They probably have been contracted by the original party to collect the debt. Certainly in the team I worked for, that’s how it was set up: the bank still owned the debt, but they sent the account to these debt collectors for a month to see if we were able to collect on it by calling the person incessantly, and us paid a fee for the service. And in that situation, callers weren’t very willing to take “I’m with a debt management company, speak to them” as an answer, because they’d only just been sent the account by the bank a couple of weeks earlier, they don’t have the account in the long-term so they can’t deal with a DMC directly, and they don’t get paid unless they collect on it. And if the customer’s DMC story is true the bank will retract the account soon anyway, so it didn’t generally matter too much (except that the person would get annoying calls for a week or two longer than they should unfortunately).
I know sometimes banks do actually sell the debt on to a debt collection company and wipe their hands of it, but that’s more of a last resort measure, because they have to sell it on at a serious discount.
Send a cease and desist letter. Tell them you want to work with them, but ONLY IN WRITING. If they call you after that, you can collect up to $1000 per call in civil court.
I used to work in IT for a collection agency, so I learned a few things…
First off, to the OPs title question… There’s only 1 reason people do this job - money. In a lot of cases, they are in the hole for child support, have a habit, or they’re fresh out of the slammer and can’t get a job doing anything else. There were a few people that I really did enjoy dealing with, but most of the people were scary.
As to the mechanics… The outfit I worked for bought and sold portfolios of debt for pennies on the dollar. They maintained a database of these accounts and attempted to collect on them, even though the original creditor had written them off long ago. They operated under different names, and moved around a lot. The particular instance I worked for had done a deal with a lawyer to operate under his name, thus giving them the imprimatur of “Office of so-and-so, Attorney at Law”. The lawyer really had no active involvement, but it made the whole bit more scarific.
The trick to these operations is that if the debtor makes an attempt to pay the debt, it comes back from the dead and the connection agency can now pursue the debt as their own, even if the statute of limitations has expired on the original debt. The statutory period differs from state to state, so YMMV.
Also keep in mind that a significant number of people who do owe money are the “promise and forget” types. I’ll have it Monday. I’ll have it tomorrow. I’ll have it when I get the cheque for the TV I sold in two days. Oh, did I promise you? I haven’t got the money yet. Following Gresham’s law, I’m sure a lot of collectors who might try to be nice learn the hard way that nice often does not work.
From my experience, they do not get paid if you pay the creditor directly. They will do everything in their power to get you to pay them, and not the people you owe the money.
I have dealt with collectors only twice in my life. The first was right after I got out of the Navy for a Sears card I had cancelled five years before. I never found out what the charges were for. The collection agency said they didn’t know and Sears refused to tell me. I foolishly paid because I had to go out of the country on business and they were threatening to turn it over to the sheriff. By the time I got back, they had changed their name and it wasn’t worth it to track them down for two hundred bucks.
The second time was due to an emergency room visit that my two insurance providers couldn’t agree who should pay. Every three months for a year, the hospital would call me, I would call both companies, they would agree who should pay, and then never pay (I found out at the end that the fee that was not paid was the facility fee which is paid by the medical group only if within 50 miles and by Blue Cross if outside that). The insurance company would only pay the hospital, not the collections people. They basically told me if I did not send them a check they would submit a report to the credit agency even after I sent them a letter from the insurance company saying they would pay.
Both times the line was pay us know and try and fix your problem later. The first time I fell for it and never got my money back or even a way to try. The second I didn’t but had a black mark on my credit report.
When I worked for a collection agency (I worked in the administration section), the collectors were all trained in what they were and were not legally allowed to do under the FDCPA. And they did get a percentage of “paid later” collections. That percentage was lower than what they got for their own active accounts.
ETA: If the creditor has already assigned the account to a collection agency, the creditor is contractually bound to pay the agency its fee even if you pay the creditor directly.
Well, there’s at least one out there who’s half-decent. My now-wife had a legitimate debt being handled by a collection agency. She’d made a reduced-payment schedule with them to finally clear it. The last payment, however, bounced and had to be resubmitted the following day. We anticipated this, and called the collection agency to confirm it would be fine.
Afterwards, we received a call saying that, since there was a delay in the last payment, it technically invalidated the reduced payment contract and the remainder of the full sum would be owed.
I asked my wife to hand me the phone, and proceeded to use a great many words I would never use in polite company. I basically felt license to be as coarse and vulgar as I felt, since I figured the guy had his ass covered (and he probably did) and it wasn’t like some debt collector was going to cut us a deal.
The guy basically responded with, “Wow, that’s how you conduct business?” To which I believe I said, “This isn’t business, it’s a shakedown and we both know it.”
The guy said, “Let me ask my boss.” He came back five minutes later and said, “Well, he gave me the thumbs up to call it settled. Have a good life.”
Now the original creditor has refused the payment, apparently because the account was charged off. Perhaps in the time between my last statement and the payment submission. Now I’ve got to deal with the collection agency. Wonderful.
So we’ll see how this all pans out. But I tell you what, if these fu#$%rs don’t stop being such pains in my ass I’m gonna just ignore them forever. Damn be my credit rating. How on Earth do they think being jerks gets them paid? I’ve already got destroyed credit…they can’t do anything to make it worse.
And these are the jerkoffs who said they will not deal with a debt management company. Which brings me back to…why the hell would they refuse a payment? It makes no sense whatsoever. None. If I get them back on the phone I’m gonna find out the real deal.
The reason they’d refuse a payment is that … they actually did sell your account, and no longer have the right to solicit or collect on the debt. Some of the confusion at previous points in the thread now looks like communication delays between different parts of a large company. But I strongly suspect your debt is now owed to the agency.
I now know who holds my debt, the collection agency. Why would they tell me that they refuse to work with a debt management company? They’re getting paid so why would they not accept payments based on who away sending them? They claim to have specific instructions from my original creditors not allowing them to deal with a debt management company. This is where my confusion comes from. Why do they care who pays them?
I’m still a little confused as to what the debt management company is doing for you. Who cares if the collection agency tells you they won’t accept the payment? They’ll lie through their teeth to scare you into making a debit card payment ASAP. The real question shouldn’t be why they are saying that, the real question is: WILL THEY in fact accept a payment from a debt management company? And the only way to find out is to try. So send the debt management company your $500 payment (or whatever), let them take their $50 (or whatever) fee, and then presumably they are supposed to cut a check for $450 to the creditor, with your name and account number on it. At this point, if the collection agency honest won’t accept a payment from a debt management company (which I kind of doubt), they will return the check. Next you will (should) get a call from your debt management company telling you their $450 payment was returned. That’s when you ask for a full refund, because they are unwilling or unable to satisfy their end of the bargain, so you shouldn’t have to pay them anything.
This has some good, state-specific information. I was a bit hasty. If you enter into a payment agreement with a collection agency that MAY be assumed as a new contract and MAY restart your statute of limitations period (state laws/court decisions are all over). The best argument against that is one of lack of consideration. What did the collection agency provide for you to make that a “contract”?
Foolishly, I assumed a payment to the original creditor which in no way restarts the period. Apologies.
Anyhoo, I was in a similar situation to yours about ten years ago. I ended up working with the companies (in writing) and am debt free (except for mortgage payments). My advice:
Send this company a cease and desist letter. Tell them that you are working with Acme Debt Consolidation and to contact them. Tell them to not call you ever again. That leaves them with the option of suing your or working with the debt collection company. They will work with the debt collection company. If they do keep calling, then keep a record and get ready to sue them for a $1000 each time they call.
The debt consolidation company can’t do anything that you can’t do yourself. In writing, without the high pressure debt collector bothering you, you can lay out your bottom line deal that you can work out with them. Don’t promise more than you can comfortably pay.
If they refuse, then you can’t pay. They can’t get blood out of a turnip. I’m not sure how much money we are talking about, but depending on the company, they may just let it go.
Always ask as a part of the negotiation that they remove any negative trade lines from your credit report. They may tell you no, but it doesn’t hurt to ask.
Pull your credit report and make sure that they have reported your debt accurately. Sleazy companies try to double and triple report the same debt and age it later than it should be. These are all recoverable damages that you can use to negotiate.
Don’t ever talk again to a debt collector on the phone except to tell them to piss off.
Keep your head held high. You are not a terrible person because you are having financial troubles. Don’t let them run roughshod over you.
While keeping your head high, bankruptcy may have to be an option down the road if you are in over your head too much (I was ALMOST there, but not quite).
Good advice overall but I’d just like to note again, don’t tell the guys calling you to piss off. From having been on the other hand, I promise it won’t help; if anything being rude makes it more likely they’ll keep your account active for calls. If they call, ask to speak to the manager (they have to agree) and make it clear to the manager that you have a right to insist they remove all of your phone numbers as long as they have your address, and that you’ll deal with them in writing. He should know that but if he doesn’t, make it clear that you do have that right, preferably try and find the law or regulation that enshrines it to cite. Be polite.
I don’t know why they’re refusing to deal with the DMC if they’ve actually purchased your debt. That’s strange.
I have a Magic Jack. 20 bucks a year for a phone number. I use that phone number for out going calls when I don’t want to use cell minutes, and for those things that require a phone number when in fact, I don’t want to be called back. Since I never hook up the jack unless I’m calling out, incoming calls notifications go to my gmail account, where they can be flagged as spam or easily deleted.
The question would be how to change your phone number at their end.
Correct. I meant “piss off” in the friendliest possible way. You must be firm or else they will take your politeness as a sign of weakness and try to convince you to keep talking.
Be polite, but forceful. You will not talk to them. You want them to cease and desist and only communicate in writing/through the debt collection agency. Tell them the letter to that effect is on the way. If they can’t stop talking then hang up.
I had one lady call me and tell me that I was committing fraud and was going to go to jail. See I told them I would pay and I didn’t, so that was fraud and they were going to go the prosecutor “tomorrow morning” if we didn’t work something out. Luckily I knew that was a bunch of garbage. As soon as I asked for her name and her company’s name, she hung up.
I can’t imagine if I didn’t know any better and was worried about going to jail.
Things like this are why you never deal with someone on the phone. They know the ins and outs better than you. If you deal strictly in writing, you have time to do research to see how to respond. AND THEY KNOW THIS.
It sounds to me like your debt management company is a scam – I’m on with one and they are doing exactly what they said they would, and I haven’t gotten any collections calls since it was set up and everything is going as planned. There are honest companies out there. There are a lot more that aren’t.
