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There are Good Debt Collectors and Then There Are Debt Collectors That Lie, Cheat, Steal, and Threaten

A reader brought the following article to my attention, America’s Abusive Debt Collectors on the DailyBeast.com.

It is an interesting look into some of the bad collection outfits by Gary Rivlin. Gary includes first-person accounts of some of the actions they were asked or required to do to keep their jobs as collectors. These bad acts included everything you wished they didn’t including information family and friends about the debt owed, calling neighbors, and breaking almost every other debt collection rule.

Is it any wonder, then, that the Federal Trade Commission receives more complaints about debt collectors than any other industry—or that earlier this year the agency reported a threefold jump in grievances since 2002? More than 50,000 people contacted the FTC in 2010 to complain about severe harassment—a 25 percent increase over the number in 2009. Another 18,000 complained that a collector used obscene or otherwise abusive language (a 22 percent jump in just a year), and more than 4,000 consumers said a collector threatened them with violence—a startling 66 percent rise.

What really intrigued me was the recounting of debt buyer activity.

Eventually, the hospital or cellphone company you stiffed grows tired of sending letters insisting you pay your bill; a bank can hound you for only so long about delinquent credit-card charges before, by law, it must write off the debt as a loss (typically at six months). Sooner or later, the creditor will sell off its bad debt to a debt buyer for 2 cents on the dollar, or 5 cents or 10 cents, depending on the age of the debt and other factors.

When a debt buyer isn’t able to collect on the bad debts, he or she will most often sell the portfolio to someone else. In fact, debt is bought and sold so often that debt buyers have created a vocabulary for describing the age of their portfolios. For instance, “tertiary” (“tersh” for short) is what insiders call a portfolio already picked over by three debt buyers; “quad” debt is a portfolio that has been worked over four times. Then there’s the term critics have dubbed for an old bill that never seems to die: “zombie” debt.

“You hear these stories all the time about people getting a call about debt that’s five years old, 10 years old,” says Michelle Dunn, a longtime debt collector who has written a series of advice books for people wanting to get into the debt-collection business. “They’ll say, ‘I can’t remember it, send the documentation’—but then they don’t hear about it again until three months later.” At that point, another debt buyer has taken over the account, “and now their phone starts ringing again and they’re going through the whole thing all over again.”

If you are interested in the full article, please visit America’s Abusive Debt Collectors, it’s a great read.

There are Good Debt Collectors and Then There Are Debt Collectors That Lie, Cheat, Steal, and Threaten
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • http://www.facebook.com/people/Bob-King/1331077414 Bob King

    There is no such thing as a GOOD debt collector. The reason institutions can’t
    collect the debt is because there is no debtors prison in the USA. Debt is a
    Civil Issue not a Criminal Issue, that’s why you don’t want the Government
    buying YOUR DEBT. That’s why Banksters can’t be prosecuted for phony
    mortgage applications, but they can get a bail out! Once they do you can’t
    right it off! Let’s say you have a hundred thousand dollar passed due debt you
    didn’t pay, you receive a 1099-c you gotta pay your fair share of taxes on
    the bad debt. Two things happen, the debt is officially forgiven, you pay a
    small portion of income tax in exchange for that debt and take a walk. Pretty
    cool, right? WRONG. You never earned nor unearned that money in the tax year
    2012. The Bankster clears his books so the stockholders don’t bail, you get the
    tax bill but that’s small compared to the forgiven debt. Get it??? Tell me I’m
    lying? Another thing, They can’t garnish funds from debt that is not a Federal
    debt. You can’t right off Federal Debts under any circumstances, so those new
    student loans are really suspect to collection, if those students can’t find a
    job after they get out of Higher Education, Trade School etc. and buy a car,
    home, furniture take a much needed vacation, it’s all for not if you think you
    can skirt the Student Loans owned by the Federal Government. You can’t even
    threaten to declare Bankruptcy if you got Federal Debt. You can right off
    unsecured debt, some secured debt through Bankruptcy but NOT FEDERAL DEBT. So
    don’t think you can run down to your local Attorney and think he’s going to tell
    you differently. There is no clearing house or reorganizational programs for
    REAL DEBT! So the Debt Collector you need not fear. It’s not against the law to
    ignore all the phone calls, you have no idea who you are talking to on the other
    end of the line. They may sound official but they are blowing smoke! You may
    have to answer to an official of the court, but then you can have your day in
    court, which is one of the original amendments to the Constitution, I think the
    4th coupled with 1st and a few others to protect you.
    Even if you screw up your case pro-see you still don’t have to pay. Debt
    collectors buy debt for nickels on the dollar, screw it… you don’t have time to
    deal with these vermin of the earth. The only thing they can screw with is your CREDIT, but isn’t that why we are haveing this discussion? Debt collectors are like bounty hunters,
    they work on a fee basis and usually use the same techniques to do their dirty
    work that hackers use to rip off your worthless identification. Debt Collectors
    are like Tele marketers, time share salesmen and women. They comprise the same
    personality of the 20th Century Used Car salesman or Ponzi artiest. They are running
    numbers hoping you trip over your tongue. It’s not a big deal unless you want to
    make it a big deal.

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