Post by "Pop" Stran on Jan 18, 2005 0:48:49 GMT -5
First of course, I should point out that you are by law responsible for any valid debt...and no website (including this one) should try to tell you otherwise.
There is no magic or secrets that will make valid debts disappear (assuming you don't see a bankruptcy as magic).
You are not however, as some collectors attempt to imply, at the mercy of any collection service.
Federal, state, and local laws are in place to protect you the consumer from unscrupulous behaviour on the part of a debt collector, their employer, and their clients.
Collection agencies who use illegal practices to collect on a debt can be sued and fined, and in extreme cases even closed completely.
Debt collectors come in a few basic varieties, depending on the type of debt:
Private collectors work for the company that is owed the money.
An example would be the rep that calls you from the power company to let you know that your payment is late.
Collection agencies work two general types of accounts; Direct client accounts, and "Bad paper" accounts.
An example of a client account is the call (and letter) you get from your current mortgage holder when your check is late.
The bank that originated the loan has sold the note (over 96% are sold almost immediately) to an investor, and the investor's firm uses an asset-protection agency to handle the tedious details, such as collections.
An example of a bad paper account is the letter you get from the ABC Collection Agency regarding that ColumbiaHouse account you ignored and eventually forgot about 2 years ago.
...to elaborate:
ColumbiaHouse sold the debt for pennies on the dollar to ABC, and it is now the agency's money.
Let's say that you owed ColumbiaHouse $23.95 for that initial shipment of CDs, and never responded to their private collector's attempts to collect.
The debt was later sold to ABC for about $3, based on the belief that three bucks is better than nothing, and it gets that red ink off the ColumbiaHouse books.
Now ABC has a $20.95 profit waiting to be made, if they can only get and keep your attention.
Agencies tend to slip into the "grey area" of the law much easier when collecting a profit-debt, as opposed to a client's debt.
To run afoul of the law with a client account leaves the client-company vulnerable to bad press and possible investigations as well as the agency attempting the collection.
A collecton agency can be anything from a tiny office in a rowhouse where a single highschool student processes piles of mail...to a huge office complex employing hundreds, with attorney offices upstairs.
BTW: I didn't make that example up...I dated a girl who worked for a collection agency long ago, and she was the entire agency.
A recent graduate, this was her first job...and it sucked.
Regulations were very loose, and she broke the law on a daily basis...but in her defense, the training period was about one hour, with no mention of laws.
The saddest part of that story is that there are still agencies today that operate under the radar, and hire only under-paid and poorly-trained staff to run the tedium of daily operations.
There is no magic or secrets that will make valid debts disappear (assuming you don't see a bankruptcy as magic).
You are not however, as some collectors attempt to imply, at the mercy of any collection service.
Federal, state, and local laws are in place to protect you the consumer from unscrupulous behaviour on the part of a debt collector, their employer, and their clients.
Collection agencies who use illegal practices to collect on a debt can be sued and fined, and in extreme cases even closed completely.
Debt collectors come in a few basic varieties, depending on the type of debt:
Private collectors work for the company that is owed the money.
An example would be the rep that calls you from the power company to let you know that your payment is late.
Collection agencies work two general types of accounts; Direct client accounts, and "Bad paper" accounts.
An example of a client account is the call (and letter) you get from your current mortgage holder when your check is late.
The bank that originated the loan has sold the note (over 96% are sold almost immediately) to an investor, and the investor's firm uses an asset-protection agency to handle the tedious details, such as collections.
An example of a bad paper account is the letter you get from the ABC Collection Agency regarding that ColumbiaHouse account you ignored and eventually forgot about 2 years ago.
...to elaborate:
ColumbiaHouse sold the debt for pennies on the dollar to ABC, and it is now the agency's money.
Let's say that you owed ColumbiaHouse $23.95 for that initial shipment of CDs, and never responded to their private collector's attempts to collect.
The debt was later sold to ABC for about $3, based on the belief that three bucks is better than nothing, and it gets that red ink off the ColumbiaHouse books.
Now ABC has a $20.95 profit waiting to be made, if they can only get and keep your attention.
Agencies tend to slip into the "grey area" of the law much easier when collecting a profit-debt, as opposed to a client's debt.
To run afoul of the law with a client account leaves the client-company vulnerable to bad press and possible investigations as well as the agency attempting the collection.
A collecton agency can be anything from a tiny office in a rowhouse where a single highschool student processes piles of mail...to a huge office complex employing hundreds, with attorney offices upstairs.
BTW: I didn't make that example up...I dated a girl who worked for a collection agency long ago, and she was the entire agency.
A recent graduate, this was her first job...and it sucked.
Regulations were very loose, and she broke the law on a daily basis...but in her defense, the training period was about one hour, with no mention of laws.
The saddest part of that story is that there are still agencies today that operate under the radar, and hire only under-paid and poorly-trained staff to run the tedium of daily operations.