Question:
This may sound a bit odd as I'm not trying to get out of any debt or run
from a collection agency... but I've been reading quite a few posts from
different people about how collection agencies use their scare tactics to
try and get them to pay and I'm left with a question. Perhaps some of you
can help me to understand.
It would seem, from most of my reading and the experiences that have been
outlined in this group, that the collection agencies rarely, if ever, sue a
debtor for payment. I've read countless postings from folks who have been
threatened but I've failed to locate even one case in which a debtor was
actually sued. Do any of you have any insight as to how these agencies make
a decision as to sue or not? Does it have to do with the amount of the debt
or the employment status of the debtor or the equity in their property? I'm
stumped. It seems like an interesting racket to be in and I just wonder why
I haven't found any instances of suit or judgment. Is the likelihood of
collection of a judgment so slim that it's just not worth them wasting their
money to file suit in the first place?
Another aspect of their operations that I don't really understand is the
chain of ownership. When the original creditor transfers that debt to a
collection agency is that debt SOLD to the collection agency? If so, what
are the typical terms of such a sale? Is the purchase price based on a
percentage of the original unpaid debt? If not, is it a case where the
collection agency is simply assigned the right to try and collect, and then
receives a percentage of any monies collected? How does a debt transfer from
one collection agency to another?
Seems to me I can't be the only one out there wondering what the answers to
these questions might be. Your replies will be greatly anticipated.
Answer:
Q: This may sound a bit odd as I'm not trying
to get out of any debt or run from a collection
agency...
A: . . . RIGHT . . . and also, you've never told a lie, you hate candy and
ice-cream, you're certain there really is a Tooth Fairy, and the check is in
the mail . . .
Q: . . . posts from different people about how
collection agencies use their scare tactics to
try and get them to pay [raise] question[s I'd
like] help . . . to understand.
It would seem, from most of my reading and
the experiences that have been outlined in
this group, . . .
A: . . . can you judge what percentage of the population in general experiences
cancer based on a count solely of the number of persons who consult an
oncologist? . . .
Q: . . that the collection agencies rarely, if ever,
sue a debtor for payment. I've read countless
postings from folks who have been threatened
but I've failed to locate even one case in which
a debtor was actually sued.
A: Except, of course, for the MANY hundreds of thousands of collection lawsuits
filed throughout the country on an on-going basis by or on behalf of large
numbers of mass-retailers who supply their own credit cards and by most other
credit providers (as you readily would determine, among other ways, by just
checking the docket at your nearest municipal court).
Q: Do[es whether] these agencice [decide] to sue or not
. . . have to do with the amount of the debt or the em-
ployment status of the debtor or the equity in their
property?
A: All of the above, in many cases with decision-making refined to a
highly-sophisticated (even if: mass) basis.
Q: I'm stumped.
A: Among the MANY substantive sources re. how, in fact, wide-spread collection
practices are, including the filing/procecuting of real-life lawsuits then
attempting and frequently succeeding in collecting on the resulting judgments,
are any number of academically- and legislatively-conducted studies included as
part of the legislative history of the pending changes to (for many individual
consumers/credit-users, in effect: repeal of) the federal bankruptcy act; and
so you can if you want readily resolve your "stumped-ness" by merely gluing ass
to chair and eye to page and reading.
Q: . . . I just wonder why I haven't found
any instances of suit or judgment.
A: The most likely explanation is that you haven't bothered actually to look.
Q: Is the likelihood of collection of a judgment
so slim that it's just not worth them wasting their
money to file suit in the first place?
A: You are GROSSLY underestimating the near-pervasive extent, including real-life
numbers, of use of (especially so-called "personal) credit and, also very
likely, also unrealistically overlooking the use by small businesses and their
owners of personal credit cards to finance businesses not able to obtain
financing by other means.
Q: I [also] don't really understand . . . the chain of
ownership. When the original creditor transfers
that debt to a collection agency is that debt SOLD
to the collection agency?
A: The generally prevailing REAL (i.e., practical) answer, in substance (if not in
these precise words), is basically little more than this:
"Here's a list of the names/addresses of deadbeat debtors and the amount owed
by each for you to 'process' and so please do so" [i.e., send out whatever the
"profile"-determined number/nature of demands may be then sue as the relevant
"profile" warrants].
Q: If so, what are the typical terms of such a sale?
Is the purchase price based on a percentage of
the original unpaid debt? If not, is it a case where
the collection agency is simply assigned the right
to try and collect, and then receives a percentage
of any monies collected?
A: All of the above, as more particularly (easily) documentable in (among MANY
other such sources) the above-cited legislative materials.
Q: How does a debt transfer from
one collection agency to another?
A: Email, FAX, etc.
E.g. (have I mentioned this?): "Here's a list of the names/addresses of
deadbeat debtors and the amount owed by each for you to 'process' . . . ."
Q: Seems to me I can't be the only one out
there wondering what the answers to
these questions might be. Your replies will
be greatly anticipated. THANK YOU.
A: Probably, although unfortunately, too few do the same "wondering" you do.
Your questions all are very good ones (really!) even if, perhaps unfortunately,
the (comparatively minimal) effort you might have made, which readily
could/would have resulted in substantially better/well-informed preliminary
answers than your so far just impressionistic approach, seems not to be on a
par with the degree of inquisitiveness stated. If you genuinely are serious,
there is an enormous amount of material available in libraries, perhaps also on
any number of web sites, and (as noted) in numerous bar association sponsored
and (obtainable by minimal effort) state and federal legislative studies.
