Over the past couple of months, I have come across a few stories in newspapers about the plight of debtors and the heartless tactics of debt collectors. Now, I’m not going to get too caught up in pretending that I collect debts in selfless pursuit of the greater good. I extract money from debtors on behalf of creditor clients and make a profit for myself.
Having said that, it was refreshing to read an article by Robert Markoff, President of the National Association of Retail Collection Attorneys who pointed out some of the societal benefits provided by debt collectors.
If there were no consequences for non-payment of one’s obligations, the temptation would be for no one to pay their bills when due. Credit is granted with the expectation that it will be repaid. Sophisticated credit grantors do understand and plan for the fact that a portion of the credit they give will not be repaid. However, by using collection professionals, billions of dollars are returned to our economy each year. This allows for lower interest rates and lower overall cost of goods and services. . . . All consumers would be penalized if businesses were unable to recoup losses resulting from bad debt.
He also has some recommendations for debtors who find themselves in the debt collection system: 1) Respond to letters or phone calls; 2) Keep financial records; 3) Be honest about what you can afford; 4) Speak up if the debt is not yours; 5) Never ignore a summons from court; and 6) Be involved.
My career in debt collection (a relatively small part of my job running a city-sponsored non-profit business lender) was somewhat eye-opening. There are people who call you to say that their payment will be 20 minutes late and hope that you won’t kill them (okay, small exaggeration, but not that small) and then there are people who simply don’t understand why they should pay back money that they borrowed and that wasn’t theirs in the first place.
I am a moderate Democrat. My brother-in-law, a moderate Republican attorney, and I would have conversations about bankruptcy reform in the late 1990’s (pre-reform) which always tickled me because I, the Democrat, was in favor of bankruptcy laws that would make it harder for someone to walk away from debts. He, the Republican, felt that I was being mean. That is, until a client stiffed him on fees in a bankruptcy. That ended our debate.
A lot of debtors read that they can send a “cease and desist” letter to stop all communications from debt collectors. Once that happens, it is a good bet that the debt collector will send the debt out for legal collection in the form of a lawsuit.
There is a lot of bad information out there. One I used to get a lot but haven’t lately is that “you can’t charge interest on medical debts.” There was also one about “if I offer payments, you have to take the offer.”
While I don’t question the value of having debt collectors, the fact is that it’s essentially the wild west. I faced off with several after an extended illness found me behind on a few bills. Several of the collectors that contacted me – especially the smaller and specialty outfits – were honest and easy to work with. However, some of the bigger collection companies are completely unbound by any kind of restraint. Despite blatant, documented violations of the Fair Debt Collection Practices Act (and numerous complaints to the relevant agencies), they continued to hound me for months after the debt was settled (with the original creditor).
Asking for realistic regulation of this industry, and updating the notification requirements for collection-driven lawsuits – especially when there’s a wide variance between state laws – is not denigrating the profession.
Documented violations of the FDCPA? That’s like a Christmas bonus — $1,000 per violation plus attorney’s fees.
BrianK, how DO you get rid of collection agencies after the original creditor is satisfied? My wife quit a gym, paid up through the contractual date, then some corporate clerk turned it over to a collection agency when our bank bounced an incorrect billing request. They are still dunning us constantly.
I thought Mr.Remington would help, but it seems to be illegal for some strange reason.
Doug, are you a NARCA member, then? What is that? The Spanish affiliate? lol
I would happily take a large blunt object to debt collectors at the moment. Due to a data entry error, my phone number is in “the system” as belonging to someone who is behind on her debts. I get phone calls at 6 AM, noon, 11:00 PM.
I get called names. I’m told that I am a liar. (No, I don’t know this person, never met her, it’s a data entry error.) When I can get a word in edgewise and give the phone call person the correct information on the debtor (I’ve gotten enough calls that I’ve turned to the Internet) I get called more names and then hung up on. “Pay your bills.” They’re not MY bills!!
This has gone on for more than a year.
I agree you that is a necessity even if most people do not like it. If this system was not set in place nobody would pay their bills and the economy would fail.