Times Magazine lays out the world of debt collecting in:  "Paper Boys: Inside the Dark, Labyrinthine, and Extremely Lucrative World of Consumer Debt Collection" http://nyti.ms/1qIXSMJ

Here are some excerpts from the article I found interesting and informative:

"As he soon discovered, after creditors sell off unpaid debts, those debts enter a financial netherworld where strange things can happen. A gamut of players — including debt buyers, collectors, brokers, street hustlers and criminals — all work together, and against one another, to recoup every penny on every dollar. In this often-lawless marketplace, large portfolios of debt — usually in the form of spreadsheets holding debtors’ names, contact information and balances — are bought, sold and sometimes simply stolen.

For Wilson, none of it was personal. Instead, he saw the challenge of collecting in very professional, even empirical terms. He’d developed his own quasi-scientific taxonomy, grouping debtors into some 38 different species or types. For example, a D.H.U. (Debtor Hung Up) was a sorry specimen because he had hung up the phone and would probably do so again; a C.B. (Call Back) was a better prospect, because he had at least bothered to call back; a Promised to Pay had potential, because he acknowledged that the debt was his; a Broken Promise had failed to honor his guarantee, but that wasn’t entirely bad because you could now use that against him; and a Broken Payment simply needed a little nudging because he had started to pay and just needed to get back on track. Using a software system that Wilson developed himself, he could program the office’s auto-dialer to call only those debtors who fell into certain classifications. One day, I watched as the auto-dialer at his office called Broken Promises, Broken Payments and C.B.s.


Yet Wilson’s pitch — you owe the money, and now you need to pay — was both simple and perfectly legal. In most states, you can still try to collect on a debt even after its statute of limitations has expired. As the Federal Trade Commission notes on its website: “Although the collector may not sue you to collect the debt, you still owe it. The collector can continue to contact you to try to collect.” Wilson knew the rules and used them to his advantage. As far as I could tell, that’s what Wilson loved about collections: It was a hustle, but a legitimate hustle..."

Many times, clients ask, "I really need to discharge my old debt. It's going to fall off my credit report." I always explain that they do not want it to pop up with some collector that buys old debt. It much easier to say it was discharged and move on. This way, they never have to question, is the call legitimate or a scam... is it a collectible debt ... can they really take me to court? If the debt is unsecure and you listed it on your bankruptcy schedules, these questions are answered with the discharge.

Don't fall prey to this collection system. If you are having financial trouble and have collectors hunting you, you may want to consider bankruptcy before you throw good money after bad and worse yet pay your money to a thief. This is an interesting article and I would recommend it to anyone.

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