The Debt Buying Companies

[iacas]

34 minutes ago, StevenR84 said:

say that B collects the full amount. So now A has written off 70 but that same 70 has been paid to B.

So? B bought a product and then made a profit. The debtor is not out anything extra.

People buy things from garage sales, fix them up, and resell them and profit. Same idea kinda.

[colin007]

2 hours ago, StevenR84 said:

say that B collects the full amount. So now A has written off 70 but that same 70 has been paid to B.

Once A sells that debt it has no share in whatever B seeks. 

[boogielicious]

The alarming thing about the episode was there is a percent of the debt bought that has already been resolved that is still sold. The debt buyer still goes after the former debtor. If this was a senior citizen or someone without full understanding, they could be paying off the debt twice. 

There is a special place in hell for someone who commits fraud against senior citizens.

[newtogolf]

58 minutes ago, boogielicious said:

The alarming thing about the episode was there is a percent of the debt bought that has already been resolved that is still sold. The debt buyer still goes after the former debtor. If this was a senior citizen or someone without full understanding, they could be paying off the debt twice. 

There is a special place in hell for someone who commits fraud against senior citizens.

I agree with you but in most cases they're not trying to intentionally defraud people, it's just the result of really poor record keeping and the fact that there's nothing to prevent the list from being sold multiple times.  I'm usually against government regulation but debt selling is something that needs regulation.  

1. It promotes poor practices by lending institutions.  The penalty for offering credit to non credit worthy individuals is minimal given the lending institutions can write off and sell the bad debt.  The sub prime mortgage debacle and now what's going on with car loans that extend beyond 5 years are examples where uneducated consumers are taken advantage of and lending institutions are allowed to offset their risk of writing bad loans.  
2. The selling of the lists and the quality of the data is not properly maintained.  In many cases there are just bad debt reports that get exported into spreadsheets or even worse printed documents.  As the lists get resold there are not restrictions on making sure an updated list is sold that removes names of those whose debts were collected.  
3. The lists are not only used by debt collectors, these lists can be purchased by anyone that sees value in them.  If you have the money, you can own the customer data.  

The tactics used by debt collectors also needs to be regulated.  I believe one should be responsible for their debt but calling the CEO of a business at home to report the debt of an employee or harassing, threatening people at work goes is overreaching.  

[jkelley9]

26 minutes ago, newtogolf said:

I agree with you but in most cases they're not trying to intentionally defraud people, it's just the result of really poor record keeping and the fact that there's nothing to prevent the list from being sold multiple times.  I'm usually against government regulation but debt selling is something that needs regulation.  

1. It promotes poor practices by lending institutions.  The penalty for offering credit to non credit worthy individuals is minimal given the lending institutions can write off and sell the bad debt.  The sub prime mortgage debacle and now what's going on with car loans that extend beyond 5 years are examples where uneducated consumers are taken advantage of and lending institutions are allowed to offset their risk of writing bad loans.  
2. The selling of the lists and the quality of the data is not properly maintained.  In many cases there are just bad debt reports that get exported into spreadsheets or even worse printed documents.  As the lists get resold there are not restrictions on making sure an updated list is sold that removes names of those whose debts were collected.  
3. The lists are not only used by debt collectors, these lists can be purchased by anyone that sees value in them.  If you have the money, you can own the customer data.  

The tactics used by debt collectors also needs to be regulated.  I believe one should be responsible for their debt but calling the CEO of a business at home to report the debt of an employee or harassing, threatening people at work goes is overreaching.  

A further scary part of it is that the initial bank factors in the net write off as worst case and further drops their credentials since they know what the going rate is for the collectors (buyers). So they don't even use a zero as a worst case.

[mchepp]

I enjoyed the piece. Oliver did a nice job.

I have been sent to collections before. Twice. Both times it was AT&T claiming I didn't pay my bill (I did, but that is another discussion about crappy AT&T customer service). They first send you a letter, very official looking. I so rarely open mail now (99% of it is junk) so they may have sent 2 or 3, but I remember throwing a few of them away.

They then call. Incessantly. Even leaving a message saying they have something really important to tell me. I never answered a call. 

To end it, I just wrote back a letter saying, "I dispute this charge." Never got another letter or a call. I think they give it a try and once they know it will be really hard, they give up. 

[xcott]

I think the burden of debt worthiness should lie on those providing the loan. If I decide to loan my deadbeat cousin $100 and he doesn't pay it back, that's my dumb move for giving him the $100 not his for asking.