Assuming debtors have a valid address, which is some cases they do not, additional notice that the debt is being assigned to a third party collection entity is no benefit. My experience is intervention to collect by a third party normally occurs when the consumer is over 180 contractual delinquent. Furthermore, if the consumer receives the warning the account would be placed with a third party so how many different contacts would occur??? Many and more confusing to the consumer and agency.
Why is it that debt collection agencies feel like litigation is needed? I have helped over 4.5 million people settle their accounts without ever using litigation. What the debt buying and collection industry needs to realize, is that most people want to pay their debts – and will if given an opportunity. When a customer is threatened with litigation they begin to panic, often times leading to bankruptcy. Once a bankruptcy occurs the customer ends up in FICO hell and all of the customer’s other creditors suffer the consequence caused by one litigation happy debt buyer.
The empirical data now conclusively proves the non-litigation collection model is more profitable than the litigation collection model. It is also safer and more profitable for the banks who sell loans. It is safer because it creates no bank exposure or risk for improper litigation by the purchaser of their debt and it is more profitable because non-litigation debt buyers can afford to pay the bank a higher price for the same distressed loans.
What is the true way to help someone who is deep in debt? It isn’t to sue them into oblivion but rather to offer them a way out of their predicament. This way out can be accomplished by helping them resolve their other obligations; helping them find new/better employment or providing them needed social services. Sometimes it is simple as just listening to their plight and offering them patient understanding.
The entire robo-suing; inadequate documentation, sewer service, mistaken identity problem involving 10 million lawsuits a year could be avoided simply and easily. If debt selling banks were persuaded not to sell loans to debt buyers who utilized a litigation collection model, these ills would be stopped overnight. This simple solution would end the living nightmare now suffered by more than 30 million American families.
Debt collectors continuously resell the debt to other debt collectors who start the clock all over again. Then that debt collector resells the debt and the 3rd debt collector restarts the clock again, and so on. The burden of proof is put on the consumer to prove it is an old debt. The credit reporting agencies don't automatically remove old debts nor do they check to see if a newly reported debt is in fact a 9 year old debt that has been resold numerous times. The credit agencies (CRA) are more of a problem for consumers than the debt collectors. The CRAs are paid by the credit card companies and the credit card companies have bigger profits when they can charge higher rates based on poor credit scores. So there is inherently a huge conflict of interest here. If the CRAs can keep our credit scores down the card companies can make more money and don't mind paying the CRAs a piece of the action. Seems like unspoken collusion to me.
My company calls, auto-dials, emails, and snail mails customers many times before they are sent to a collection agency. Many debtors simply refuse to respond to the original debtor. They only make payment after the account is assigned to a collection agency -- akin to seeing just how far they can go before there's a consequence to not making payment. Requiring a validation notice from the owner of the debt should be optional on the creditor's part. The FDCPA requires the collection agency to send their first notice after the debt is assigned. More notices from the creditor are useless and expensive. And the single most frequently used excuse of any debtor is "I didn't receive the letter/invoice/statement".
A first class letter costs $0.55 minimum (inclusive of postage, paper, and envelope). That cost does not include overhead and employee cost. Multiply that cost by the number of notices and statements already sent (and ignored) and you begin to see the true cost of collection.
RBell
1Assuming debtors have a valid address, which is some cases they do not, additional notice that the debt is being assigned to a third party collection entity is no benefit. My experience is intervention to collect by a third party normally occurs when the consumer is over 180 contractual delinquent. Furthermore, if the consumer receives the warning the account would be placed with a third party so how many different contacts would occur??? Many and more confusing to the consumer and agency.
View this comment in the discussion thread
BillBartmann
2Why is it that debt collection agencies feel like litigation is needed? I have helped over 4.5 million people settle their accounts without ever using litigation. What the debt buying and collection industry needs to realize, is that most people want to pay their debts – and will if given an opportunity. When a customer is threatened with litigation they begin to panic, often times leading to bankruptcy. Once a bankruptcy occurs the customer ends up in FICO hell and all of the customer’s other creditors suffer the consequence caused by one litigation happy debt buyer. The empirical data now conclusively proves the non-litigation collection model is more profitable than the litigation collection model. It is also safer and more profitable for the banks who sell loans. It is safer because it creates no bank exposure or risk for improper litigation by the purchaser of their debt and it is more profitable because non-litigation debt buyers can afford to pay the bank a higher price for the same distressed loans. What is the true way to help someone who is deep in debt? It isn’t to sue them into oblivion but rather to offer them a way out of their predicament. This way out can be accomplished by helping them resolve their other obligations; helping them find new/better employment or providing them needed social services. Sometimes it is simple as just listening to their plight and offering them patient understanding. The entire robo-suing; inadequate documentation, sewer service, mistaken identity problem involving 10 million lawsuits a year could be avoided simply and easily. If debt selling banks were persuaded not to sell loans to debt buyers who utilized a litigation collection model, these ills would be stopped overnight. This simple solution would end the living nightmare now suffered by more than 30 million American families.
View this comment in the discussion thread
drose977
3
Debt collectors continuously resell the debt to other debt collectors who start the clock all over again. Then that debt collector resells the debt and the 3rd debt collector restarts the clock again, and so on. The burden of proof is put on the consumer to prove it is an old debt. The credit reporting agencies don't automatically remove old debts nor do they check to see if a newly reported debt is in fact a 9 year old debt that has been resold numerous times. The credit agencies (CRA) are more of a problem for consumers than the debt collectors. The CRAs are paid by the credit card companies and the credit card companies have bigger profits when they can charge higher rates based on poor credit scores. So there is inherently a huge conflict of interest here. If the CRAs can keep our credit scores down the card companies can make more money and don't mind paying the CRAs a piece of the action. Seems like unspoken collusion to me.
View this comment in the discussion thread
Aturk
4My company calls, auto-dials, emails, and snail mails customers many times before they are sent to a collection agency. Many debtors simply refuse to respond to the original debtor. They only make payment after the account is assigned to a collection agency -- akin to seeing just how far they can go before there's a consequence to not making payment. Requiring a validation notice from the owner of the debt should be optional on the creditor's part. The FDCPA requires the collection agency to send their first notice after the debt is assigned. More notices from the creditor are useless and expensive. And the single most frequently used excuse of any debtor is "I didn't receive the letter/invoice/statement". A first class letter costs $0.55 minimum (inclusive of postage, paper, and envelope). That cost does not include overhead and employee cost. Multiply that cost by the number of notices and statements already sent (and ignored) and you begin to see the true cost of collection.
View this comment in the discussion thread