Even Debt Collectors Are Having Trouble Paying Their Bills
You would think tough times would be boom times for debt collectors, but debt collection company First American Recovery Services is filing for bankruptcy. "The amount of debt out there is 10 times what it had been, but the ability to pay is less," Tim Smith, FirstSource Advantage collections vice president told The Buffalo News. Don't dance on their grave quite yet. The debts will just get sold to someone else, and usually each generation of debt owners has successively less scruples. But you have to wonder, how long before there is just too much debt that's just too hard to collect in time before the statute of limitations expires?
Now who’s drowning in debt? Bill collectors [The Buffalo News] (Thanks to Eric!) (Photo: Sharon Cantillon)
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Plus paying collections won't help your credit score. I usually only tell people to pay collections if 1) the collector will agree to remove it from the report completely or 2) the collector is filing a suit against them in court.
Well, a collector cannot sue you unless they actually own the debt. Most of the time, collections agencies are only acting as agents for the company that owns the debt. In that case, they can only recommend the company that owns the debt to sue.
There is absolutely no reason to ever pay a collections agency unless they agree in writing to permanently remove the derogatory entry from your credit report.
Blood != Stone
Damn straight ... I went through a very irresponsible time in my 20's, and these people are the bottom feeding scum of the world. I hope they ALL go bankrupt!
I'm not usually a spelling nitpicker, but I am actually curious.
Is "boontime" an actual word, or did you misspell "boomtime"? :)
Muahahhahahahhahahaha! This is about time if you ask me. These companies make a living by harassing people for money. I wonder if they are getting harassed themselves???? I bet so and they can't take it!
I won't loose any sleep over them being gone.
@FDCPAGuy: or 3) you actually owe them money. That's always a good reason to pay someone back. Maybe not immediately if you don't have them means, but later on down the road when you can.
So what are the odds of getting mods on this debt? If these companies keep going bankrupt and are offloading the debt at firesale prices, do you think the new owner of the debt will do principle and interest reductions so that the debtor can pay it back, while the creditor is still making money?
Well why would anyone want to pay their bills after we've now been witness to the actions of the big corps. I mean really, if I can piss away billions of $$$ and run a company into the ground, then the feds come and give me money..... Why would I want to pay debts?
Buy expensive stuff, Spend lavishly, get free money. It's win win.
@TakingItSeriously: So others should get shafted for your irresponsibility? These companies aren't the only scum out there.
So will the employees who are stiffed by the bankrupt collections company hire a collection agency to get their lost wages back?
Please tell me it's so. Irony is the Breakfast of Champions, don't you know...
As much as some folks are loving this - it's just a job. I've done it (boo! hiss!) - most collections agents don't control who they call, or when they call them, unless you've already talked to them, so they know you might be available then. They don't dictate if they call you at work, etc. The vast majority of collections agents are working the same job as CSR's - sitting with a phone and a computer, reading a script. They don't get up in the morning and say "I'm going to be a REAL ass to some folks today!". I'm not happy that these folks lost their jobs, and I wish them the best in finding employment elsewhere.
Buying up high-risk debt... I've heard this story before.
Sorry but I don't agree. Debt collectors buy non-performing debt knowing it's past due and delinquent. Why should anyone feel the need to pay a company money who purchased something knowing they might never get paid back.
Let the SOL to run out, bury them with paperwork, sue them for FDCPA/FCRA violations, tell them to go pound sand, and once it's obsolete it's off the report.
@FDCPAGuy: Isn't there some trick that companies use to keep debts "fresh" so that the statute of limitations never comes into play since the debt is by some technicality not old?
They should all go out of business. I would not pay a collector but make a deal with the original creditor. but some are asses and say the matter is out of their hands but is not true...
Yes they attempt to "Re-age" the tradeline but that's actually a violation of the FCRA if you can show it's not bona fide error. So if they try to pull that just file suit. The SOL and date of obsolescence go by the date of last activity, not by when a collector buys the debt.
They're not going bankrupt.
Read between the lines in the article.
"we've got more assets than liabilities..."
They're suspected of making preferred payments...
And the people that have judgements against them for violating the FDCA are going to get nothing.
It's a dodge to avoid paying legal judgements.
@starrion: Not getting any money for the judgement against them for FDCA violations is a fair trade off for them closing shop, if that would actually happen.
@Jakuub: Ah, but you also can't use the "I was just following orders" excuse. In high school I quit Best Buy because I could not stand for all the misleading of customers going on and to this day I regret the time I was there. If I were to have to account for what I did during my two short months there I would have no excuse for it. Following orders/doing your job is not an acceptable response.
@starrion: Having read the article, I really think you may have hit the nail on the head there, though why that was hand-waved to the end of the piece itself I'm not sure. The whole thing smells quite strongly of spin to me.
@projoe1979: The company you owe money already wrote you off for pennies on the dollar. If you want to pay somebody back, pay back the original company, not the debt collectors.
@Ein2015:
Maybe people should pay back money owed because they owe the %$#@! money. Isn't there an ethical or moral obligation (crazy in these days of bail outs left and right) to pay money that you owe??
You know, I have debts in collection right now, and I actually do feel morally obligated to pay all but one: my college tuition bill. Long story short, I qualified for FAFSA (albeit late), and 2 phone calls and angry letters later I was told "Oops, we made a mistake. You owe $4K" I have no problems letting that debt rot in hell, but my student loans on the other hand I do. I took the loan, I signed, I owe. Luckily I got that one out of collections.
As per debt collecting as a whole: if they don't change some practices and they go bankrupt? By my heel, I care not. At Wells Fargo Home Mortgage (where I used to collect debt) we would call some homeowners on the 2nd day of the month, and some many times per day. I know this isn't illegal, but doesn't common sense dictate that if they haven't been late in 12 years, they won't be this month? Instead, I could have used that call to help someone in foreclosure. Now I KNOW that these companies are different, but debt collecting is debt collecting, and I know some shadier practices go on elsewhere.
Bottom line: for a company that bought someones %23.99 interest rate, $12 over limit credit card debt? Kiss my, well wallet.
@Darascon: I'm always amazed at these commercials on the radio that say there are secret ways to get companies to magically forgive a "significant portion of your credit card debt". It's just encouraging people to (over)spend and not pay their bills.
I have a fixed rate mortgage, put at least 15% of my income into savings (via a 401k, IRA, and interest-bearing savings accounts), and have no credit cards. The only debt I have is the house and car, and the car will be paid off in half the time since I overpay. How do I get in on this money I don't have to repay?
@Ein2015: I tried that with the only bill of mine that has ever gone to collections - lab fees at a hospital. They sent it to collections 15 days after it was due, and it was due 5 days before I got it in the mail. When I called them to pay, they said 'it already went to collections and we can't process it.'
Though I have some sympathy for hospitals in bad financial situations, I can't help feeling that this kind of mismanagement is part of it. They would not take the money I owed them, so the collection agency got it. Shame.
"how long before there is just too much debt that's just too hard to collect in time before the statute of limitations expires?"
Since when has the SOL expiring ever stopped a collection agency?
@SadSam: As I see it, treat people the way you want to be treated. I would feel a moral obligation to repay money owed to someone I have a personal relationship with. Large corporations who treat me as a source of profit and sometimes as a potential criminal (with super-strict return policies and so on) don't really inspire much in the way of moral sentiment from me. And debt collection agencies are bottom-feeding blood-suckers who will often treat you with nothing but contempt. Why should anyone feel any obligation to pay them?
Restating what was said above, if you feel an obligation to repay a debt, why would you give that money to someone other than the person you owe?
If you want to get rid of collection agencies entirely, PAY YOUR BILLS.
It's a tough concept, I know.
@FDCPAGuy: So, I have an old debt that has been off my credit report for a couple of years now, but some new agency bought it up and has been trying to contact me. I make it a habit to not answer calls from numbers I don't recognize, letting it go to voicemail. Is this the best response, or is there some way I can tell them to shove it without resetting the time?
The odds right now of getting a modification are somewhere between 99 and 100 percent. Have you tried asking? Even if you have steady income they will settle.
@oneandone: Interesting. My only collections experience was with a hospital as well. They once sent a raft of bills directly to collections before billing the patients. The collections guy I spoke to was actually extremely nice and helpful, and I just paid the hospital the amount requested, which took care of the matter.
THEY are going bankrupt - particularly First American and UNISTATES - we turned the court docs over to Fred Williams for the story - these guys ripped off their 21 plus million dollar loan. Other agencies are suffering as paper gets thinner and thinner
www.budhibbs.com
@projoe1979: The folks that are out there only to defraud eventually get caught. It's the poor people that get caught up in a bad set of circumstances that truly have to suffer. Predatory lenders, high interest rates, cycles of debt that repeat themselves. Banktruptcy is usually one of the only options they have left. To those people, CA's are terrible, scummy people.
I had a finacial rough patch after grad school and got behind on some of my cards. One of them was charged off and sent me into collections hell. The problem that I have encountered in collections is that EVERY single time I offered to make payments, as I couldn't afford the lump sum the collections agencies were demanding, they literally laughed at me, berated me and refused to accept anything other than the lump sum payment. The calls would stop for a while, then I'd go through the same thing with the next CA. I talked to a lawyer who gave me the same advice as FDCPAguy, and I am following that advice, because I tried to satisfy my moral obligation to pay the debt and was . Frankly, I don't understand the CA business model at all, because it seems like they are more interested in harrassment that collecting money.
@randomangela47: You really need to contact a local debt lawyer for this advice because it can very by state. In some states admitting it is your debt can reset the clock. Usually it is just imperative that you NEVER pay them one dime, or the clock is reset, both the for the credit reporting and the statue of limitations if they sue you.
Generally say you dispute the debt and to stop contacting you. If it is on your credit report immediately demand that they remove it. If you just want action sound sophisticated and quote statutes. Send it certified mail. If you want to sue them, make the demands, but don't be as detailed. Get a certificate of mailing (doesn't mark the envelope or prove delivery, and they are likely to ignore). Then contact a local attorney and file suit, pass go, and collect $1000. Then wait for the next debt collector to come around.
@TakingItSeriously:
Its actually a word, such as in the recent title of an article from time
Is Offshoring A Ceo Boon?
In the case of credit cards, I would be interested to see some statistics comparing the outstanding debt to the amount of interest already paid on that debt. I would bet that in many cases they have already recovered most of the debt in the form of interest, so selling it for pennies on the dollar isn't really a 'loss' at all.
@HRHKingFridayXX: Yeah, speaking as someone who was once told by a debt collector that I should pay them $1,000 instead of spending that money on a chemotherapy treatment, my take is "Boo-hoo! You poor, poor people."
@howie_in_az: you get the credit cards, spend up a storm, borrow up to the limit on your house, spend up a storm, and then let your mortgage go a few months delinquent. Let your credit cards to a month or two delinquent. Then declare bankrupcy, or try to get a renegotiation on your home loan.
There's lots of ways to get this "free money" but first you have to be broke and spend up a storm on credit.
@deadspork: And never have an emergency that is beyond your financial capability. And make sure that you never engage in any financial transaction. And don't allow anyone else to engage in fraudulent transactions with your information either. Better yet, just don't exist in the first place.
It's a tough concept, I know (for narrow minded people).
If they're filing bankruptcy because they're trying to get out of lawsuits for illegal collections practices, it's just a matter of time before they get sued again. Sucks for the people who's suits go into the trashcan, but I bet they don't change their practices.
Wait a second - they bought bad debts from other companies that couldn't collect those debts, right? So they are surprised that they could not succeed where the other debt collectors failed? GENIUS!
Please keep in mind not every debt in collections is valid. Once my wife bought 80 dollars worth of stuff from spiegal. When the first bill arrived it had a late fee of 25 dollars on it We called and disputed the late fee they said we will waive it just send in the payment which we did. The next months bill they had removed the payment and readded it with a extra 50 dollar fee 25 for not paying enough last month and 25 for a late fee for notpaying enough. We called told them to pound sand and wrote them a check for an add. 80. bucks. Thats makes a total of 100 for an 80 dollar item. Long story short they continued to add fees and late charges until it got to about 1500.00 then they wrote it off and sold it as bad debt. The new co. added fees and ran it up to about 3200. dollars then sold it to another debt collector as a bad debt. They added fees and the last time they contacted us it was up to 4600 dollars. I have a 2 inch file on this it includes many postal reciepts and such We have followed the proper steps and it shows as disputed on our credit report and its been a couple of years since they have called. 2 points 1 It is wrong that a company can keep adding fees and abuse the system ruining your credit without proper justifacation. 2. Companies should never be able to write off as full value for tax purposes fee inflated debt.
@SarcasticDwarf: Glad you had that option - not everyone can stay at Mom and Dad's for free if they quit their jobs.
A friend was hired as a collector even though he had filed bankruptcy 2 years ago. The old "do as I say not as I do".
Haha! I have no sympathy for most of these companies!
My theory is that noone is going to have the capital (or desire) to buy off these debts. Even if you buy it for pennies on the dollar, companies still have to pay collectors much more per hour that they can collect.