So I’ve got considerable credit card debt, and I live in PA. I haven’t made any payments on my credit card accounts in around a year, preferring food and shelter over a good credit rating. My financial situation has however changed from before. Now I can pay, but I’m going through a “debt management company”, whatever that means (temporary accountant service?).
Basically I have them handle the creditors, they receive my money and forward it to the creditors minus their fee and in return the credit card companies get more of an assurance that my account is being repaid - and I don’t have to worry about it anymore. One payment, to one company, for a predetermined amount of time. No settlement, no debt reduction, no charge-offs. Full repayment of the original debt, just with this company backing up my word that I’ll pay so a better interest rate can be worked out. It works for me.
The debt collectors have not yet stopped calling, as I anticipated they wouldn’t, and they continue to firmly state that they are in no way going to deal with any debt management company or credit consolidation company or anything of the sort. Pepper that with condescension and arrogance at my inability to repay for the last year and you can imagine how frustrating these phone calls are.
My question is this:
How can this debt collection company tell me that they will not deal with a debt management company? Why on Earth would they refuse payment? Even if it came from the Easter Bunny or Batman on my behalf? I think it has to do with their lack of a commission payment…since the money goes directly to the original creditor, and not to them. But if that’s the case, then aren’t they lying by saying that such a payment is not acceptable? And is there anything I can really do about it?
Never, ever, ever, EVER deal with collection agencies on the phone. Ever. To infinity.
Your legal right is to be communicated with in writing about their collection attempts. Inform them that you request, as per the Fair Debt Collection Practices Act, to be contacted only in writing and to immediately cease use of your telephone for this purpose. Then, hold them to it. Many, many people have successfully filed suit (or had debt waived) due to FDCPA violations. Log calls, make recordings if possible and legal in your area.
Individual collectors will tell you practically everything to get you to pay right now. That is all they are trained to do - to collect your money now, immediately, on this call. They will lie, insult you, threaten illegal things – don’t bother trying to negotiate with the guy on the phone. Chances are, he’s getting a cut if you pay it over the phone. You pay later? He gets nothing.
Never ever ever trust a collector. Get it in writing. Always, 100% of the time. I have known collectors. I have (briefly) worked as one. Never trust them.
Now, if I were you, I would not go to a debt management company, but that’s up to you. In any case, it’s a very good idea to get educated about your rights and responsibilities however you decide to go. This is an excellent resource that taught me an amazing amount about how credit and debt works:
Ex-prisoners and people on welfare are a great source of these collectors. In order to be in state programs or to get food stamps, in some states you have to work them off. These people will work off their food stamps at a company like this for minimum wage.
The ones I’ve dealt with have been pleasant and helpful. When I expressed my surprise at this the collector said that, in this economy, they need to be so that they are at the top of my payback list. You give money to people you like. You are more likely to tell jerks to fuck off.
Damn straight! Which is why I was so flabbergasted at the phone conversations I have had with these morons. Do they think they can intimidate money out of me??? Fer cris’sake it’s not like they’ve got baseball bats or anything.
Based on my indirect experience (Mrs. Simmons worked for a number of collection agencies over the years), there seems to be an equivalent of Gresham’s law at a lot of these places–bad collectors drive out good. Ethical collections is a somewhat drawn-out process of building relationships with debtors, tracking their promises and holding them accountable, and educating them about the real long-term consequences of ignoring their debt.
Aggressive, hostile collectors can bring in money quickly from the fraction of their books that are susceptible to intimidation tactics. And a collection agency manager/owner who is (a) looking mainly at short-term profits and (b) not concerned with ethics can become convinced that this is the only way to make money in collections. Sadly, (a) and (b) are both very common traits amongst managers/owners of collection agencies.
Well said, SCSimmons. The debt collection industry is filled with unlawful behavior, to the point where an educated consumer with some debt or a half-clever lawyer can easily live off income from settling meritorious claims under the FDCPA. If all debtors began enforcing their FDCPA rights, it would be the equivalent of all homeowners asking for a true copy of the note in foreclosure – it would bring the entire system to a halt because of the misfeasance of the companies.
I realize you said “it works for me”, so maybe you don’t want to discuss the debt management company itself, but I’m a little curious what the terms of your contract with them are. Are they the ones negotiating a better interest rate? Is that what their fee is for? Because if it is, and the creditors are still calling you, it seems like maybe they’re not upholding their end of the bargain. Or if interest rate negotiating is not what their fee is for… what IS it really for?
I only ask this because, in my experience, debt management companies are almost as dishonest as debt collectors. For instance, many will quote you a monthly payment, but then the first 6 payments go 100% towards their fee, and only then do they start making payments to the creditors, which opens the door to harassment and lawsuits while the debt management company doesn’t actually have any obligation to speak with the creditors on your behalf.
If you found a debt management company that works and isn’t too expensive, then great for you. I bring this up only because I’m not sure what you’re paying them for, other than maybe letting you write 1 check each month instead of 10, in which case hopefully they’re only charging you a nominal fee.
I worked in a debt collection call center for a while. One common misconception - which I think you do understand, but I’ll just mention it anyway for others - is the idea that they “take a cut” out of any money you pay via them: they don’t. If you whip out your debit card and pay $50 down on your credit card debt over the phone with the debt collector, all $50 will go towards paying down your credit card debt. The debt collectors get paid their fees separately by the bank. I think they do get paid more depending on how many accounts they close though, which might well be by why they don’t want to deal with the debt management company.
As far as the people who work there, it’s quite easy to demonize them, but it’s a mixed bag. The callers themselves don’t really decide who they call - calling is done by an automatic cental dialler system. Callers just sit at a computer with a headset on; the screen will say say ‘Idle’ for a while, then suddenly it’ll beep and say ‘Outbound call’ and you’ll hear “…hello?”. Sometimes the dialler guys would mess up and the system would start calling people 5 times a day - you’d get put through to people who were already absolutely furious. But while it’s certainly the company’s fault as a whole, the callers themselves don’t generally have much control over it.
The callers vary as people, just like in most jobs: some are really nice, some really are bastards. The company I was at had quite strict rules about not being too aggressive with customers and certain things you can’t do (lie to them for instance), and if someone made a complaint to the manager the call was always listened to by higher-ups and the caller given a talking to if it was too aggressive. But you’d always hear the occasional person lying or being aggressive anyway; sometimes other callers would tell them to stop it. It’s like any job really.
With regard to debt management companies: most debt collection companies get given an ‘account’ on a rolling basis, usually each month. Their mandate is that they get given the account at the start of the month, they call the person directly to try and try and close it, and then if they don’t close it the account either gets renewed or not renewed at the end of the month. And they do get paid more by the bank depending on how many accounts they close. That’s why they won’t deal with your debt management company: firstly they can’t because they only operate in the short-term and they can’t handle long-term deals on your account. Secondly they’ve been given your account relatively recently and been told by your bank to call you directly. Thirdly it means they don’t get paid. If someone told us they were with a debt management company, we’d usually say something like “the account has been forwarded to us by [your bank]”, so the bank would have to retract it. It is an unfortunate system (the whole debt collection system is not very well organized) because it means that people like you, who genuinely have debt management companies sorting it out, still get called for a few weeks until the bank retracts the account.
However as someone has mentioned, you are within your rights (or you are here in the UK anyway) to demand that they only contact you by post at your home address, and remove all your phone numbers. Make sure you speak to a manager though, and make it clear that your rights say they have to remove all your phone numbers if you ask them to, as long as they have your address. A lot of the callers at my company genuinely weren’t aware of that, so if people asked them to remove all their numbers they’d say, “well actually, we’re legally allowed to keep one number, which one do you want us to keep?”, and customers would accept that. Take it to a manager and follow it up to make sure.
In the first part of this paragraph (“Even if it came from the Easter Bunny or Batman on my behalf?”), you describe the situation in terms of where the money is coming from. But in the second part (“the money goes directly to the original creditor, and not to them”) you describe it in terms of where the money is going.
Thus, I think there are a total of FOUR parties here: The credit card company, the collection agency, the debt management company, and you.
The reason you’re confused is that you think the collection agency is working on behalf of the credit card company. You think that the collection agency makes phone calls for the credit card company, and gets paid a commission on whatever money they successfully collect.
But that’s NOT how it usually works. More common is the case where the credit card company gets tired of waiting for your payments, so they actually sell your debt to the collection agency. I don’t know if that’s what happened in your case, but I know that it can be done, is often done, and is totally legal. And then what happens is that the credit card company no longer cares about you, because you owe the money directly to the collection agency.
But you didn’t realize this, and so your debt management agency is making payments to the credit card company. This upsets the collection agency. As you say, they shouldn’t care who is making the payments — but they do want to be on the receiving end! If the payments are going to the credit card company, then the credit card company has to forward them to the rightful owners, the collection agency.
Here’s my suggestion: Call the credit card company, tell them your account number, and ask about paying. If I’m right, they’ll give you the name of the collection agency. And then you should tell your debt management company that they’re sending your money to the wrong place.
By the way, one thing I wouldn’t recommend is being aggressive back with them, telling them to 'fuck off", anything like that, even if they’re being dicks to you. They don’t have much control over the dialler but they do have a certain amount of control (they can usually set a period in which you don’t get called), and I can testify that when someone screams obscenities at you down the phone, you don’t get a strong urge to delay their next call date! It’s actually worth asking about the next call back: “can you set my next callback for 2 weeks time?”, that sort of thing, because often they can do that. The standard callback time is often 3 days, or 1 week if there’s a reason, like they say they’re with a debt management company.
Finally I’d just say that it’s quite easy, when you’re getting these calls, to imagine that it’s from some monolithic, demonic machine acting in unison, trying to crush you and laughing about it together afterwards. That’s not how it works: it’s just a bunch of people at desks who’ve had 1 week training, getting paid minimum wage, who don’t really understand how any of it works themselves. If you get called by a guy who’s being a dick, just politely end the call and the next caller should be nicer.
Ps. Don’t ever let them get into a discussion of your personal costs. “Why can’t you afford this $50 payment today? What are your outgoings? Oh, piano lessons for your kid? Why can’t she just not have that lesson this week?” Etc. We were told specifically not to do that in training and I used to hate it when I heard callers doing it anyway. Just say it’s not appropriate to get into that and bring the discussion back to the account as a whole.
IME, they get really mad when you haven’t even made a good faith payment for a year or even talked to them. I’ve dealt with bad debt collectors and good ones, and the good ones ease up when they see you are trying to pay, even a little.
True, but you want to be careful before you pay. If you’re trying to negotiate, you need everything in writing first. And, for God’s sake, if you’re going to dispute anything about the debt, do not make a payment!
The phone callers will not like to move things into writing only, of course. They will resist. Stand by your rights. The number of stories of people negotiating down debt over the phone with collectors, making a payment, and having the settled amount mysteriously change (or go back to the original value) are high. Or, they’ll just resell the rest of the debt to someone else. The industry is full of scummy tactics – remember, you’re not their customer, they just bought the debt.
Well, the credit card company is still sending me bills in the mail, even though I haven’t paid them a dime in over a year, demanding the entire amount be paid immediately as the minimum payment, as though that wil somehow magically make my bank balance change or something. So I guess that they do still care about the account and haven’t sold it off.
They can’t send me a bill for an account they’ve sold can they?
Yeah it’s weird…the debt collectors act as though they’ve been contracted by the original creditor to collect the debt. So I really don’t quite understand how it’s supposed to work. Because they still get all pissy when I mention that I’ll be using this debt management company. I just don’t get why they care. What if it was my own personal accountant…with legal power of attorney? Who signed checks for me and arranged all the payments? Or if my dad stepped in and made payments for me? How is it different than hiring any third party to handle the debt for me???
Also…my credit report lists the accounts as “charge offs”. Which I understood to mean that they had been sold…or something. But they still send me bills. Anyway, my first payment with this debt management company is due to go through tomorrow so I’ll find out soon enough who wants the payment and what they’ll do with it.
Well, a charge-off might mean they are still trying to collect it, just that from an accounting perspective they don’t have any real hope of doing so.
You’re working with a debt management company: do you have any proof that they are making any payments on your behalf? i.e. do you see any payments reflected on those statements? If not, that sends up a pretty major red flag. Such agencies have a reputation for NOT making the payments you’re expecting them to.
Without naming the company: have you researched them to see if there are complaints against them?