
Debt collector profits soar with people flush and easy to find - pseudolus
https://www.bloomberg.com/news/articles/2020-08-07/debt-collector-profits-soar-with-people-flush-and-easy-to-find
======
jedberg
Always ask for proof of the debt before paying. If they can't provide proof,
you can contest it on your credit report and you don't have to pay.

I keep having debt collectors call me for a fake debt. I've been an AT&T
customer for 25 years. About a decade ago I upgraded my broadband, and instead
of upgrading my account they closed my old one and opened a new one. I got a
final bill on the old one and that was that.

About two years later I got a debt collector trying to collect on the old
account. At first I thought it might be legit, maybe I missed the final bill.
So I asked for a copy of the records. They stopped calling.

A couple years later a new debt collector called on the same debt. Again I
asked for proof, again they stopped calling.

I think my name was finally deleted from the spreadsheets they pass around,
but who knows. Maybe one day someone will call again.

~~~
janesvilleseo
That’s ATT for you. They have the worst billing systems that I know of.

Back when they were pushing UVerse they wanted to combine billing with their
other services. For what ever reason they weren’t combined to begin with.

Well when you did that you had to get both on the same cycle. UVerse I believe
was post paid at the time. You needed to pre-pay as their other services.
Maybe it was the other way around, don’t remember. Either way you are stuck
with 2 months of UVerse plus your other services when you combine it. So a
large bill.

Well here comes the fun part, I had that service for maybe a year. I canceled
it and to my surprise nobody seemed to remember that I had an extra month I
already paid for. The system didn’t seem to account for it.

I called numerous times and talked to quite a few different people. I ended up
getting about 700 in credits because I was able to walk people through the
billing who were able to see what was going on.

I thought about taking this to a few attorneys I know since this had to have
impacted a ton a people. Never got around it.

~~~
grecy
I worked in IT for a Telco, and was intimately involved in the billing system,
the multi-million dollar project to move everything to a new billing system,
and then the new billing system.

From experience I can tell you the billing system of a Telco is at least 1000
times more complicated than I ever would have believed. Maybe 100,000 times.
The number of edge cases and complicated stuff it has to deal with is utterly
staggering, and every single one of them is being changed repeatedly by
marketing and project managers and people from all across the company -
products for partial months, discounts, packages, rate changes, non-recurring
charges, changes to non-recurring charges, fees, taxes, government subsidies,
overages, products that have to exist by law but we don't want to sell,
products that customers have because "grandfathered", products that don't
exist in real life but do in the billing system, etc. etc.

Keep in mind the billing system is extremely tightly coupled with the
provisioning system (the one that actually makes the internet lights blink and
the voices actually work), which has ten thousand more edge cases and
complicated configuration than the billing system.

Once you dive into the provisioning system, the billing system looks
straightforward!

My personal bill from the company I worked for often had mistakes, and frankly
I was shocked it didn't have more!

------
awslattery
Curious how much is attributed to the continued adoption of pay-for-delete
(PFD) by these debt buyers/factoring/collection agencies.

I noticed the trend start in 2018. Midland was one of the first to adopt it,
then PRA a few months later.

For those unaware, paying a collection account was of little to not benefit
for improving your credit score. The negative tradeline(s) would still be
present for the typically 7 years (less, depending on type of debt and state
in some cases).

Put another way, once you were in debt, there was little to no incentive
beyond traditional "morals" that these folks would play to for you to pay.
That, and legal action, which is still a highly effective source of revenue
for these outfits.

Most that are sued either ignore legal service, aren't aware of service by
publication in obscure notice ads, or don't show up for the designated day in
court, awarding a default judgment to the collector. From there, they can
garnish, seize, and follow your ass for years, in most cases for a debt they
paid pennies on the dollar for in an excel document auction of sorts.

In the last few years, most of the debt buyers and collection agencies will
delete the negative tradeline when you settle for less or pay in full the
amount owed. This was a previously a "one in a hundred" chance you'd see
discussed ad nauseum on debtor boards; that is, including a pay-for-delete
stipulation in settlement negotiations.

If you're in debt, read up on your rights, and how to play the game with these
folks. Whether you can pay it easily or not, knowledge in the processes is
incredibly valuable.

~~~
ramraj07
Looks like you gave a lot of information but I'm not getting. Firstly, what is
pay for delete? And what are you saying? That you should pay the collectors or
that you shouldn't? And I didn't get the 1-in-100 part either. Completely
lost!

~~~
salawat
The idea is, these collectors informed Credit bureaus of the negative
tradelines. Now, they come after you to see what they can get. If you pay them
back, there is no guarantee that they will inform the credit bureaus you have
paid; essentially, leaving that damage on your report until 7 years from their
time of reporting elapses.

A Pay-For-Delete seems to suggest that you should double check terms you are
being offered for an explicit contract clause that binds them to report the
resolution of the debt to credit bureaus.

~~~
johnmichaeltom
The credit bureau will do one of three things. They will show it as paid in
full, settled(for a lesser amount than the full balance), or they will remove
it(pay for delete). Although the credit bureau will state openly that deletion
is not a possibility unless the account is not yours.

If the debt is disputed as ”not mine” the collection agency will be contacted
to ask for verification of the debt. If the agency says no go ahead and delete
it, well you got your “pay for delete.”

Keep in mind paying a collection off may not increase you score and in some
cases may lower it. Getting it deleted is ideal, but the collection agencies
should not be doing this(its in the agreement the collection agency makes with
the credit bureau).

------
timavr
The situation with debt for average Americans is criminal.

Why lifes and mental health are being ruined, while Fed is just pumping
gazillion of free money into corporations?

Not taking any debt is the best decision the person can make in their
lifetime. In some cases it is OK to do it, when buying a house or using debt
for business purpose from non institutional lender: friends, family etc.

Companies should just write it off. It is just money.

~~~
GarrisonPrime
Spoken like someone who has never run a business.

 _Why_ do you think the government is handing money over to corporations?
Hint: It's not just to give their big business friends some moolah.

~~~
illirik
I'd love to hear the answer, as I have never seen a satisfactory explanation
for this strange phenomenon.

~~~
trevyn
To attempt to prevent collapse of the regime.

------
zxcvbn4038
This is probably the worst time to be paying off old debts. I think that very
shortly the courts are going to be so overwhelmed with debt cases that it’s
going to take years to clear the backlog. For people living paycheck to
paycheck your basically judgement-proof anyway. As long as you pay your income
tax you have noting to worry about. If you owe tax then it’s completely
different story.

~~~
scarface74
It was similar during the last recession. I was underwater on my house and two
other houses. With everyone else walking away it way the perfect time to do
strategic defaults...

1\. Rental property one - walked away. The bank sold it for $70K less than was
owed. I payed $0

2\. Rental property two - owed $130K. Did a short sale for $30K. I paid $1K

3\. My own house. Walked away. It was sold for $70K less than I owed. They
threaten to sue me. I told them that they could either sue me and I would file
for bankruptcy or I could get 1/4 of what I owed from my 401K. They couldn’t
touch my 401K in a lawsuit.

3 years to the day after the foreclosure, I got an FHA loan for 3.5% loan for
a new house.

~~~
site-packages1
This seems...morally questionable?

~~~
scarface74
Was it morally questionable when the same banks did predatory lending that
went bad and got bail outs from the taxpayers?

It’s a business transaction. Businesses default on loans and go bankrupt all
of the time and it’s just part of doing business.

Startups fail all of the time and lose investor money and can come right back
to the trough.

That’s like businesses that say “we are family and we are in this together and
we need to make a shared sacrifice” while they walk away with golden
parachutes and leave the employees with nothing.

Heck we elected a president that filed for bankruptcy 4 times.

Businesses love to talk about morality as long as it benefits them. My last
company had a budget shortfall because of Covid and trotted out the “we are
family” schtick along with a 10% pay cut. The same day of the announcement I
was looking for another job.

3 years later when I did get another loan, the banks saw my foreclosures and
short sales and were more than happy to give me a mortgage that was 50% more
than my prior one. It was just business to them too.

~~~
opo
>...3 years later when I did get another loan, the banks saw my foreclosures
and short sales and were more than happy to give me a mortgage that was 50%
more than my prior one. It was just business to them too.

FHA loans are guaranteed by the the federal government. During the next
recession if you default on this loan because you no longer want to pay the
loan, it will be the rest of us taking the loss, not the bank. So, not very
surprising that the bank was willing to give you the loan.

~~~
scarface74
That’s not the way insurance _should_ work. You pay private mortgage
insurance. The entire idea of insurance is that it should be priced to take
losses into account and break even.

Btw, none of the other loans were “conforming” ie government backed.
Especially the investment property. The banks should also take risk into
account when deciding interest rates. The government had no reason to be on
the hook for non conforming loans.

~~~
chordalkeyboard
> The entire idea of insurance is that it should be priced to take losses into
> account and break even.

insurance needs to make a profit or there is no incentive for investors to
risk the loss of capital or assume the opportunity cost (meaning they could
invest elsewhere). The person selling the insurance exchanges gives up a known
regular amount to protect themselves against an unpredictable potential loss.
The insurer accepts the risk of paying the unpredictable future cost in order
to receive known predictable regular income. If the expected value of the
transaction is zero then the insurer is essentially risking their capital for
nothing.

~~~
scarface74
The FHA is a _government_ backed program. PMI goes to the government.

------
Simulacra
When companies know that people have extra cash, they go after that cash.
Whether it's a stimulus check or UBI, companies are not moral beings, they are
profit driven machines.

~~~
lopmotr
Collecting debts is a moral action though, isn't it? It's part of the system
that keeps society working for everyone.

I've had people owe me money. It's not pleasant when you know you've basically
given money to them for free while they can laugh in your face. Sometimes I've
got it back via debt collectors. It's a good thing.

Maybe you don't like predatory lending, but that's not the same as trying to
help out somebody who's having hard times then getting ripped off by them. Not
all debtors are some kind of helpless victim of life's unfairness. Often
they're just selfish bastards trying to take advantage of whoever they can.

~~~
alejohausner
Actually, morality and debt do not intersect at all.

Graeber covers this very point in his book "Debt". It's fascinating.

We all have moral obligations to the people around us: to our families, our
friends, our neighbors, the people in our lives. We are generous to our
friends, and moral obligations will make them return our generosity.

However, when you borrow money, you are making a gamble. If you manage to
repay the loan, you will be allowed to borrow again. If you fail to repay, you
will lose something: either the collateral (as in a mortgage), or low interest
payments (if you become a "bad risk"), or the right to borrow at all (if you
declare bankruptcy, you will have trouble borrowing for 7 years).

The lender is also making a calculated bet. If they ask for collateral, their
risk is lower, and they will charge less interest. If they lend you money
without collateral (eg a credit card), the interest will be higher. The very
fact that unsecured loans charge higher rates means that the lender expects,
on average, to make a profit, because the higher interest will make up for the
occasional default.

There is no personal relationship between lender and borrower. There is no
moral obligation. It's just business and probabilities.

Unfortunately, people confound the two kinds of obligations, personal and
financial. Lenders benefit from this confusion, because borrowers will have
trouble being cold-blooded about the agreement they are entering into.

~~~
harryh
This is wrong.

High trust societies where individuals can be expected to fulfill their
obligations tend to prosper. Low trust societies where individuals cannot be
trusted in this way tend to languish.

Paying back debts according to an agreed upon timetable is one of the
important ways that high trust societies are built.

~~~
lupire
The Mortgage Bankers Association defaulted on its mortgage.

Everyone from the bankers themselves to the POTUS knows that paying off debts
is only for suckers.

Let the billionaires pay their debts and their taxes first.

[https://en.wikipedia.org/wiki/Mortgage_Bankers_Association#D...](https://en.wikipedia.org/wiki/Mortgage_Bankers_Association#Default_on_headquarters_loan)

~~~
Woberto
Which is why our society is languishing

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loktarogar
The short term gain for many will be enormous, but the long term effect might
be devastating on American society.

~~~
newfriend
Sorry, are we implying that it's better for society if people don't pay their
debts?

~~~
monadic2
Yes, 100%. I highly, highly recommend the book "Debt: The First 5,000 Years".
Society has repeatedly been stabilized with mass debt forgiveness many times
throughout history.

I'm no religious person, but there certainly seems to be a certain theme about
debt forgiveness...
[https://www.openbible.info/topics/debt_forgiveness](https://www.openbible.info/topics/debt_forgiveness)

Debt is pretty central to most problems in society, actually.

~~~
syshum
The problem with your attempts to equate modern debt with debt of the past is
2 fold

1\. Historical debt like referred to in the book that destabilized society was
generational debt, passed on in the family. Unlike modern debt where your debt
dies with you.

2\. Historical debt there was no concept of bankruptcy in the legal systems of
that time. There was also debtor prison and indentured servitude to pay off
debt.

Those 2 factors are what destabilized societies and caused the need for mass
debt forgiveness, we solved those by changing the lender risk metric, and
allowing for a case by case relief valve called bankruptcy

~~~
ridgeguy
Does modern debt actually die with you? I think creditors can sue your estate.

~~~
ls612
Yes. If your parents die in debt creditors can go after the estate but they
can’t go after you for anything. At least in the US.

~~~
monadic2
This is disingenuous as it pretends that the capability of debt creditors
matches that of their behavior.

~~~
syshum
It is not disingenuous, a person has no legal liability or obligations to pay
a debt they did not incur

It is up to you to understand and know the law, or hire someone that does

------
haram_masala
The alarming thing about this is that there are millions of people for whom an
extra $600/week is “flush.”

~~~
koolba
$600/week is $30K/year annualized. Minimum wage ranges as low as $240/week
depending on the State, so for many coming from those jobs this has been a
bumper couple of months.

~~~
dehrmann
While I applaud congress for moving fast in March and April to get money out
to people, there were bound to be holes in the act, and paying people more
while on unemployment than they were previously making is one of them. It's
not that I see it as a disincentive to work, but something feels very unfair
about it, making for bad optics. I'm surprised the Democrats are pushing so
hard for $600 without the caveat that unemployment won't pay more than you
were previously making. Seems like a pretty easy compromise.

~~~
maximente
depends on one's priorities. that "extra" cash likely prevented an even worse
pandemic outcome in the US, as paying people to say home (which is what this
amounted to, essentially) was among the best public health outcomes that the
US could have had engineered. a rare bug-turned-feature outcome.

~~~
refurb
As far as I understand the $600 was for people who were on unemployment, so
they had no job to go to.

------
malchow
A great startup that I've been telling folks about is Seth Goldstein's
Spartacus, which does (as far as I've experienced) a great job of removing
your addresses from the internet. [1]

[1] [https://spartacus.com](https://spartacus.com)

~~~
rideontime
Can you elaborate on that? Because the site for Spartacus sure doesn't. I
couldn't find any explanation of their "data broker deletion" detailed enough
for me to want to give them money.

e: Oh, cool, they're going to solve the problem with blockchain. Hard pass.
[https://cdn.spartacus.com/white-
papers/fiduciarydatabanking....](https://cdn.spartacus.com/white-
papers/fiduciarydatabanking.3.7.2019.pdf)

------
tempsy
Conversely, this must mean that payday loan shops are dying...so yay?

------
hotpockets
There is a real opportunity for society to learn a lasting lesson here, mainly
how relatively little is gained for the economy from extra cash (tax cuts) to
the already flush.

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fallingfrog
Just look at how much benefit the economy is getting from a relatively modest
boost to the lowest incomes, which gets spent immediately or goes to reducing
crippling debt, versus tax breaks and subsidies for the wealthy, which get
plowed into asset bubbles and expensive wine.

~~~
lupire
Paying off old debt doesn't help the economy. It's just a wealth transfer from
poor to wealthy.

~~~
fallingfrog
It does help the person in debt though. Have you ever had that kind of debt?
Where they call you ten times a day? You can’t get an apartment if they’re
going to run your credit score. It hurts your relationships and makes you
depressed. Owing a few hundred dollars to a collection agency can really
affect your life in a negative way.

~~~
fallingfrog
It was because of an overdraft fee, if you’re wondering- I checked my account
balance at an atm machine, and it came up $1.50. But, unbeknownst to me the
machine then charged me 2 dollars for checking. That was the last day of the
month, so then I got hit with an extra overdraft fee, so now I was down about
100 dollars. I refused to pay it. They continued charging me overdraft fees
every month for a few years then sent the bill to a collections agency, it was
over a thousand dollars by then. This was all going on in 2008 while I was
watching every J.P. Morgan banker get away scot free for almost tanking the
world economy. I ended up paying the whole thousand dollars so I could get an
apartment with my girlfriend.

About 10 years later I got sent 25 bucks as part of a class action lawsuit
against the bank. Thanks, I guess?

