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New Victims of the Struggling Economy: Debt Collectors?

debt collectors

You won’t likely shed any tears over this: Being a debt collector is harder than ever. While most Americans want to get out of debt using a debt management plan or debt consolidation, many can’t afford the payments right now. This complicates the debt collection process. Debt collectors aren’t dealing with deadbeats ducking obligations–they’re trying to get blood from a stone at a time of record debt.

Debt Collection Agencies in Hard Times

Originally reported by the Associated Press, debt collectors have more work than ever. They also have fewer opportunities to actually collect.

Some firms are satisfied with a debt management plan including payments as low as $5 or $10 per month. While this might allow the collection agency to report payments, it does little to help Americans get out of debt.

Further, Americans are less capable than ever of getting out of debt. With unemployment high and salaries low, the old “I don’t have the money” line isn’t an excuse–it’s a hard reality for millions of Americans. Debt consolidation and a debt management plan won’t do any good if the debtor simply doesn’t have any spare cash. For the growing debt collection industry, this is a case of “water, water everywhere / but not a drop to drink.”

More Complaints About the Debt Collection Process

In addition to a harder collection environment, the debt collection process itself is under attack. The Federal Trade Commission gets more complaints about debt collectors than any other industry.
In tough economic times, debt collectors, who work on commission, are forced to engage in more and more desperate means to collect outstanding debt.

Changes in the Debt Collection Process

According to the AP article, some decades ago debt collectors averaged 30 percent recovery on outstanding debt. Now the number hovers closer to 20.

Perhaps most striking is the change in types of debt collected. In times past, debt collectors called either from the original debtor or from a single third-party collection agency. Now there’s a booming industry dedicated to acquiring debt third- or fourth-hand for pennies on the dollar, often after the customer’s legal obligation to repay the debt has long since lapsed.

Common Consumer Complaints Against Debt Collectors

The Fair Debt Collection Practices Act outlines rights for consumers trying to get out of debt. The law forbids a number of unfair and harassing practices by aggressive debt collectors, but three are particularly heinous:

  • Not information a debtor of his rights in writing.
  • Calling repeatedly.
  • Providing false information regarding the debt.

Debtors can turn the tables on creditors, collecting $1,000 for every infraction of the Fair Debt Collection Practices Act. Still, with debt collection a lucrative business, many third-party collection agencies can afford to play fast and loose with the law. Especially when times are hard and so is collection, the market might actually incentivize some of the worst practices of debt collection.

How to Handle Debt Collector Calls

Anyone being harassed by abusive debt collectors should begin all conversations with “This call is being recorded,” record the call, take notes and report the infractions to the Federal Trade Commission. Every time debt collectors violate collection law, you owe them $1,000 less.

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  • RBDC

    How to reverse boycott debt collectors.

    When a debt collector/debt collection/debt buyer company can repeatedly call with the intent of getting money their customers can repeatedly answer or call back with the intent of not giving them any. They need people to pay with as little talk as possible. They don’t want to talk with people who know they are never going to pay. Be all talk and no pay. Answer when convenient. Call back. Give no information. Verify nothing. Ask as many questions as you can. Answer none.

    Don’t ignore/block/report them. It doesn’t work. These folks want you to ignore them for as long as you can stand to or until you give them something valuable like money or information. Ignoring them is being their good customer. Sending a cease and desist is giving information. It lets them know you are still alive and remain their good customer. Preparing to initiate unlikely individual legal battles is being their good customer.

    Be their bad customer. Make them talk to you fruitlessly for as long as they can stand to or until they stop selecting you as their customer. These companies cannot spend seconds much less minutes on the phone with every person who will never send them a dime. But they don’t know who that is. You do. That knowledge is power. Every second you can keep their staff on the phone will render their business less profitable giving them a reason to never call you again.

    Calling will not reset your SOL. Making a partial payment will.

    One person who does this likes to ask general questions they should but usually won’t answer, “May I have the name and address of your agent for service of process?” Calmly and slowly ask them to spell every word in the address. Read it back for verification. Control the pace. If they are rushing then politely ask them to slowly repeat. “Are you a corporation and if so in which state are you incorporated?” Repeat your questions when you don’t get direct answers. When they won’t answer a question ask, “Would you like to comply with the business and professions codes of your state?” That is usually the point when they hang up on me but if they say they want to comply then begin your questions again.

    Repeat while you have the spare time. These folks have many victims and few operators. If everyone calls back but pays nothing the mass auto-dialer business model becomes unprofitable. Don’t aid and comfort the enemy by ignoring them. Call! Have a nice long slow friendly chat! Make them hang up first.

    Press 2 for Spanish.

    There are certainly enough victims to take down this company so ignoring/blocking seems downright Orwellian to me. Really? We’re just going to passively submit and go with a block list or however we manage ignoring an endless stream of unwanted phone calls day after day? No! Unite or remain conquered. Answer/return every call – become well practiced at keeping these folks on the phone – or count yourself not amongst the free.