You won’t likely shed any tears over this: Being a debt collector is harder than ever.While most Americans want to get out of debt using a debt management plan or debt consolidation, many can’t afford the payments right now. This complicates the debt collection process.
Debt collectors aren’t dealing with deadbeats ducking obligations–they’re trying to get blood from a stone at a time of record debt.
Debt Collection Agencies in Hard Times
Originally reported by the Associated Press, debt collectors have more work than ever. They also have fewer opportunities to actually collect.
Some firms are satisfied with a debt management plan including payments as low as $5 or $10 per month. While this might allow the collection agency to report payments, it does little to help Americans get out of debt.
Further, Americans are less capable than ever of getting out of debt. With unemployment high and salaries low, the old “I don’t have the money” line isn’t an excuse–it’s a hard reality for millions of Americans.
Debt consolidation and a debt management plan won’t do any good if the debtor simply doesn’t have any spare cash. For the growing debt collection industry, this is a case of “water, water everywhere / but not a drop to drink.”
More Complaints About the Debt Collection Process
In addition to a harder collection environment, the debt collection process itself is under attack. The Federal Trade Commission gets more complaints about debt collectors than any other industry.
In tough economic times, debt collectors, who work on commission, are forced to engage in more and more desperate means to collect outstanding debt.
Changes in the Debt Collection Process
According to the AP article, some decades ago debt collectors averaged 30 per cent recovery on outstanding debt. Now the number hovers closer to 20.
Perhaps most striking is the change in types of debt collected. In times past, debt collectors called either from the original debtor or from a single third-party collection agency. Now there’s a booming industry dedicated to acquiring debt third- or fourth-hand for pennies on the dollar, often after the customer’s legal obligation to repay the debt has long since lapsed.
Common Consumer Complaints Against Debt Collectors
The Fair Debt Collection Practices Act outlines rights for consumers trying to get out of debt. The law forbids a number of unfair and harassing practices by aggressive debt collectors, but three are particularly heinous:
- Not information a debtor of his rights in writing.
- Calling repeatedly.
- Providing false information regarding the debt.
Debtors can turn the tables on creditors, collecting $1,000 for every infraction of the Fair Debt Collection Practices Act. Still, with debt collection a lucrative business, many third-party collection agencies can afford to play fast and loose with the law. Especially when times are hard and so is collection, the market might actually incentivise some of the worst practices of debt collection.
How to Handle Debt Collector Calls
Anyone being harassed by abusive debt collectors should begin all conversations with “This call is being recorded,” record the call, take notes and report the infractions to the Federal Trade Commission. Every time debt collectors violate collection law, you owe them $1,000 less.