update?

After how many calls do you give up on the debt? Do you never give up until you sell it? I've always wondered what the deal is with collectors who call repeatedly once or twice a day every day Monday through Friday and sometimes Saturday.

Sometimes there are irregularities in the calls. Why are you calling me at 8:35a on one day but not until 2:40p the next? Twice in one day but only once the next?

I assume a debtor can expect to receive calls from the same number for 3 or 4 months max. Is there an average maximum in the industry? 5 months?

It's just hilarious how an agency thinks that it's an efficient technique to just auto dial a number 6-8 times a week for weeks on end even though the agency has never once heard a hello from the prospective debtor, nor have they ever left a voice mail.

In a world where everyone has a cell phone and many people use a cell phone as a primary phone number furthered by some people having numbers through Google Voice, I don't get how persistently calling someone is an effective debt collection method.

What's the deal with an account that has been charged off / written off by the original creditor? Besides the fact that some p*ssies may "feel badly" that they're in debt, what incentive does a debtor have to paying the collection agency? Would bringing up the fact that the original creditor has long since written off the account get the debt collector off one's back?

What insurance did you sell that you cant sell in NY?

Who is watching the infants while you are working?

My wife used to work for a huge law firm that did collections. I know the partners did very well.

Good Luck

Translation: I am a deadbeat.

Pay your bills deadbeat.

i had a collections agency calling me repeatedly asking about someone who shares my last name (unrelated to me) and refusing to take "i dont know anyone by that name" as an answer. Given what was said about social networks being against the law, is this practice also against the law?

Seems like such little threat to be sued anyway (in terms of the social networking thing earlier). If they are too busto to pay you, they are too busto for a lawyer.

Quick update: I just finished my move to Buffalo yesterday, so I haven't really been online much. I did have a very big revelation though that hopefully will help me do very well. Earlier in the thread I had talked about what debt I was going to buy and had settled on PayDayLoans because it was what we had experience in. I had also spoken about some debt from Aaron's Rent-to-Own store that was collected on by one agency already for 2.5 cents on the dollar. Before I pulled the trigger on the paydayloan I did some last minute research on the Aaron's debt, and after a few hours of digging found the wholesaler that bought the debt originally.
I contacted that wholesaler, and found that they were willing to sell me 10k of debt at 2cents on the dollar that had never been collected on by anybody. We managed to agree on a price of 1.8centsI have decided that this is the debt I am def. going to buy, and we have started drawing up a contract for it. There is clearly a 2nd hand market to sell the debt, since there was a broker trying to sell it 2nd hand for 2.5 cents, so I figure even if I crash and burn, I can resell the debt for almost what I paid for it.
So as of a few weeks from today, I will be paying about 10k for approx 550k worth of debt in the states of California and Louisiana. The LLC is formed, the collection software is ordered, and payment processing is set up. We still need phonelines and a few computers, but we should be up and running by the second week in August... I am going to answer a few questions in my next post.

The idea is never to give up on the debt until you collect on it or pay it. Why would you give up? It takes 10 seconds to dial a number and call it. The risk is nil and the reward is great. Collectors call at dif. days and times in order to try to change up the pattern. If you aren't home during the day on Tuesday, maybe you will be there Thursday evening.
There is no maximum amount of time you can be called. If I own your debt, I can call you for 10 years if I want. Even if the statute of limitations is up on your debt, I can still legally call and try to collect on it; you just have no incentive to pay it if you know the law. There is no average length of time collectors will call either, it really depends on the collection strategy of the company. With the new prime debt I will be buying from Aaron's, it comes to me 8months after last payment on the account. I will try to collect on it for 3 months and resell it before the debt becomes 1year old for maximum resale value. If the resale value is less than I expect, I will outsource the debt as 1agency debt to a collection firm and take a split on what they collect. Other agencies may call on the debt for years and just squeeze every dollar out of it.
Autodialing a number to collect IS an efficient technique. It may not be the most effective liquidation-wise, but collections is a huuuuge industry. Dialers are cost effective.
Calling people is an effective collection method. Your point is correct that lots of people don't have traditional numbers so lots of people won't be collected on, but if I'm buying debt for 1.8cents on the dollar, my breakeven after overhead is 2.5cents on the dollar collected. If I liquidate 5% the first month, I pay myself and my partner 500 a week salary, and also put about 10k profit into my corporation for more investments and expansion. You don't need to collect from a lot of people to make money in this business.
Bringing up the fact that the original creditor has charged off the account would do nothing to get the collectors off your back... They obviously know this because they bought the debt from the creditor. The collection agency now owns the debt. If you don't pay the collection agency, that is an additional debt you have defaulted on and the collection agency can further destroy your credit rating. You can also be sued and have a judgement brought against you; depending on the state you can have your wages garnished, and I have known of some people whose homes get sold to pay for debt they owe to collection agencies.
http://abcnews.go.com/Business/Perso...1#.UA7N5aNRyuE

Thanks for the good luck thoughts. I sold Final Expense insurance and Medicare Supplements in TN. The type of insurance isn't illegal in NY, but the effective marketing strategies employed are illegal here. The insurance is totally geared towards seniors, and mail/phone calls targeting seniors in NY is fiercely regulated. It makes it impossible to sell the insurance in NY as your only source of income.
I have a whole combination of people who will be watching the infants. My mom works as a teacher in a private high school, and has been there for 30 years. They have a free babysitting program for teachers children. Even though they are her grandchildren not her children, they said they will let them have free babysitting 2 days a week because of her tenure there. In addition, many of my friends here are in the nightclub industry, and are free during the day and have volunteered to watch some of the time. My parents will watch them on Saturdays when I work. It will still be a week to week schedule, but I'm hoping to only need to pay for babysitting 2days a week max... hopefully.

That practice is not against the law, it's just annoying. They obviously just don't want to take your word for it that you don't know the person. As long as they have not told you anything about the debt, or that it is an attempt to collect a debt, there is nothing illegal about calling and asking for somebody... it's just annoying. Block the number if they keep calling, but they prob will give up in a month or so.
Most of these debts will go to small claims court if they go to court, so they wouldn't need a lawyer. Plus, they mostly will never go to court, but the fact is that they COULD... so the threat of a lawsuit is greater than the actual lawsuit.

I read the story you linked to. This is another reason why Utah is my least favorite state. In many states, Florida for example, your home is not attackable. Your homestead is exempt property under the FL constitution.

Yep, FL is a terrible state to own debt in. Very consumer friendly.

Yea, that Utah story is rough, but it is also slanted. I personally think there was more to that story than was written, but it just shows that you really do have reason to pay debt even if it isn't to the original creditor.
Florida is incredibly consumer friendly... one of the worst places to buy and collect on debt... hence why it is super cheap there; also in Texas and North Carolina come to mind and cheap, bad debt states.

I am not sure if this question has been asked or covered yet and would I like to hear your thoughts on this. My impression from reading the thread is that you basically buy debt for say example 2 cents per dollar. That debt is now considered part of your inventory, so to speak. What are your thoughts and experience on offering discounts to increase sales volume here?
Say for example, you settle with a debtor for 40 cents on the dollar. Will this type of strategy drive more cash flow volume for your business? My thoughts are that it is revenue and usually a better deal than reselling it for 1.5 cents to another buyer. In other words, you pay some premium for liquidity (similar to the firm that sold off their past due accounts receivable for 2 cents on the dollar).
In your experience, is there a point like this that will increase your total revenue? Or is it better to settle less in total debts, but collect 100% on the ones that are settled? What are your thoughts and experience on this?

Like the answer to most poker questions; It depends.
Before I resell the debt, I will call the people that seemed receptive to paying off the debt at a later date, and tell them they can liquidate today for a very low rate. You rarely collect 100% on the debt you own for any persons account, because everybody, debtors included, love a deal.
"If you pay TODAY, we'll cut you a break and settle for 85c on the dollar because my boss wants to clear out these old cases. This offer is only if you pay today though..."
I like the liquidity of reselling the debt after cherry-picking the easy ones. The ROI is obviously better if you work every single file to death, but the NET can be better if you take the easy ones, sell the file, and reinvest in brand new debt. Different strokes though, and mine is DEF. not the only strategy used.

Hmm, I have a question that could have a very obvious answer, but I think if I am right then it will have a huge impact on the value of this. If they buy this debt and collect on some of it that means that they have some metrics to decide which debt to collect on. With their vast experience, they could easily just sort through this data and determine with decent accuracy the frequency they could collect each debt [and what %]. So isnt it possible that they are simply buying a ton of debt, analyzing it, attempting to collect on the stuff that meets certain criteria and then reselling the rest as never collected on debt? If thats the case, then I would really reconsider this purchase, but if the price is right, it could still be profitable.

I have no actual experience in this field, so I could be way off, but I find it really interesting and just wanted to throw in my 2 cents. GL and hope things work out, I will be following along!

Will you receive media( loan docs) with your Aaron's purchase?

No. The company that I am buying the debt from does no collecting at all. They buy the debt directly from Aarons, and sell it to investors/collection agencies. They do the same thing with credit card debt from banks, which I am not bankrolled to buy at this time. The company I was ORIGINALLY thinking of buying the debt from never claimed to be selling prime debt. They disclosed it as once agency debt. What you are describing is possible though, and it makes due diligence on the part of the buyer extremely important.
Yes. Incredible media actually, including place of employment (at time of purchase), social security number, and copy of drivers license.

Good. I'm very interested in this as I have thought about making a debt purchase for some time now. I have been in the collections industry for 10 years. What is going to be your first step when you load the portfolio to the software? I would recommend immediately sending first notices before even attempting to call. What are your plans to mitigate lawsuits for any perceived fdcpa violation? Do you have an attorney that represents your company? Do you plan to have a letter campaign that will offer settlements to all non paying accounts b4 their resold? Inside arm is a great resource but also has some very poor advise and trolls just like 2p2. I wish you luck. Keep us informed

I came across this thread and have been meaning to give some input and suggestions.

I'm an attorney and I do a good amount of work for collection agencies with FDCPA and Texas DCA cases. With that experience a few things stuck out to me glancing over this thread.

1. When you buy the debt, make sure to get a proper business record affidavit documenting the transfer and ownership to you. Affidavit requirements vary by state, so make sure to get one under the California requirements and one for the Louisiana requirements (I think these are the two states you said).

reason for this is because if you own the debt and get sued under the FDCPA in state court, you can counterclaim for breach of contract on the debt. If brought in federal court, you usually can't bring the counterclaim. In most states you can recover attorney's fees for breach of contract so use this in settlement negotiations for a pure walk away rather than having to pay out.

2. I would not use an attorney letterhead in the manner you described, or at all. You run into too many possibilities of misrepresentations, like that its actually from an attorney or that you are an attorney, or actually failing to state its from you, the collection agency. "Least sophisticated consumer" standard is crap, and doing this makes a viable claim.

3. Do not charge a "convenience fee". You are only allowed to charge a convenience fee if state law allows it, or the contract provides for it. If the contract provides for it, good, but the way you stated it, charging it has nothing to do with the contract. Almost no state allows this fee to be charged except in the case of bounced, or NSF checks. I wrote a memo to one of the largest collection agencies in the country regarding this, how it makes them very susceptible to class actions, as well as just individual cases where liability is obvious. They actually listened to me, got rid of the convenience fee foregoing a sizable amount of revenue.

4. Dont leave voice messages. Plaintiff attorneys have turned voice messages into a damned if you do, damned if you don't situation. this is already long so dont want to get into detail but giving the mini-miranda disclosure on a voice message puts you at risk of a third-party disclosure. Just saying call this number back puts you at risk of failed to meaningfully disclose your identity. Foti-compliant messages are the new recommendation, named after a case discussing it, but I've heard too many calls where the collectors mess those up too.

5. Take great account notes for everything you do. A must to successfully defend litigation or as settlement negotiation.

6. immediately start saving for threat of suit situations. You mentioned that most litigation ends up in JP court but this is not true. They end up in federal court more often because the FDCPA is a federal statute. You'll either end up paying to settle or hiring a lawyer if this happens.

Thread has been quite for a while but post some updates if you have any!

GL

Thought I'd give an update, since it's been almost a month since I posted in this thread. Lots of changes have happened to my business plan since I last posted, and everything has turned upside down. That being said, my debt collection agency will be making our first calls September 24th if all goes well.
When I made my last post, the plan had been to purchase debt from Aaron's Rent-to-Own company, and work it between myself and my partner, and then resell the debt. We ran into a huge problem with this approach; unless you work out of a commercial office, you are unable to use most skip-tracing tools. For those that don't know, skip-tracing is the method in which you track down debtors who have changed their phone number, or moved, or just refuse to answer the phone. Obviously, skip-tracing is a must in order to get profit in the collections business, especially since accounts were last paid on over a year ago.
To justify renting an office, and paying for utilities and phone-lines etc., I decided to make it cost effective, we would need some employees as well, and not just the two of us working. I have decided to hire 5 additional collectors, and have hired three so far, all working for between 10-12 dollars an hour plus bonus.
Obviously, with having more employees, our costs went up. I bought 7 computer systems, seven phone lines, seven collection software licenses, 7 cubicles. Our infrastructure cost quite a bit more than I expected. In addition, I need to have enough money in our business account to cover overhead and payroll the first month or two, when I will certainly be losing money since postdated checks haven't come in yet.
So for the past month, I have been aggressively soliciting clients to collect for on a contingency basis. It was extremely difficult because of our company only being formed in the past month, and having no financial history to prove our success. I have finally acquired what I believe is a good contract though. Our contract with a debt buyer I formed a relationship with provides us with 40k of debt per collector per week, or approx. 1mm per month. We get to work that debt for 30 days until our contract is up, and then we reevaluate. We get 50% of everything we collect. Obviously the goal is to eventually buy our own debt so that we can get 100% of it, and also resell it. For now, I don't have the financial capability to do that. The type of debt we are working are paydayloans from 2010 and 2011. They have been worked by one collection agency before we got them. I hope to collect about 6% of the debt we are given. If we can do that, we will make a good profit, and be able to aggressively expand our company.
Besides soliciting clients, the past month was full of frustration. Between getting approved for skip-tracing, and finding a payment processor to handle a collection agency, I will never underestimate how difficult it is to start a business again. There won't be much to update until next the 24th when we hope to officially open for business, but I'm still here, still trying to make it in this crazy world. I will update and answer questions if anybody is still interested.
Andy

Nice update. Look forward to one next month.

Curious how skip-trace works. I'm assuming you get access to databases not traditionally available to the general public. There has been a lot of conversation about how difficult it would be to just disappear and not be found.

Thanks Henry, appreciate the interest.
Skip-tracing is pretty much exactly what you said. Since I have people's SS numbers, I can access anything else their SS# is attached to. That means any cell-phone or land-line, any job where they get a paycheck, and any lease where they provided their SS#, I can access it. Obviously it is very sensitive information, which is why I had to go through all the nonsense that I did in order to access skip-tracing companies. My office was inspected by a 3rd party agency to make sure I was compliant with the federal laws concerning skip-tracing, and there were a lot of things that I needed to do to be compliant.

As far as how difficult it would be to just disappear? I couldn't find you with my tools as long as you didn't use your SS# for anything, or didn't have anything in your legal name. But if you make any sort of money whatsoever, and have a bank account, odds are I could find you.

PS... in my last post, it should have said our contract allows us to work the debt for 90 days, not 30, until we return it to the owner.

Really interested in this if you continue to update. Came across this myself but I don't think I have the balls to try it at all yet. Sounds like yours is complicated enough Good luck!

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Great thread and good luck.

Once you start buying your own portfolios are you planning on doing any valuation of them before deciding to purchase one?

It seems strange to me that these smaller companies seem to have preset pricing on what they sell. Maybe I missed it but are they giving you more information than total facevalue, number of accounts and average balance before you agree to purchase something? There are a ****ton more variables (statue of limitations, when their last payment was, how much that payment was etc) that can drastically change the liquidation rates of a portfolio.

Week one is in the books. We opened for business on Tuesday at noon, and it was a disaster lol. The internet didn't work and neither did the phones. We sent everyone home at 3. Wednesday was better. Internet was still slow, so we upgraded to high speed business class, which should kick in this coming week. We had hired 5 people to start, plus my manager and myself. Of those five people, one was fired on the second day for being useless and a distraction, one is a vagrant and shows up when he wants and will be fired next week if it continues, and one has no experience. Two of the hires I made are absolute studs, and I should be paying them far more than I am. So out of 7 seats, we end the week with 4 solid collectors, including myself and manager.
We have two new hires showing up on Monday hopefully. One seems like a good hire, but we'll see. The other is working strictly on commission, so that is a win/win for me. So far we have collected 2500 for the month of October, and 2000 for the month of November. In order to break even for the month of October, we need to collect 25k. If we collect 20k, I'll have to go into my pocket a bit for payroll, but we should have enough postdates for November where I will feel comfortable dipping into my savings. I am going to try to find one more person to work on commission, because therefore my payroll doesn't go up unless that person is profitable. So it has been a rough first week, but we're gettin there. Hopefully next week we collect 6.5k now that we're rolling, and then I'll be a lot less nervous.
The debt we were given is ok, but if we start being profitable, I am forming a separate LLC to but debt and work it with my agency asap, because we aren't getting a favorable piece compared to what I feel we should. That is down the road though. Step one is not going bankrupt by mid-November.
Andy