Interesting article on debt collection

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There is an interesting article in the NY Times on the shady world of consumer debt collection. For anyone dealing with a debt collector, its a must-read. Its called "The Paper Boys"
 
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I will read the article later. Lots of people go into major credit card debt and then settle it for 40% of what they should owe. Sneaky ? I think so.
 
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Did none of these debtors file bankruptcy? If they did and were successful, isn't their debt still on the books but otherwise uncollectible (assuming there was no agreement on a payment plan)? Would like to learn more about this subject.
 
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Donald

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Originally Posted By: LT4 Vette
I will read the article later. Lots of people go into major credit card debt and then settle it for 40% of what they should owe. Sneaky ? I think so.
From today's NY Times for educational purposes only. The scale is breathtaking. From 2006 to 2009, for example, the nation’s top nine debt buyers purchased almost 90 million consumer accounts with more than $140 billion in “face value.” And they bought at a steep discount. On average, they paid just 4.5 cents on the dollar. These debt buyers collect what they can and then sell the remaining accounts to other buyers, and so on. Those who trade in such debt call it “paper.”
 

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From personal experience, the couple of things that went to collections during my divorce, I got an agreement from the collection agency that after I paid it would be removed from my credit report. I paid and got them off my credit report. Once you pay you have no more leverage. In one case I drove to their office and got an agreement and handed over a check.
 
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Originally Posted By: LT4 Vette
I will read the article later. Lots of people go into major credit card debt and then settle it for 40% of what they should owe. Sneaky ? I think so.
For some one who's already acquired the big things in life like a home they've paid off, and decent cars, that's not a bad idea for buying lots of stuff for what essentially amounts to half off. Load up the cards, don't pay, and settle it out years later for 50 cents on the dollar or less. As long as you don't care about your credit rating, who gives a rat's? Insurance premiums take credit rating into account, but just buy state minimums to keep that cost item down.
 
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Originally Posted By: LoneRanger
Originally Posted By: LT4 Vette
I will read the article later. Lots of people go into major credit card debt and then settle it for 40% of what they should owe. Sneaky ? I think so.
For some one who's already acquired the big things in life like a home they've paid off, and decent cars, that's not a bad idea for buying lots of stuff for what essentially amounts to half off. Load up the cards, don't pay, and settle it out years later for 50 cents on the dollar or less. As long as you don't care about your credit rating, who gives a rat's? Insurance premiums take credit rating into account, but just buy state minimums to keep that cost item down.
I can see that, but for some on here of a certain ilk (and in this land in general), being in debt, and especially not paying it off in FULL, is WORSE THAN committing cold blooded, brutal, painful murder in their eyes. shrug
 
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It sure is a paper game in many areas. Look at A lot of Long Island ( I have little personal experience there) or where I work, Westchester NY. Westchester is one of the most affluent counties in the US. Our recent County Exec has been solid with cutting and I commend him for that, but we need much more. There is a sliver of a middle class. Westchester is a great place to live if you are filthy rich or dirt poor. Horrible if your making enough not to get free healthare or free food. There was an incredible "white flight" as it was termed over the last decade. It wasn't so much white flight as it was anyone, white, black, spanish, asian, with the means headed north to avoid the Westchester taxes and fees. If well thought out it can be used, and done legally, to take full advantage of creditor policies. When I built my house I had 50k on a credit card...i've always been 800s credit score and the credit card was 1.9% for life. I'm down to 20k now but every creditor freaks when they see it. Best loan I will ever see in my lifetime! Was better than adding to the mortgage.
 
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I thought the goal was to rack up 150k credit card debt, take a 300k home equity loan on your house, then croak with no assets. Even your family wouldn't collect your body from the hospital morgue, so the city has to pay to cremate your body. Livin Large, die with a smile on your face. ah, the American Dream. banana
 

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Originally Posted By: LT4 Vette
Lots of people go into major credit card debt and then settle it for 40% of what they should owe. Sneaky ? I think so.
40% of what they "should" owe? Well define should. Probably folks in these situations end up getting hit with fees, a default interest rate, and compounding interest on the actual owed amount. But the amount the bank is really out is really only what they paid to vendors charging the credit account. Not getting all the interest and fees may mean lower profit, but its also built into the business model, and isnt necessarily anything but arbitrary charging on top of the actual funds the bank paid out.
 
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Originally Posted By: dailydriver
but for some on here of a certain ilk (and in this land in general), being in debt, and especially not paying it off in FULL, is WORSE THAN committing cold blooded, brutal, painful murder in their eyes. shrug
Not worse than murder, but it's theft and it speaks volumes to a person's moral character. If you do decide to go into debt and choose not to pay it off then you've stolen something from someone else. It's a matter of personal values-some people stand behind their word and pay their debts. Others don't.
 
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While I agree that we should honor our debts and that credit terms and product prices would be better for all of us were there fewer charge-offs, creditors should also behave honestly. In too many cases, lower income credit card users are subjected to heads I win, tails you lose treatment under the cardholder "agreement". Jacking up the interest rate on exiting balances is a primary example of this and probably leads to an increase in defaults. People should obviously avoid using plastic as a means of financing everyday expenses, but many lower income Americans have little choice when the unexpected and unbudgeted expense comes along. Not everyone is as fortunate as you or I.
 
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I read the article. All the characters in that article have the same business principles as a crack dealer, pimp, con man, tow truck driver, loan shark, drug addict, car mechanic, politician, bail bondsman, .....etc. Lots of sketchy characters. I knew an attorney that bought 'paper' and hired people to collect / recover as much money as possible from the debt.
 
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IMO, one of the more interesting things pointed out is how much bad (not real, duplicate) debt or debt past the statute of limitations that is trying to be collected on. Needless to say a list of SSN with amounts on a flash drive does not really instill a good feeling of accurate records to me.
 
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Let's see here, with up to 25% credit card interest rate, and selling some remaining balance at 4.5c / dollar to a collector to settle, I'd imagine credit card companies made a lot of money on average and then some will be sold as junk bond package to write off. They still make money on average, and on average the credit card borrowers are still paying a lot of money, because the math works out. As for me, with 810 FICO score and a 2.5% fixed term mortgage, I still think I'm ahead of those loading up their credit card hoping to get their debt written off.
 
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