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.