At this very moment, as you read this, a computer network has created your profile. It has stored images of you and your family-from your driver's license photo, from websites you have posted pictures on, from newspaper articles about you or your business, from editorials you wrote to a newspaper or websites. It has your tax records. The same network is keeping an eye on your credit file, your FICO score, your child's school curriculum. The network knows what you bought last week, from your credit card purchases, from your previous purchasing patterns. It knows your neighbors, what cars they drive, what your home is worth, and what your favorite television channel is. It is watching your every move, with evil intent.
This is real.
It is happening.
NOW.
It's called a neural network, and it is the latest tool designed by major lending companies to drain the last dollop of green from your veins. After that, they will happily leave your bloated corpse rotting by the roadside and move on to the next target. You will note one reference below is from 96. I can only imagine what they have done since, but I fear it is only more thorough and of even greater concern.
When you receive a call tomorrow from a friendly and helpful collection agent, you might be finishing a shower, preparing for work. If you work overnights, you may be preparing to rest. You might be unemployed and searching for work. You may be a grandparent, who is interrupted by a ring on your telephone.
"Hello, is this Mr(s)-----?"
You drop your newspaper to take the call, knowing full well a collections specialist is on the phone. You stare out the window at the wreckage of all you have tried to accomplish, before the waves became too high. Your financial picture is in shambles, and you can see it all too clearly. No matter if it is YOUR fault, as so many will happily tell you, or the result of a layoff, medical tragedy, or simply a miscalculated risk. You see all these things.
They do not.
HERE is what they see:
As the collection specialist is offering to waive a month's payment, or is threatening you with immediate summary judgement, an onscreen program shows this:
Photos of you and your family.
A map of your street and home, perhaps with a blown up graphic of the very kitchen or bedroom you currently sit in.
A list of your hobbies and interests, previous and past milestones like marriages and divorces, children born and parents deceased.
A graph of your income and expenses, clickable to analyze your spending and payment history. A graph of your family's interests, expenses, and hobbies.
A computer model of people in similar situations, outlining what responses you are likely to give the collections agent, based on statistical models built from similar situations, with similar people all over the country from recent weeks.
An animated graphic of a "gas tank" that shows your current debts, the principal you have paid, the interest you have paid, and MOST IMPORTANT OF ALL: the amount of future interest you will LIKELY pay. This is the most important object on the screen, and it will determine your entire future, as far as this phone call is concerned.
If you live in a high income neighborhood where the stigma of BK runs strong, they will know-and will use it. If you are in the middle of nowhere, without neighbors, and there is no stigma at all they will know that. If you are likely to pay no more on their debt, they will know. If you can be depended on for occasional payments, they will know. And they will use this information to remove your last dollar, at the moment before you realize utter destruction on yourself and your family.
They might even have street photos of your neighborhood-or house.
It's not sci-fi, folks. It's real. I will include links after this, showing just how real it is.
I have devoted the last week or so to learning everything I can about BK, credit companies, debt resellers, FICO, and every aspect of the business, from initial applications for debt to the final chargeoffs of bad debt and beyond.
People in the Midwest should be particularly interested. Your previously charged off (deducted for tax reasons) debt is especially valuable. Debt resell markets are the secondary collections agencies who might contact you long after you have defaulted. They PURCHASE the already charged off debts from main lenders. They pay a fee to try to collect the debt, then might or might not share anything they receive from the original account holders. People in the MIDWEST-for one reason or another-are more valuable. Likely, there is a perception (perhaps reality) that Midwesterners are more likely to satisfy an old debt, even after BK or chargeoffs. Thus a debt portfolio that is mostly from accounts in the Midwest commands a significant premium. Collection agencies pay MORE to own your debt-so they can call and harass you. Because you are statistically more likely to pay. Don't believe me?
From the link below this quote, a major reseller of debts:
The portfolio’s geographic concentration in Midwestern states makes this one of the most desirable consumer charge-off portfolios to reach the market.
I am not normally a paranoid conspiracy theory type of person, but the tip of this iceberg is very compelling.
I don't have tons of time to explore it and will do so as I can, but there appears to be plenty to consider. In the references below, you will see indications of this "neural network", and hints to what it means. I will follow up as I can, and I hope others join the search.
The main thing I gather is that they are statistically modeling us based on challenge/response theory to determine how close to the edge (BK) they can take us. More important, though, is how long they can KEEP us there. The credit companies make a vast sum of money from people who have been brought to the edge and refuse to surrender. Look at the "aging" credit on the Advanta link I provide. this is a gigantic source of pure revenue, long past the principal has been paid off, and accounts for massive shareholder gains.
The key for the CC companies, though, is maximizing the money they make from taking us to the 30% interest rate (or higher) and holding us there as long as possible.
The comptroller report I reference, link below, discusses the idea of modeling your behaviour-PREDICTING WHAT YOU DO-in any given collection scheme. It is NINETY-FIVE percent accurate. It is designed to take your last dollars, to tell you there is hope, to give you ONE LAST chance to rectify things-long after any real hope has died. It is to get one more dollar before you declare BK, to maximize CC company profits.
While you are up all night worrying about where the money comes from, these folks are sleeping comfortably. They know that tomorrow their computer models will, with a 95% accuracy rate, deprive you and your family of diaper money, food, and air conditioning.
Behavioral or Performance Scoring
Behavioral scoring is a technique used to segment a portfolio of existing
accounts based on the past behavior of the borrowers. Banks use behavioral
scores for collection strategies, authorization requirements, credit line
Comptroller’s Handbook 121 Credit Card Lending
assignments, and renewal decisions. This scorecard predicts which accounts
will become delinquent within the next six to 12 months. Behavioral scoring
relies principally on credit line usage patterns (revolving credit) and payment
patterns. Behavioral scoring models consider elements like payment history,
the number of times the payment has been greater than the minimum
required, delinquency history, and use of the cash advance option. Credit
bureau input may also be used.
Emerging neural net technology has enhanced the effectiveness of behavioral
modeling. Neural nets are computer programs that can sort through
mammoth amounts of data and spot patterns, mimicking human logic
patterns. Neural nets predict better than current behavioral scoring models
the accounts that can handle an increase in credit limits and those that cannot.
The principal advantage of a neural net is that, like humans, it learns from
previous experience. This knowledge is then factored into subsequent
decisions.
Collections Scoring
Other scoring models are devoted mainly to collection activities. They
include:
Collection scoring – These systems show the likelihood that collection efforts
will succeed. They help a bank allocate collection resources efficiently.
Payment projection scoring – These systems identify the likelihood that a bank
will receive a payment on a delinquent account within six months. The
collections area can use this information to determine which accounts should
be “worked.”
Recovery scoring – These systems identify the likelihood of recoveries after
charge off. The collections area can use these systems to minimize charge-off
losses.
Below: Advanta report, detailing the money they charegeoff for taxes. Note that there appear to be NO losses from principle that has gone unpaid. It is PURE INTEREST, not LOSS at all.
Reselling debt
to protect agencies who buy debt
Someone who has time or is bored, please help me investigate this further. It won't help us at this stage, but it sure as hell might help us in the future, post BK days.
This is real.
It is happening.
NOW.
It's called a neural network, and it is the latest tool designed by major lending companies to drain the last dollop of green from your veins. After that, they will happily leave your bloated corpse rotting by the roadside and move on to the next target. You will note one reference below is from 96. I can only imagine what they have done since, but I fear it is only more thorough and of even greater concern.
When you receive a call tomorrow from a friendly and helpful collection agent, you might be finishing a shower, preparing for work. If you work overnights, you may be preparing to rest. You might be unemployed and searching for work. You may be a grandparent, who is interrupted by a ring on your telephone.
"Hello, is this Mr(s)-----?"
You drop your newspaper to take the call, knowing full well a collections specialist is on the phone. You stare out the window at the wreckage of all you have tried to accomplish, before the waves became too high. Your financial picture is in shambles, and you can see it all too clearly. No matter if it is YOUR fault, as so many will happily tell you, or the result of a layoff, medical tragedy, or simply a miscalculated risk. You see all these things.
They do not.
HERE is what they see:
As the collection specialist is offering to waive a month's payment, or is threatening you with immediate summary judgement, an onscreen program shows this:
Photos of you and your family.
A map of your street and home, perhaps with a blown up graphic of the very kitchen or bedroom you currently sit in.
A list of your hobbies and interests, previous and past milestones like marriages and divorces, children born and parents deceased.
A graph of your income and expenses, clickable to analyze your spending and payment history. A graph of your family's interests, expenses, and hobbies.
A computer model of people in similar situations, outlining what responses you are likely to give the collections agent, based on statistical models built from similar situations, with similar people all over the country from recent weeks.
An animated graphic of a "gas tank" that shows your current debts, the principal you have paid, the interest you have paid, and MOST IMPORTANT OF ALL: the amount of future interest you will LIKELY pay. This is the most important object on the screen, and it will determine your entire future, as far as this phone call is concerned.
If you live in a high income neighborhood where the stigma of BK runs strong, they will know-and will use it. If you are in the middle of nowhere, without neighbors, and there is no stigma at all they will know that. If you are likely to pay no more on their debt, they will know. If you can be depended on for occasional payments, they will know. And they will use this information to remove your last dollar, at the moment before you realize utter destruction on yourself and your family.
They might even have street photos of your neighborhood-or house.
It's not sci-fi, folks. It's real. I will include links after this, showing just how real it is.
I have devoted the last week or so to learning everything I can about BK, credit companies, debt resellers, FICO, and every aspect of the business, from initial applications for debt to the final chargeoffs of bad debt and beyond.
People in the Midwest should be particularly interested. Your previously charged off (deducted for tax reasons) debt is especially valuable. Debt resell markets are the secondary collections agencies who might contact you long after you have defaulted. They PURCHASE the already charged off debts from main lenders. They pay a fee to try to collect the debt, then might or might not share anything they receive from the original account holders. People in the MIDWEST-for one reason or another-are more valuable. Likely, there is a perception (perhaps reality) that Midwesterners are more likely to satisfy an old debt, even after BK or chargeoffs. Thus a debt portfolio that is mostly from accounts in the Midwest commands a significant premium. Collection agencies pay MORE to own your debt-so they can call and harass you. Because you are statistically more likely to pay. Don't believe me?
From the link below this quote, a major reseller of debts:
The portfolio’s geographic concentration in Midwestern states makes this one of the most desirable consumer charge-off portfolios to reach the market.
I am not normally a paranoid conspiracy theory type of person, but the tip of this iceberg is very compelling.
I don't have tons of time to explore it and will do so as I can, but there appears to be plenty to consider. In the references below, you will see indications of this "neural network", and hints to what it means. I will follow up as I can, and I hope others join the search.
The main thing I gather is that they are statistically modeling us based on challenge/response theory to determine how close to the edge (BK) they can take us. More important, though, is how long they can KEEP us there. The credit companies make a vast sum of money from people who have been brought to the edge and refuse to surrender. Look at the "aging" credit on the Advanta link I provide. this is a gigantic source of pure revenue, long past the principal has been paid off, and accounts for massive shareholder gains.
The key for the CC companies, though, is maximizing the money they make from taking us to the 30% interest rate (or higher) and holding us there as long as possible.
The comptroller report I reference, link below, discusses the idea of modeling your behaviour-PREDICTING WHAT YOU DO-in any given collection scheme. It is NINETY-FIVE percent accurate. It is designed to take your last dollars, to tell you there is hope, to give you ONE LAST chance to rectify things-long after any real hope has died. It is to get one more dollar before you declare BK, to maximize CC company profits.
While you are up all night worrying about where the money comes from, these folks are sleeping comfortably. They know that tomorrow their computer models will, with a 95% accuracy rate, deprive you and your family of diaper money, food, and air conditioning.
Behavioral or Performance Scoring
Behavioral scoring is a technique used to segment a portfolio of existing
accounts based on the past behavior of the borrowers. Banks use behavioral
scores for collection strategies, authorization requirements, credit line
Comptroller’s Handbook 121 Credit Card Lending
assignments, and renewal decisions. This scorecard predicts which accounts
will become delinquent within the next six to 12 months. Behavioral scoring
relies principally on credit line usage patterns (revolving credit) and payment
patterns. Behavioral scoring models consider elements like payment history,
the number of times the payment has been greater than the minimum
required, delinquency history, and use of the cash advance option. Credit
bureau input may also be used.
Emerging neural net technology has enhanced the effectiveness of behavioral
modeling. Neural nets are computer programs that can sort through
mammoth amounts of data and spot patterns, mimicking human logic
patterns. Neural nets predict better than current behavioral scoring models
the accounts that can handle an increase in credit limits and those that cannot.
The principal advantage of a neural net is that, like humans, it learns from
previous experience. This knowledge is then factored into subsequent
decisions.
Collections Scoring
Other scoring models are devoted mainly to collection activities. They
include:
Collection scoring – These systems show the likelihood that collection efforts
will succeed. They help a bank allocate collection resources efficiently.
Payment projection scoring – These systems identify the likelihood that a bank
will receive a payment on a delinquent account within six months. The
collections area can use this information to determine which accounts should
be “worked.”
Recovery scoring – These systems identify the likelihood of recoveries after
charge off. The collections area can use these systems to minimize charge-off
losses.
Below: Advanta report, detailing the money they charegeoff for taxes. Note that there appear to be NO losses from principle that has gone unpaid. It is PURE INTEREST, not LOSS at all.
Reselling debt
to protect agencies who buy debt
Someone who has time or is bored, please help me investigate this further. It won't help us at this stage, but it sure as hell might help us in the future, post BK days.
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