How I began my career in personal finance, and eventually being a “financial counsellor” of sorts and a debt adviser, was to start at the bottom. That is not to degrade the job at all, I began as a collector. I worked in the collections department of one of the largest car financing lenders in the world.
I collected past due and defaulted car payments.
And as you can imagine in the years of doing this, I heard a lot of reasons why someone failed to pay their car payment.
More on these “stories” later, I need to keep you intrigued and reading.
As a collector for a secured loan, our final recourse if someone did not pay their car payments, was to repossess the car. This was always a last resort, as repossession does the car’s owner no good obviously, and does the lender no good as well.
Once a car has been repossessed it can be sold at auction, however, rarely will the sale achieve enough to pay off the balance on the loan, which then leaves a deficiency balance, which the borrower is still liable for.
This deficiency balance is now an unsecured debt as the car or vehicle has been sold, which can make it more difficult to collect. The borrower no longer has the car, so they may feel why do I still need to pay for this.
As for why people don’t pay their bills or debts, this can fall into two categories:
They can’t: A person may not have the means or money to pay the bill. Maybe they were made redundant or lost their job some how. Perhaps they are ill and cannot work. For some reason they simply cannot afford the bill.
They won’t: This is a rare occurrence when someone just doesn’t want to pay a bill or debt. In the circumstance of a car being repossessed, many people just feel why should they pay as they no longer have the car. I remember some cases where someone bought a car that was faulty and was always in the repair shop, so they withheld payments as they felt the car was a “lemon”.
I remember two specific incidents that I experienced in attempting to collect an account that was in arrears.
One was for a lorry as we financed the large trucks and lorries as well.
These accounts were difficult to collect as the owners/drivers were always on the road, and this was before everyone had a mobile phone.
It took me months to finally catch up with the account holder/owner and when I did he promptly sent the three missed payments. He had been travelling all over the country and did not have the time or all the money, until he had finished his run.
That account was perpetually in arrears, but he and I developed an understanding, and he paid the account every three to four months, and would bring it current, only to have it fall into arrears again.
Paying like this did nothing but hurt his credit score, however in the end, he paid the account off.
A sad and tragic tale of when I was collecting car loans, was one incident when a young woman’s account fell into arrears.
I made many attempts to contact her, but never could reach her.
In the end I phoned her parents as they were listed as references on the loan application. I could not state why I was phoning due to data protect laws, but I could identify myself and give my details and request they have their daughter phone me.
The parents informed me their daughter was killed in a car accident in the vehicle I was attempting to collect for.
I apologised for the call, told them I was sorry for their loss, and coded the account accordingly so no one would contact them again.
You don’t forget things like that.
The majority of people want to pay their bills, however, some of the excuses they give as to why they have not, or to what extent they may go to in avoiding paying the bill, can require more energy than just paying it.
There are many reasons when a collector speaks to someone about an account that the borrower may give as to why they have not paid. The old saying, “the cheque is in the post” no longer holds up as most accounts are paid by standing orders or direct debits.
Some common excuses:
* I forgot
* I switched banks/accounts
* My partner/spouse handles the bills
* Is that due again
* I don’t have the money
This last excuse is not really an excuse, but a reason, and a good one.
This is where as a collector you really do your job in finding out why they cannot pay/don’t have the money, and attempt to come to a solution that is in the best interest of both parties.
Maybe it is just a transient issue of their finances, and they can get back on-track in a few months. If it is more serious, the borrower may need to look at insolvency options.
However, there are times when the borrower just wants to get the collector off the phone, or has no intent on paying, there are some “tricks” they may use.
I am not advocating the use of any of these “tricks” or untruths, just simply pointing them out.
Especially in collecting car loans, this is one of the oldest and most used tricks in the world. You simply hide the car, or swap cars with someone else.
The main issue with this is the insurance. You may be using someone else’s car with their permission, but are you insured, and are they insured for your car.
There are also some tricks the repo man has of their own to locate the car. If the car cannot be found, the lender may decide to take further legal action.
The trick of hiding the car can be used for other secured type loans as well. Unfortunately, it doesn’t work in the instance of a mortgage as you cannot hide a property.
I have seen this little trick used many times.
You may owe the gas company or electricity company, and you move house and need to set-up new service, you get the new service in a different name. I have even heard of people using their children’s names to set-up a new service.
In the instance of a collector coming to your home, again they ask for Mr. Smith, and you state you are Mr. Jones and are just staying there.
This little trick won’t last long, but it can buy you some time.
And in some instances, if the financial issue is soon to be cleared up, just advising the lender of this can also allow you the time required to sort things out.
Not an easy solution to avoiding bill collectors, but people do it, especially if they are in arrears with their landlord.
People move away and leave no redirection or forwarding address. This in the hopes that no one will locate them, and that any bills associated with the old address will not follow them.
However, council tax follows you where ever you go, so you can be found that way.
The bill collector has you on the phone, or in person as they have visited your home, and you just want to make all this go away; so you make a promise to pay a certain amount on a certain date, like when you get paid.
However, you have no intention to pay that amount on that date, or you know you will not have the money.
When you break these promises to pay, the lender is not going to be happy, and may no longer accept and future promises.
There are many more ways to avoid the bill collectors, however, they do not give up that easy. Even if you have not had contact with a creditor for sometime, even years, the debt has not gone away into “the ether”.
The debt could get sold onto another collection agency and they begin the process again.
Only after six (6) years of no contact from a creditor can a debt be statute barred or no longer owed.
I read this story the other day and couldn’t believe it, but yet it supposedly was true. I have heard of people doing some crazy things and saying even wackier things to get out of paying a bill or debt, but this person may have taken it a bit too far.
A 38 year old woman in Russia has changed sex to become a man to avoid paying debts of 130,000 rubles or around £2,255. A statement from the bailiff service chasing the woman for the debts was this, “The debtor changed gender to try to escape liabilities.”
“During our investigation, we found out that the woman doesn’t exist any more, and now a man exists.”
The woman turned man, then got a new passport, name, and all new details which they used to take out new loans. However, it was stated they are still responsible for the old loans taken out as a woman.
“He will be liable all the same, despite the gender change. It’s futile. He’ll still have to pay them back. If a debtor thinks he can escape that way, he’s very much mistaken.”
In the UK prior to a sex change operation, there are many interviews with psychologists and doctors all to insure the person requesting the change is mentally able to go through with it. Gender reassignment is a huge thing and not to be entered into lightly by any means.
However, it would appear someone here in the UK did have a sex reassignment in the hopes of avoiding some £50,000 of debt.
I think this is about the wildest attempt to not pay a debt I have ever heard of. Hopefully there will be no copycats.
,How I began my career in personal finance, and eventually being a “financial counsellor” of sorts and a debt adviser, was to start at the bottom. That is not to degrade the job at all, I began as
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