Being In Debt Doesn't Make You A Failure

So at a recent network event, I was talking with a professional outside the collection industry how we try to make collecting from consumers a process where they keep their dignity and are treated like a human being.  She responded saying ‘being in debt doesn’t make you a failure’.

And she was absolutely right.

Imagine playing some form of poker – and they don’t explain the rules to you until the third hand.  And the people explaining are your opponents, who all want to win.  Oh, and occasionally the dealer sets some of your poker chips on fire.

Many consumers who have a net worth of $0 or less are working at a disadvantage – they aren’t taught real, practical financial literacy by the schools or their parents, and the information online is all skewed by creditors, lawyers, collection agencies, insolvency trustees, all of which are looking to generate profit from the consumer.  On top of that, human behaviour is monetized with installment plans, tap debit, $0 down, pay later plans, targeted advertising and so on.   Everyone seems to learn the hard way.

How many people learn the hard way?  Talking to a trustee, about 100,000-150,000 people file for bankruptcy or a consumer proposal every year – over the last 8 years, that’s 1 million people.  Assuming that people need a few years as an adult to rack up enough debt to file with a trustee, let’s estimate 25 million people in Canada over 20 … so 1 in 25 people having the worst of the worst financial experiences.  Now looking at hydro utility companies, cable companies, internet companies, fitness companies, etc, they have a bad debt write off of around 4%, so also 1 in 25 people, but often an agency has very little overlap – I would guess that 1 in 5 people have been in collections at some point, maybe more.  That’s a huge number, millions of people.

So when we attempt, as a collection agency to collect from consumers, we want to have a little empathy.  We also have the benefit of hindsight, we see everything that has gone wrong – the consumer didn’t understand the contract, didn’t realize that 59.9% interest roughly doubles the debt every year, didn’t think that us reporting a debt to the credit bureau would affect them 2-3 years down the road … and while 9 out 10 consumers are good people, bad things happen to them like job losses or illness, or personality quirks impact them financially – procrastination, the desire to hide from stressful events or emotionally lash out. 

So what do we do about this?

First and foremost, we need to remember that the people we are dealing with in debt, no matter what, have been dealt some sort of bad hand, and they didn’t intentionally expect to end up getting collection calls, wage garnishments, or liens on their property.  Life just happened.  We can berate them, intimidate them, or we can give them a hand up, educate them and solve the problem at hand if possible.

And we can advocate for real, practical advice.  Not just abstract math to teach people how compound interest works, and fun little exercises with nickels and quarters – big scary presentations in Grade 12 where we explain what happens if you don’t pay for your car and it’s repossessed, leaving you with an empty parking spot and a huge deficiency balance on your car loan that you still owe.

My advice for consumers?  Read everything you can – books like ‘Straight Talk On Your Money’, ‘The Wealthy Barber’ or ‘The Pig and The Python’.  Even skewed books like ‘The Wolf At The Door’ … and take all the viewpoints.  Watch Youtube videos on how to manage a mortgage, ask questions online and with friends and relatives, whether they are in good financial shape or not.  Learn the rules of the game, before the dealer comes and sets your poker chips on fire with unexpected circumstances, bad luck, or financial decisions that seemed like a good idea at the time.

Being in debt doesn’t make you a failure – it happens to more people than you think.  Just solve one problem in front of you, and then another, until you make it to $0 in debt.

I run a collection agency, and I know it’s odd, but I actually work hard to have positive experiences with consumers and help them where we can.  I started this blog back in 2010 offering help and information to consumers in Canada, and I still stand by that 11 years later.  If you don’t know where to turn, I recently started a debt settlement arm of our company, for free, to help folks in Ontario – you can find the link here: https://kingstondc.ca/debt-settlement/ … and if you aren’t in Ontario, or your problem is bigger than what we can help you with, feel free to reach out and we’ll try to point you in the right direction of someone in your province or state.

Thanks kindly,

Blair DeMarco-Wettlaufer
KINGSTON Data & Credit
Cambridge ON
226-946-1730
blair@receivableaccounts.com