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.
The Good
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 bwettlaufer@gmail.com.
Blair Wettlaufer
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