What Kind Of Person Becomes A Debt Collector

[backtoschool]

The banks can extend credit because they are creating the credit. They don't stash $10,000 in a vault somewhere when they create a credit limit for a consumer. What happens is the consumer spends $100 on his cc. The bank pays the vendor $95 ($100 - fees) by borrowing money overnight for less than 1% interest rate. The consumer starts paying the bank back $20 per month which the bank applies maybe $18 to the balance and $2 (which more than covers their borrowing rate) to interest. Basically the bank is making money quite handsomely on each transaction.

If you consider this process occurs millions of times each day and the default rate remains relatively low it makes sense for the bank to offer credit to people it may well never collect from.

If there are any brilliant economists out there who can explain this better than I tried please help!

As to the bank considering the human impact of their collection efforts it's really quite simple. Everyone who enters into a contractual agreement with the bank is an adult who should understand this is not a personal situation. It's purely business. The debtor agreed to pay the debt and the creditor agreed to extend the credit and collect the debt. There really is no room for emotion in this situation.

When you represent a bk client who includes his Aunt Melba as a creditor because she loaned him 1/2 her life savings so he could start his now failed Amsoil franchise do you consider the human impact that event has on Aunt Melba? Or is she just a name on the creditors matrix?

This is an excellent generalization of how credit cards work except for a few missed items:

1. The bank also collects 1-4% of each transaction up front from the vendor.

2. If you carry a balance on your card, then then in a $20 payment, the bank is applying about $15 towards interest and fees and $5 towards your balance.

[OhioFiler]

Indeed, the economy doews not work on any sort of moral values, business also essntially has no values or ethics at this point. Filing BK is a business decision, lending money is a business decision.

All that being said, it "business" is no excuse to act like scum. Even if someone has to include Grandma Mabel on his matrix because that is how BK works (you can't do payments to insiders), I hope he has the human decency to pay her something after the BK closes.

As to banks, they have no human decency, and they don't have to. Back to my motto" never trust anyone who would lend you money". That way, you don't have to sit around and argue with a creditor.

No they don't and I for one am grateful. At least this way we all have the same rules to play by. If I need human decency from an organization I go to church!

[leena]

We don't have humanity clauses in our contracts. We can't inject "make it right" into the court system without writing laws. The bankruptcy laws are the "make it right" when it comes to debt but until the debtor files for protection there is no "make it right". It's only business.

I think it helps everyone to look at the collection process without emotion and moral. Dealing with the collectors is much easier without the belief that it isn't right.

Indeed, the economy doews not work on any sort of moral values, business also essntially has no values or ethics at this point. Filing BK is a business decision, lending money is a business decision.

All that being said, it "business" is no excuse to act like scum. Even if someone has to include Grandma Mabel on his matrix because that is how BK works (you can't do payments to insiders), I hope he has the human decency to pay her something after the BK closes.

As to banks, they have no human decency, and they don't have to. Back to my motto" never trust anyone who would lend you money". That way, you don't have to sit around and argue with a creditor.

[OhioFiler]

I think what you are getting at, OF is the essentially inhumane nature of the this economy. It is true, but true does not make it right.

We don't have humanity clauses in our contracts. We can't inject "make it right" into the court system without writing laws. The bankruptcy laws are the "make it right" when it comes to debt but until the debtor files for protection there is no "make it right". It's only business.

I think it helps everyone to look at the collection process without emotion and moral. Dealing with the collectors is much easier without the belief that it isn't right.

[leena]

The banks can extend credit because they are creating the credit. They don't stash $10,000 in a vault somewhere when they create a credit limit for a consumer. What happens is the consumer spends $100 on his cc. The bank pays the vendor $95 ($100 - fees) by borrowing money overnight for less than 1% interest rate. The consumer starts paying the bank back $20 per month which the bank applies maybe $18 to the balance and $2 (which more than covers their borrowing rate) to interest. Basically the bank is making money quite handsomely on each transaction.

If you consider this process occurs millions of times each day and the default rate remains relatively low it makes sense for the bank to offer credit to people it may well never collect from.

If there are any brilliant economists out there who can explain this better than I tried please help!

As to the bank considering the human impact of their collection efforts it's really quite simple. Everyone who enters into a contractual agreement with the bank is an adult who should understand this is not a personal situation. It's purely business. The debtor agreed to pay the debt and the creditor agreed to extend the credit and collect the debt. There really is no room for emotion in this situation.

When you represent a bk client who includes his Aunt Melba as a creditor because she loaned him 1/2 her life savings so he could start his now failed Amsoil franchise do you consider the human impact that event has on Aunt Melba? Or is she just a name on the creditors matrix?

I think what you are getting at, OF is the essentially inhumane nature of the this economy. It is true, but true does not make it right.

[OhioFiler]

Believe it or not, there are very few people who intentionally set out to go in debt with no intention of repaying it. There are a lot of people who, when they get a credit card in the mail with a $10,000 credit line, feel rich. So they go right out and spend their new-found "wealth".

You can argue all day long and never get to a conclusion about who's more stupid: The borrower for spending it or the credit card company for extending it. The way I see it, credit card companies and banks are financially sophisticated to the nth degree. The doofus that they sent the credit card to has a G.E.D. and was probably struggling with day-to-day expenses before he went into debt with the credit card.

So you have to ask yourself: "Why did this bank, knowing what they must have known, extend this guy a credit line equal to 1/2 his annual salary when he was barely making his day-to-day bills?" The only logical answer to that is that they must have hoped that while he was on that interest/penalty treadmill that they knew he would end up on, pay back more than he borrowed. The more the better. What does this do his ability to provide for his family? Who cares, as long as he pays his bills.

People who have crashed and burned financially are vulnerable. They are ashamed that they can't pay their debts. Debt collectors know this and they leverage it. They don't consider for one minute the human impact of their efforts. It's all bottom line to them, just like it is for their bosses, the banks.

The banks can extend credit because they are creating the credit. They don't stash $10,000 in a vault somewhere when they create a credit limit for a consumer. What happens is the consumer spends $100 on his cc. The bank pays the vendor $95 ($100 - fees) by borrowing money overnight for less than 1% interest rate. The consumer starts paying the bank back $20 per month which the bank applies maybe $18 to the balance and $2 (which more than covers their borrowing rate) to interest. Basically the bank is making money quite handsomely on each transaction.

If you consider this process occurs millions of times each day and the default rate remains relatively low it makes sense for the bank to offer credit to people it may well never collect from.

If there are any brilliant economists out there who can explain this better than I tried please help!

As to the bank considering the human impact of their collection efforts it's really quite simple. Everyone who enters into a contractual agreement with the bank is an adult who should understand this is not a personal situation. It's purely business. The debtor agreed to pay the debt and the creditor agreed to extend the credit and collect the debt. There really is no room for emotion in this situation.

When you represent a bk client who includes his Aunt Melba as a creditor because she loaned him 1/2 her life savings so he could start his now failed Amsoil franchise do you consider the human impact that event has on Aunt Melba? Or is she just a name on the creditors matrix?

[leena]

You can argue all day long and never get to a conclusion about who's more stupid: The borrower for spending it or the credit card company for extending it. The way I see it, credit card companies and banks are financially sophisticated to the nth degree. The doofus that they sent the credit card to has a G.E.D. and was probably struggling with day-to-day expenses before he went into debt with the credit card.

So you have to ask yourself: "Why did this bank, knowing what they must have known, extend this guy a credit line equal to 1/2 his annual salary when he was barely making his day-to-day bills?" The only logical answer to that is that they must have hoped that while he was on that interest/penalty treadmill that they knew he would end up on, pay back more than he borrowed. The more the better. What does this do his ability to provide for his family? Who cares, as long as he pays his bills.

People who have crashed and burned financially are vulnerable. They are ashamed that they can't pay their debts. Debt collectors know this and they leverage it. They don't consider for one minute the human impact of their efforts. It's all bottom line to them, just like it is for their bosses, the banks.

You can have a lot more than a GED, and make a good bit more than 20K and still get stupid enough to think of a big credit limit as winning the lottery. My highest limit ever was 7k. I was back in collage when I got that limit and having job issues and expenses here and there popping up, and that card and all the other smaller ones were just to readily available, to easy. I was working or in school or studying constantly and fell prey to recreational shopping, using credit cards for groceries, you name it. The dumbest thing of all is that for all the debt I ended up in, I had very little to show for it, no big spendy luxury items. I swear most of my credit debt was spent on some type of food or clothes, nice food and clothes usually, but not crazy nice. I was educated, intelligent enough, and still got into trouble just because I did not keep firmly in my mind that you cannot trust anyone who lends you money.

I think that a lot of debt collectors are motivated by needing work, and some/many also by the idea that the debtors are all/mostly just deadbeats/idiots/general scum and they, the collectors are there to make the stupid/evil debtors live up to their "rightful obligations". Many years ago I worked in a bank, and I remember the talk about people who had bad credit, owed a debt, whatever. Very smug and superior that staff was, not seeming to realize that millions of people-the smug and superior ones included are one job loss or serious illness away from being a "deadbeat" if they owe credit card debt, or a mortgage or car that is too big a stretch.

[MSbklawyer]

I've not had the collector's calls yet, but know they will come. I have been reading this thread trying not to duplicate this info...there is an ad in the local free ad paper here in Indy for people who want a job as a DEBT COLLECTOR. States it is a pay-for-performance environment with base pay plus a very rewarding MONTHLY COMMISSION...Indiana's 22nd fastest growing private company! Work Smart and Earn Up to $70,000/yr. One of the qualifications is the Ability to follow and/or work from a script. Went to the website out of curiosity "entertaining", but not near as interesting as these posts...especially from MSbklawyer and BigJohn. They have brought a LOL to an otherwise dreary subject.
WaitNSee

Believe it or not, there are very few people who intentionally set out to go in debt with no intention of repaying it. There are a lot of people who, when they get a credit card in the mail with a $10,000 credit line, feel rich. So they go right out and spend their new-found "wealth".

You can argue all day long and never get to a conclusion about who's more stupid: The borrower for spending it or the credit card company for extending it. The way I see it, credit card companies and banks are financially sophisticated to the nth degree. The doofus that they sent the credit card to has a G.E.D. and was probably struggling with day-to-day expenses before he went into debt with the credit card.

So you have to ask yourself: "Why did this bank, knowing what they must have known, extend this guy a credit line equal to 1/2 his annual salary when he was barely making his day-to-day bills?" The only logical answer to that is that they must have hoped that while he was on that interest/penalty treadmill that they knew he would end up on, pay back more than he borrowed. The more the better. What does this do his ability to provide for his family? Who cares, as long as he pays his bills.

People who have crashed and burned financially are vulnerable. They are ashamed that they can't pay their debts. Debt collectors know this and they leverage it. They don't consider for one minute the human impact of their efforts. It's all bottom line to them, just like it is for their bosses, the banks.

[WaitNSee]

I would take a job cleaning toilets, picking up garbage before I would take a job as a debt collector. That is my opinion, but that is how I feel about the people.

I've not had the collector's calls yet, but know they will come. I have been reading this thread trying not to duplicate this info...there is an ad in the local free ad paper here in Indy for people who want a job as a DEBT COLLECTOR. States it is a pay-for-performance environment with base pay plus a very rewarding MONTHLY COMMISSION...Indiana's 22nd fastest growing private company! Work Smart and Earn Up to $70,000/yr. One of the qualifications is the Ability to follow and/or work from a script. Went to the website out of curiosity "entertaining", but not near as interesting as these posts...especially from MSbklawyer and BigJohn. They have brought a LOL to an otherwise dreary subject.
WaitNSee

[MiSSMaGoo]

Well...I would not sneez at 50k a year either. Thats what both myself and wife make together. I wish mine were helpful and not asshats. Some are but if there if nothing to give there is nothing to give.

I got layed off last year (hence my bk situation)and was getting ready to take on a diff carreer. Debt collections was not even on the list.

Yeah , I can't complain about the pay. I work 30 hours a week and pick my hours so that works well with having 3 kids under 4. I think it depends on what collections agency/department you work for though. I don't work at an agency, I work for a bank so we only deal with account 6months or less past due.

[MiSSMaGoo]

What kind of people work for a debt collector? Two kinds - (1) desperate people who need a job - any job - with regular income to keep a roof over their heads and food on the table, and (2) sociopathic people who think crushing others under their verbal heels and making people cry is an incredibly entertaining way to spend their day and make some money to boot.

Wow I didn't read through everyone's post until now. This is very insulting. And yes I work to keep a roof over my head but would you rather have people that work for their money or use government money to get by? I don't like making people cry and I wouldn't take another job (as I said before) even if I had the option. Being that you're so quick to pass judgement on what all collectors are, you must be one of those people who gets the call and tells the person working hateful things about their family and wishes awful things on them. People receiving the calls can be just as harsh as the ones calling.

[sigferl]

Thanks for your post lrprn. I respectfully disagree with you completely. My cousin was a repo-man for a rent-to-own company, he is now a store manager.

1. Hard working people who pay their debts and honor their promises.

2. Able to tell the difference between the truely needy and the lazy materalistic people.

3. Were you having a bad day when you made this post?

When the going gets tough the tough get going.

What kind of people work for a debt collector? Two kinds - (1) desperate people who need a job - any job - with regular income to keep a roof over their heads and food on the table, and (2) sociopathic people who think crushing others under their verbal heels and making people cry is an incredibly entertaining way to spend their day and make some money to boot.

[crashzx]

Well...I would not sneez at 50k a year either. Thats what both myself and wife make together. I wish mine were helpful and not asshats. Some are but if there if nothing to give there is nothing to give.

I got layed off last year (hence my bk situation)and was getting ready to take on a diff carreer. Debt collections was not even on the list.

[MiSSMaGoo]

I agree that people need to feed their kids and keep a roof over their heads. If you are respectful to the people you are calling, then it is a relatively unpleasant job, but one that pays your bills, enough said.

But many bill collectors are cruel. And I can't imagine why a person needs to be cruel to keep a roof over their heads. I suppose guards in a prisoner camp who torture people just need to keep a roof over their heads too, that is why they are guards. But did they need to torture people? I don't think so.

It's the collectors that are deliberately cruel and nasty that have no right to use the excuse that it is "just a job". I am not saying that this is you.

Just my opinion.....

Well I can't speak for the A-hole collectors but on the same token.... I think all of us including myself forget sometimes, when we used the credit card that was a luxury someone trusted us with and then the bank tries to collect their money, they very much so have their rights. I'm not standing up for disrespectful collectors but really don't expect collectors not to call if you're past due. And as for "just the job" if I was offered a different job, I would not leave. I make decent money and I'm one of the collectors that helps people and it makes me feel good when I can help someone get caught b/c "life" happened and they got a little behind.

[MiSSMaGoo]

Wow, they let you be a collector with credit issues/BK? Even back several years ago, collections was one of those fields where you had to have a sterling credit rating. The explanation for it was generally that you had access to change information about your credit and also that if you owed unpaid debts yourself your heart would not be in collections.

I am not criticizing, I am just surprised!

No this is very true, and when I started my job I had stellar credit. I was confronted about two of my accounts that went into to my bky that was through my bank but they had no problem. Maybe b/c during my job I had 3 kids and 2 surgeries they felt bad and probably knew I had medical debt through the roof! They asked if I would try and pay them, rather than include them and I said no, it would be dumb on my part to pay them the 7k I owed if I could put it in my bky. Now had my job been on the line, then yes I would have paid.