The Wolf At The Door
It’s no surprise to many that collections is a contentious topic. The people who have the most exposure to collection agencies are the consumers. Every collector speaks to thousands of debtors each year, and some of those collectors are antagonistic, or even abusive. To assist these consumers, former collection lawyer turned consumer advocate Mark Silverthorn has written the book, The Wolf at the Door.
Out of curiousity, I purchased his book and read through it – I find a number of subjects in his book well covered. However, I found a few topics I strongly disagreed with his approach. This is likely a difference of viewpoint, as he is a laywer who has previously affiliated with collection agencies, and I have worked as a collector and collections manager dealing directly with debtors, and the collection agencies he and I have worked with have operated with vast differences.
Over three articles, I will review some of the topics covered by Mr. Silverthorn's book.
There are a number of excellent topics that Mark Silverthorn covers well, and I would wholeheartedly support a book that addresses these topics as well as he does, with excellent information for consumers.
Mr. Silverthorn is very correct in stating that settlements can be arranged on debts. The facts that many agencies have a blanket permission to settle accounts for a flat settlement rate, or the older the debt the higher the settlement amount are absolutely true.
That being said, on the collection end of things, I would supplement Mr. Silverthorn’s advice. Firstly, don’t ask or offer a settlement unless you have the means to settle – a broken settlement arrangement will be noted, and can thwart future attempts to request settlement in the future. By all means offer a settlement that benefits yourself and see what the agency and client respond with. I also agree with Mr. Silverthorn that you should always ask for the settlement offer in writing in advance before payment. Keep that settlement letter, and your release or receipt letters in your financial records for the next seven years. That is your protection as a consumer to prevent the creditor (mostly likely from misinformation, rather than maliciousness) from pursuing the balance of the debt in future.
Some creditors will never agree to settle, and others will right at the start of the debt aging – take the advice in the book as a general guideline. There certainly is no harm in offering a settlement. As well, settlement is an excellent option when a portion of the debt is in dispute, due to argument over quality of service, specific goods received, etc.
Poor Collection Practices
I applaud Mr. Silverthorn for calling out unethical collectors who demean or humiliate consumers, or threaten inappropriate actions. The entire section on Identifying Bill Collector Misconduct is excellent. Sadly, this information is necessary for consumers, as many collection agents go far outside the bounds of legal collection practices.
False threats of lawsuits are foremost in the collection industry. Many untrained collectors threaten legal action on every file coming across their desk, regardless of balance. This book is absolutely right that many collection agencies threaten legal action with no intent (or permission from the client) to follow through with such action. Legal action can’t occur over four days. Collection agents can’t magically seize your wages or bank accounts without a judgment first. See my previous series of articles about collection agencies and legal action at http://receivableaccounts.blogspot.com/2011_02_01_archive.html.
It is also true that many agencies are set up to motivate their staff through fear, and encourage improper collection practices, either actively or through the neglect or ignorance of management. These sort of excesses are not necessary to be an effective collection agency in the 21st century.
The Credit Bureau
The chapter on credit bureaus, and credit reports is spot on how Mr. Silverthorn accurately covers Trans Union and Equifax as business entities, and how they interact with collection agencies and consumers. I believe he focuses too much on credit scores, as many credit managers of smaller creditor companies review the whole bureau in full, although he is right that banks and large financial institutions rely heavily on the score (combined with internal data factors such as length of time at employment or owning a home) for a pass/fail decision to lend funds to a consumer.
A small point of difference -- you do not have to pay for your credit bureau. If you visit Trans Union directly, you can receive a copy for free. If you have been denied credit in the last 30 days, you can also request a copy from Trans Union or Equifax for free. Mr. Silverthorn is right that you should request a copy of your credit bureau on a regular basis to know what is being said about your credit worthiness (I believe it should be once a year).
Limitations on Action
Mr. Silverthorn is right on the limitations that an item can be pursued legally or placed on the credit bureau. His chapter on “The Lmitation on Your Debt Has Expired” chapter is excellent advice, although he focuses on legal action rather than credit bureau limitation periods. Again, I suspect this is a reflection of Mr. Silverthorn’s legal background and experience.
Non-profit credit counselling agencies are excellent resources for people unable to cope with their debt. They are an excellent source of representation, and can negotiate cessation of interest charges and collection calls. An Orderly Payment of Debt (OPD) program will parse out your available funds pro-rata to your creditors, and help you out of financial difficulty. Be warned, some collection agencies are under instructions by their larger clients to refuse credit counselling payments or notices. The concerns regarding for-profit credit counselling firms are valid, and I would also encourage caution and full disclosure from a credit counselling agency regarding its fees before engaging with them.
The chapter on consumer proposals and personal bankruptcy are detailed and accurate to my experience. I certainly agree that bankruptcy is not the best option for everyone, but this section is very accurate and outlines all the steps of a bankruptcy, and lists the pros and cons well.
I found reading Mark Silverthorn’s book an overall enjoyable experience, and there is some excellent value here. Stay tuned next segment, when I address some points of difference I have.
While my professional interests rest with the creditors I represent, and I may not be the ideal point of reference for consumers looking for advice, I do have a great deal of contact information that I would be pleased to pass on regarding creditor rights, credit counselling, paralegal services, consumer proposals or bankruptcy. If it isn’t a conflict of interest, you are welcome to call my office at 226-444-5695, or drop me an email at firstname.lastname@example.org.