In our last post, we explored some of the forms of creditor harassment that some people have had to face and many collectors have been forced to dish out. Many of the practices are illegal, and there is one major reason why creditors engage in harassing behavior. Desperation.
So how does this desperation get so bad that it leads so many into creditor harassment? Selling debts. Consumers’ debts will be sold to various parties at various times. Chances are, if someone keeps calling you about the credit card that was closed three years ago it isn’t the bank that issued it.
With large amounts of accounts, and continued efforts to make more, most original creditors will only spend a small amount of time and resources into doing their own collections. Once they feel their own efforts aren’t worth it, they will sell the debt.
A typical transaction may be $1 million dollars of debt for $50,000. The more of that debt they collect the bigger profit they make. Often, if the buyers find collecting too challenging they sell the debt again. The bill collector that winds up calling you might be four times removed from the original debt. These buyers assume they can recover a certain amount, and when they can’t, they resort to creditor harassment. And the more times that bill changes hands, the worse and more confusing things can get.
Ironically, the more severe the creditor harassment is the more power that a consumer can have. When collectors start hitting below the belt, chances are they are desperate enough to negotiate a lower payment. Getting names, callback numbers and even times when you can assure you can talk to the same person about settling the debt can prompt a more civilized exchange and help get creditors off your back once and for all.
Of course, it is the responsible thing to do to discuss decisions regarding debt and creditor harassment with an attorney who specializes in that field.
Newsweek, The Daily Beast: “America’s Abusive Debt Collectors,” Gary Rivlin, Jan. 1, 2012