One thing that's not mentioned in this article is that credit card companies will sometimes make last-ditch "clear your debt at a discount" offers before passing your debt on to a collection agency.
This happened to me many years ago. In the wake of the '08 financial crisis, I'd lost my job abruptly and decided to go travelling.
I'd accumulated a balance that was fairly substantial for me at the time (on the order of $10-15k, IIRC) and had been struggling to make the payments. I'd probably been 2-3 months behind on multiple occasions over the course of a year or so when a letter appeared that essentially said "we don't like you and we're going to close your account and pass your debt to a collection agency. However, if you pay off a portion of your balance in 4 monthly payments, and don't miss any of those payment dates, we'll wipe the rest."
I don't recall exactly what the discount was, but it was very substantial. In total I only had to pay something like 30-40% of the balance that I owed, so it was a very good deal. I'm not normally one to skip out on my debts but this was a huge relief to have a chance to be free of that debt: I pulled a lot of strings to make those payments on time!
True to their word, they wiped my entire balance and closed my account, and I never heard from them again (nor any collection agencies).
This is because debt collection is a terrible deal: debt like this sells for a very steep discount, because debt collectors generally have a low rate of success of collecting. They essentially rely on apathy, ignorance, or compliance from the debtor, and if there's any resistance put up they essentially just write it off as it's no longer worth the effort (especially because debt collectors often don't have any actual evidence of a debt owed: they get a spreadsheet with names, addresses, and amount owed, and that's it. Something like that doesn't tend to stand up in court). So you probably gave them a better deal then the debt collectors.
same experience, except it wasn't that simple. A family member told me I should settle with them, because that's what they did too. They wiped the balance and closed the account but the settlement stayed on my credit score for 7 years. I had a friend who was getting calls by a debt servicer and was making it seem like no big deal. I told my friend to ask the person about the 7 years, the person reluctantly admitted that his credit score will be flagged for 7 years.
It seems like this is the solution: Anytime your debt is sold on, the debtor has the right of first refusal on the price it is being sold for.
If the bank is willing to ding your credit sore and move on through parting with your $1000 of debt for $100, then you should have the opportunity to buy it at that price and be done as well.
I suppose the problem is that if that becomes too prevalent, people will stop paying their bill in the hope that the credit card company will give them a discount
As the article points out, the credit card company getting 30-40% was actually a great deal for them: if they had to sell your debt to collections, they probably would have only gotten 3-4% from that sale.
There was a case a few year back around the time of the 2008 recession where a man in debt used the Fair Debt Collection Practices Act to earn a decent living from their aggressive/dishonest practices. I did try Googling for the story, but I could find it.
His process was to let them lie to him - he even encouraged it, all while he was recording the call. After the call ended he'd launch a legal claim for compensation and he'd always win.
For example if they implied he could be jailed for not paying him debt, he ask them to confirm what they must said and use that as evidence of a violation of the FDCPA.
His logic was that in the good days credit companies were begging him to take on debt, but when the economy crashed and he found himself out of work they weren't so understanding about his circumstances.
> On June 25, 2021, the Supreme Court of the United States held that a plaintiff must suffer a concrete injury resulting from a defendant’s statutory violation to have Article III standing to pursue damages from that defendant in federal court. The Court also held that plaintiffs in a class action must prove that every class member has standing for each claim asserted and for each form of relief sought.
I had a bunch of idiotic debt collectors after me in dealing with my mother's estate. (*None* of them listened to the simple instruction that it's an estate issue, file with such-and-such court. The clock ran out, they all ended up with $0.) Rare was it a call that didn't violate the FDCPA. Unfortunately, I live in a state that's all-party with regards to phone calls even though we're one-party in person.
Recycling my post from when this link was submitted 32 days ago.
_____
While I highly encourage everyone to read this in its entirely, I think it's worth a quick summary of the bits that may be personally-useful to those who don't:
* If it comes to a lawsuit in a court case, DO NOT IGNORE IT. If you don't show up, collector gets a kind of automatic win called a default judgement, and that's how you end up losing your house or having money vanish from your bank-account. If you do show up, they might instantly offer you a discount deal, often because they know their position is very shaky and they don't actually want to spend money fighting a court case that might be unwinnable against a strong opponent.
* Ask for proof. Debt collectors often lack documentation that you are legally-entitled to. ("Debt verification" under the "FDCPA".) Many never got it form the original bank, and don't want to spend time/money getting it. Asking for that proof means they may just give up and move on to a cheaper/easier person.
* Don't be fooled into paying for other people's debt. At least in the US, debts end when the original debtor dies, except in the sense of money taken away from the debtor's stuff before it reaches heirs. You can't ever "inherit negative money". Spousal stuff is more complex, but don't get fooled into paying something you don't even owe.
* Debt collectors will often make threats that are both impossible and illegal. This means you can only benefit from having everything in writing. (Or by clearly announcing that you will record a call, and then recording it.)
* The law (FDCPA) only allows debt collectors to call family members in order to get your contact information... But some of them use this as a form of harassment/coercion. There's no magic-wand for this part.
* If you agree to a vague "payment plan" and then send them the first check or bank-account info, watch out: Even if you don't write another check, they will find ways to withdraw money out of that account at the exact worst moments for you... but the best for them.
I'm in Canada so laws are different but what I found here is when I ask for proof they don't send it, they just sell the "debt" to a different agency and then I start getting harassed again 2 months later, rinse and repeat.
(I put debt in quotes because the alleged debt is with a company I've never done business with, so I assume it's completely fake, mistaken identity, or identity theft.)
It is in this domain, of broken promises and broken people that you can establish what a society is really made of. Graeber's Debt is obligatory reading (alas not easy to read) if you want to dig into the painful history of debt relations between humans.
The post provides excellent insights into the odious side of consumer finance. It feels like a follow up with ideas about reform would not be wasted effort: Once this domain meets the odious side of tech (uncontrolled data collection, tracking etc) the toxicity will grow exponentially.
Some credit card companies - in the UK at least - specifically target people with poor credit scores with rates up to 99.9%(!)
And it's normal practice - but utterly perverse logic - to increase the rate of anyone who starts missing payments.
Debt collectors can get a court order to put a lien on property, and then get another court order to force sale of that property and repayment of the debt.
Of course the collectors bought the debt for some tiny percentage of its nominal value, so this is immensely profitable.
The outcome is that if you lend to poor people with poor credit scores there's an excellent chance you'll be able to secure a supposedly unsecured debt on their property and make them homeless, with a huge margin of profitability.
There are also ambiguous and murky connections between the debt collectors and the credit card companies which allow the latter to distance themselves from the harassment and aggression of the collection companies.
At the same time there's an incredibly toxic combination of wages decreasing in real terms, exploding property prices (both renting and buying), exploitative health care costs, constant ad noise promoting pointless lifestyle spending, and constant reinforcement of the belief that if you're in debt in a glorious economy of freedom and opportunity it's entirely your own fault.
It's a perfect storm of financial servitude. The credit industry is just one part of it.
I am far from religious, but one thing most religious traditions have common is how they ban usury/interest which would make much of global finance we have today “haram”.
You can see the reverse effect too not only at an individual but collective level. Once the religious ethos disappears from a sect, widespread adoption of debt becomes the norm.
Debt crisis followed by debt relief is historically normal. Prompting Graeber to wonder if capitalism is inherently unstable.
Maybe capitalism somehow requires debt relief (eg jubilees, bankruptcy). Then we should codify it. Instead of continuing to treat them as unanticipated, unfortunate one-offs.
Our recurring bubbles and bailouts seem to be keeping with Graeber's thesis.
It’s even more cathartic to show up in court with a motion in hand to dismiss with prejudice and a second motion barring them from both servicing and selling the alleged debt. That’s almost a money maker, since winning their suit entitles you to compensation for filing fees, and violating the second order can be wildly punitive if you haul the collector back into court.
There's a point in this article where Patrick suggests you Google "litigious debtor scrub" to confirm a point he's making, and when you get to that point --- not before --- I highly recommend doing the search and reading some of the links, because they're pretty funny.
I have come to truly loathe debt collection agencies. I see them as a pox. I’ve witnessed their conferences and the way they view other people. I’ve witnessed their tactics at work against people who were vulnerable.
Several years ago I was caught up in a case of mistaken identity with a debt collector. It was with glee that I sent them letters that included the (pre-purchased) tracking number for the envelope in the subject line. It was with glee that I sent those letters signature required, return receipt.
It was with glee that I offered them a settlement on terms I knew they couldn’t legally reply to, because they knew they had the wrong person and had already disclosed too much information without verifying my identity. It was with glee that I took the advice of an attorney to do all of that. To dangle a carrot I knew they could never grab.
patio11’s prior writing on this topic helped give me the knowledge and fortitude to successfully dispute several thousand dollars of fraudulent claims that Enterprise rental cars tried to collect from me. As he alluded to, my high-FICO self felt morally bound to settle and pay for the dented bumper, but they definitely violated the FDCPA and some CFPB rules (in writing!), which I enumerated for them. Maybe if I went “all the way” I could have paid $0 and gotten on the litigious debtor scrub list, but I worried that could somehow have been held against me in the future.
Yeah, that line stood out to me... I don't know how many of those high FICO score people pay because of morality verse how many pay because they want to continue to have access to lower cost debt that having a high FICO score gets you.
Article is great, (with it being written by pat mckenzie that is almost tautological)
> The value of portfolios is a huge discount to the face value of the debts; at the point where a lender has only worked it themselves and the debt is a few months delinquent, portfolios generally fetch about 5 cents on the dollar. That value will continue to decay over time.
I agree with his point directionally (the value of the sold debt is far below the face value of the balance) but he is off on the absolute value. You can expect more like 7-15% after working the account for 4-5 months.
> Debts are conveyed to the debt buyers as large CSV files with minimal supporting documentation.
This is funny - it is true that just big ole csv files (only ever opened in excel of course) are the way the debt is sold but how else would you suggest it be done? And in my experience you provide the debt collections agency all supporting contracts and account documents for each loan.
> in my experience you provide the debt collections agency all supporting contracts and account documents for each loan
This might be true for first party lender to first party debt buyer, but it often falls apart after that first step.
The article mentioned the chain of debt ownership and that, in my experience, is where contracts and supporting docs are lost. Once you're buying debt 3 or 4 steps removed from the primary lender the documentation becomes sparser and sparser, which is why as the article rightly said, most of these "last mile" agencies rely on people's ignorance and use a "spray and pray" strategy for debt collection.
My experience, from a large primary card issuer in the US, was that most of the major, reputable debt purchasing agencies would only buy primary debt portfolios that had _contractual guarantees_ about the accuracy of the supporting contracts and docs. They'd spend a lot of time and effort reviewing them, but they would in turn outright _refuse_ any such provisions when THEY sold their debt to smaller agencies!
If the contracts and supporting documentation were digitized, you could theoretically upload them to S3 or similar and include links to them in the CSV.
> Many people have suggestions for obvious improvements here, which might rhyme with the Federal Trade Commission’s suggestions from 2010 or the Consumer Financial Protection Bureau’s spate of rulemaking from 2021 through 2023 or the FDCPA from 1978.
I would humbly suggest looking at how different countries deal with the same issues, and seeing what works and what doesn't work. Many of the differences will be cultural, some will be differences in laws and regulations. Some will be systematic differences, some will be down to random chance.
I always enjoy patio11's writing, and I think a bit part is he writes as if the reader is intelligent but not knowledgeable about the topic, which is the best way to teach. The other three permutations of those bools are much more common.
> you, reader, use credit cards in preference to debit cards as a payment instrument
Reader from Europe here. I use debit cards for daily payments, that's just the most standard expected payment method in Europe (with mobile payments now replacing it. Is a mobile payment app more like a debit or like a credit card? I have no idea actually!).
But credit cards for online payments on the internet because (despite some debit card based systems existing which don't seem to work by default) on the internet credit cards seems to be the main supported payment method, including e.g. through Paypal, but also for local online shops, airlines, ...
So in the US credit card vs debit card is probably an important distinction between buying on actual credit or not and all the fun stuff they have there like credit ratings, but in Europe the main distinction seems to simply be which one works for online purchases or not. Of course some reward programs for credit cards do exist here, I think American Express specifically has some benefits to the user but isn't accepted everywhere (Heard from other users, don't have this one myself. I'm not really into rewards programs myself, why not just make the stuff you buy cheaper instead?). Also, visa and mastercard seem to have no practical difference and some banks just give both.
If this view is naive or incomplete, it probably just shows credit cards are indeed not as important in Europe, if they gave some huge benefit I'd have known!
Edit: I don't mean to say credit and debt collection doesn't exist in Europe. All the stuff like payday loans, car loans and buying on credit from some stores exists.
There is zero chance that I, a US resident, will ever use debit cards for anything. The reason is that in the event of a fraudulent charge (which still happens surprisingly often, given that chips were supposed to put an end to that):
- With a debit card, I am out $X of my own money, until the bank can be bothered to agree that the charge is fraudulent and refund my money, which can take weeks or months, if at all. Good luck paying rent or buying food or whatnot in the meantime if you don't have a nice savings cushion.
- With a credit card, I am out $0 of my own money, and now the bank is potentially out $X of THEIR own money, making them significantly more motivated to investigate promptly and agree that the charge is fraudulent. For however long this takes, I still have my own money to pay rent and buy food, and I'm not on the hook for paying the fraudulent charge.
The fact that credit cards tend to have "rewards" in the form of cash back or airline miles or whatever is secondary to me, personally, although I do take advantage of this as much as possible.
In the US, the terms of service are much better for credit cards than debit cards, so even folks who pay off their cards every month (for example, airline miles cardholders) prefer credit cards because of superior ToS.
The terms on credit cards are expensive for issuers, so debit cards were introduced with terms more favorable to issuers. Even if they improved the terms, consumers would still be hesitant to use them because US debit cards' reputation is tainted.
Europe has much stronger consumer protections, so I can only assume EU debit cards dont share the disadvantages of US debit cards.
The difference I see is that in Europe, at least where I live, at the end of the month the bank will charge your bank account with the full amount of whatever is the balance of your credit card.
If you have no money you will go into overdraft and that’s about it, you basically have a problem and the bank will keep nagging about that overdraft if you don’t have an agreement.
The goal is to use the “credit” of the credit card for 30 days as a convenience. The implicit expectation is that it will be paid in full at the end of the month.
In countries like US and South America (e.g.) many people see credit card as free money (that they don’t have), so when the end of the month comes they simply don’t have the money to pay the balance or pay very little of it. The consequence is what we all know: high interest on the balance which keeps snowballing.
I know in south america banks even have interface for payment in instalments etc. Here in Europe, at least my bank they don’t have have such feature, I guess it’s just not meant to be used and abused they way it happens in other places.
[In the UK] despite the verbiage on most sites still saying "credit card", I've been using ordinary debit cards (from both Visa and MC) online for as long as I've shopped online, and never had a single issue related to them being debit. For many years I didn't even have a credit card
Edit: it's possible that this is an issue of semantics. My cards have been debit cards in every sense of the term - they are labelled as such, are linked to a specific current account, and debit it immediately - but I don't think any of mine have actually said Visa/Mastercard Debit. So strictly speaking they may be implemented as a sort of instant-clearing credit card - essentially shimming debit onto credit infra. I don't know a whole lot about the finance industry or its tech, so if anyone can chip in please do
Edit 2: Ah, my current one does have "debit" in the MC hologram on the back
> Is a mobile payment app more like a debit or like a credit card?
My understanding is that the mobile payment app is just a medium for a virtual debit or credit card
> on the internet credit cards seems to be the main supported payment method
Over many years, I've never had any issue paying with debit cards on the internet, except _once_ to rent a bike on a taiwanese website (bc they do a credit card hold).
This probably depends a bit on which part of Europe. In the UK the consumer protection law surrounding credit cards is stronger so it's better to use a credit card for larger purchases especially.
For daily payments shops all accept both credit and debit and
there's no difference to the consumer whether they happen to tap a credit or debit card.
My Finnish debit and credit cards are equally accepted everywhere. I normally pay with Apple Pay, also sometimes chip & pin, and of course online.
For all purposes, they are the same. In fact, they are bundled in the same physical card. The only difference is that one debits my account immediately (usually, unless the point of sale is not networked), and the other collects debt I usually pay off at the end of the next month.
I've never had any special rewards or cash back programs associated with my cards. There is some kind of travel insurance bundled with my Visa Credit cards, but that's kind of worthless for me as I usually have other insurance in place already.
> The former advocate in me will observe that the single most effective method for resolving debts is carefully sending a series of letters invoking one’s rights under the FDCPA (and other legislation)
Can we get a summary of which letters / rights to invoke?
As a counterpoint, I live in the US and I use credit cards exclusively. Why?
* Amex with 6% cashback on groceries
* Visa with 5.25% cashback on gas
* Visa that adds 2 years or more to manufacturers warranty.
* Credit cards with promotions that end up paying for my family trips around the country and abroad. E.g airline miles or transferable points that are equivalent to $500-$1500 per promotional period
I see no point in using debit cards except for the rarest event of me getting some cash out of ATM
Around 2015 I saw the IT inards of a local debt collector. It was a 1980's PC with a monochrome CRT (yes, a real greenscreen).
Their office was located in a low tier residential appartment. Debtors had to interact and pay through an improvised hatch DIY'd into the appartment's front door.
My sleep went from bad to utterly shittastic a few years ago and I ended up missing several items that went to debt collection. They were medical bills I would only be too happy to pay and it’s a very weird feeling. I haven’t carried any debt for decades at this point, not even car or house.
I am still scheming ways to pay the creditors by getting them to accept a check, but it’s hard after they’ve gone to collection.
When one uses credit to an extreme and it suddenly changes under you, the conversation becomes interesting. The issue is - one negative thing like a 30 day lack of payment - tanks a score based on things you mostly can't control aside from paying bills.
I had this happen recently because in the US mortgages get sold repeatedly and on one propery I have it was sold 3x in a year and somehow I missed one thing. Shouldn't have, but multiple addresses, shifting mortgages, etc. The funny thing, once the "deliquenct" account agency wasn't involved, the score ticked back up.
In the US - credit is a game, it's based on how much you make (or how much you claim you can make), making payments, an keeping a score high. If you hit a high threshhold and suddenly sink after years of relationships...those old relationships can help with debt and collection.
At a certain point, institutions you have dealt with want to maintain healthy relationships.
I've have great credit situations with Amex and Citi going back decades and leveraged those to offset/erase turmoil issues.
[+] [-] Reason077|2 years ago|reply
This happened to me many years ago. In the wake of the '08 financial crisis, I'd lost my job abruptly and decided to go travelling.
I'd accumulated a balance that was fairly substantial for me at the time (on the order of $10-15k, IIRC) and had been struggling to make the payments. I'd probably been 2-3 months behind on multiple occasions over the course of a year or so when a letter appeared that essentially said "we don't like you and we're going to close your account and pass your debt to a collection agency. However, if you pay off a portion of your balance in 4 monthly payments, and don't miss any of those payment dates, we'll wipe the rest."
I don't recall exactly what the discount was, but it was very substantial. In total I only had to pay something like 30-40% of the balance that I owed, so it was a very good deal. I'm not normally one to skip out on my debts but this was a huge relief to have a chance to be free of that debt: I pulled a lot of strings to make those payments on time!
True to their word, they wiped my entire balance and closed my account, and I never heard from them again (nor any collection agencies).
[+] [-] rcxdude|2 years ago|reply
[+] [-] worldwidelies|2 years ago|reply
[+] [-] furyg3|2 years ago|reply
If the bank is willing to ding your credit sore and move on through parting with your $1000 of debt for $100, then you should have the opportunity to buy it at that price and be done as well.
[+] [-] RobinL|2 years ago|reply
[+] [-] kelnos|2 years ago|reply
[+] [-] vuln|2 years ago|reply
[+] [-] differentView|2 years ago|reply
[+] [-] DoubleGlazing|2 years ago|reply
His process was to let them lie to him - he even encouraged it, all while he was recording the call. After the call ended he'd launch a legal claim for compensation and he'd always win.
For example if they implied he could be jailed for not paying him debt, he ask them to confirm what they must said and use that as evidence of a violation of the FDCPA.
His logic was that in the good days credit companies were begging him to take on debt, but when the economy crashed and he found himself out of work they weren't so understanding about his circumstances.
[+] [-] hiatus|2 years ago|reply
> On June 25, 2021, the Supreme Court of the United States held that a plaintiff must suffer a concrete injury resulting from a defendant’s statutory violation to have Article III standing to pursue damages from that defendant in federal court. The Court also held that plaintiffs in a class action must prove that every class member has standing for each claim asserted and for each form of relief sought.
https://consumerfsblog.com/2021/06/supreme-court-substantial...
[+] [-] LorenPechtel|2 years ago|reply
I had a bunch of idiotic debt collectors after me in dealing with my mother's estate. (*None* of them listened to the simple instruction that it's an estate issue, file with such-and-such court. The clock ran out, they all ended up with $0.) Rare was it a call that didn't violate the FDCPA. Unfortunately, I live in a state that's all-party with regards to phone calls even though we're one-party in person.
[+] [-] sidewndr46|2 years ago|reply
[+] [-] Terr_|2 years ago|reply
_____
While I highly encourage everyone to read this in its entirely, I think it's worth a quick summary of the bits that may be personally-useful to those who don't:
* If it comes to a lawsuit in a court case, DO NOT IGNORE IT. If you don't show up, collector gets a kind of automatic win called a default judgement, and that's how you end up losing your house or having money vanish from your bank-account. If you do show up, they might instantly offer you a discount deal, often because they know their position is very shaky and they don't actually want to spend money fighting a court case that might be unwinnable against a strong opponent.
* Ask for proof. Debt collectors often lack documentation that you are legally-entitled to. ("Debt verification" under the "FDCPA".) Many never got it form the original bank, and don't want to spend time/money getting it. Asking for that proof means they may just give up and move on to a cheaper/easier person.
* Don't be fooled into paying for other people's debt. At least in the US, debts end when the original debtor dies, except in the sense of money taken away from the debtor's stuff before it reaches heirs. You can't ever "inherit negative money". Spousal stuff is more complex, but don't get fooled into paying something you don't even owe.
* Debt collectors will often make threats that are both impossible and illegal. This means you can only benefit from having everything in writing. (Or by clearly announcing that you will record a call, and then recording it.)
* The law (FDCPA) only allows debt collectors to call family members in order to get your contact information... But some of them use this as a form of harassment/coercion. There's no magic-wand for this part.
* If you agree to a vague "payment plan" and then send them the first check or bank-account info, watch out: Even if you don't write another check, they will find ways to withdraw money out of that account at the exact worst moments for you... but the best for them.
[+] [-] greenshackle2|2 years ago|reply
(I put debt in quotes because the alleged debt is with a company I've never done business with, so I assume it's completely fake, mistaken identity, or identity theft.)
[+] [-] nologic01|2 years ago|reply
The post provides excellent insights into the odious side of consumer finance. It feels like a follow up with ideas about reform would not be wasted effort: Once this domain meets the odious side of tech (uncontrolled data collection, tracking etc) the toxicity will grow exponentially.
[+] [-] TheOtherHobbes|2 years ago|reply
Some credit card companies - in the UK at least - specifically target people with poor credit scores with rates up to 99.9%(!)
And it's normal practice - but utterly perverse logic - to increase the rate of anyone who starts missing payments.
Debt collectors can get a court order to put a lien on property, and then get another court order to force sale of that property and repayment of the debt.
Of course the collectors bought the debt for some tiny percentage of its nominal value, so this is immensely profitable.
The outcome is that if you lend to poor people with poor credit scores there's an excellent chance you'll be able to secure a supposedly unsecured debt on their property and make them homeless, with a huge margin of profitability.
There are also ambiguous and murky connections between the debt collectors and the credit card companies which allow the latter to distance themselves from the harassment and aggression of the collection companies.
At the same time there's an incredibly toxic combination of wages decreasing in real terms, exploding property prices (both renting and buying), exploitative health care costs, constant ad noise promoting pointless lifestyle spending, and constant reinforcement of the belief that if you're in debt in a glorious economy of freedom and opportunity it's entirely your own fault.
It's a perfect storm of financial servitude. The credit industry is just one part of it.
[+] [-] bettercallsalad|2 years ago|reply
You can see the reverse effect too not only at an individual but collective level. Once the religious ethos disappears from a sect, widespread adoption of debt becomes the norm.
[+] [-] msla|2 years ago|reply
https://guilfordjournals.com/doi/10.1521/siso.2015.79.2.318
[+] [-] specialist|2 years ago|reply
Debt crisis followed by debt relief is historically normal. Prompting Graeber to wonder if capitalism is inherently unstable.
Maybe capitalism somehow requires debt relief (eg jubilees, bankruptcy). Then we should codify it. Instead of continuing to treat them as unanticipated, unfortunate one-offs.
Our recurring bubbles and bailouts seem to be keeping with Graeber's thesis.
[+] [-] spdustin|2 years ago|reply
[+] [-] tptacek|2 years ago|reply
[+] [-] bradleybuda|2 years ago|reply
[+] [-] TheNewsIsHere|2 years ago|reply
Several years ago I was caught up in a case of mistaken identity with a debt collector. It was with glee that I sent them letters that included the (pre-purchased) tracking number for the envelope in the subject line. It was with glee that I sent those letters signature required, return receipt.
It was with glee that I offered them a settlement on terms I knew they couldn’t legally reply to, because they knew they had the wrong person and had already disclosed too much information without verifying my identity. It was with glee that I took the advice of an attorney to do all of that. To dangle a carrot I knew they could never grab.
[+] [-] analyte123|2 years ago|reply
[+] [-] cortesoft|2 years ago|reply
[+] [-] aketchum|2 years ago|reply
> The value of portfolios is a huge discount to the face value of the debts; at the point where a lender has only worked it themselves and the debt is a few months delinquent, portfolios generally fetch about 5 cents on the dollar. That value will continue to decay over time.
I agree with his point directionally (the value of the sold debt is far below the face value of the balance) but he is off on the absolute value. You can expect more like 7-15% after working the account for 4-5 months.
> Debts are conveyed to the debt buyers as large CSV files with minimal supporting documentation.
This is funny - it is true that just big ole csv files (only ever opened in excel of course) are the way the debt is sold but how else would you suggest it be done? And in my experience you provide the debt collections agency all supporting contracts and account documents for each loan.
[+] [-] Joe8Bit|2 years ago|reply
This might be true for first party lender to first party debt buyer, but it often falls apart after that first step.
The article mentioned the chain of debt ownership and that, in my experience, is where contracts and supporting docs are lost. Once you're buying debt 3 or 4 steps removed from the primary lender the documentation becomes sparser and sparser, which is why as the article rightly said, most of these "last mile" agencies rely on people's ignorance and use a "spray and pray" strategy for debt collection.
My experience, from a large primary card issuer in the US, was that most of the major, reputable debt purchasing agencies would only buy primary debt portfolios that had _contractual guarantees_ about the accuracy of the supporting contracts and docs. They'd spend a lot of time and effort reviewing them, but they would in turn outright _refuse_ any such provisions when THEY sold their debt to smaller agencies!
[+] [-] xyzzy4747|2 years ago|reply
[+] [-] all2|2 years ago|reply
Might I recommend a blockchain and smart contracts?
I'll see myself out.
[+] [-] mattclarkdotnet|2 years ago|reply
[+] [-] heywhatupboys|2 years ago|reply
Even by standardized credit numbers, it is more like 60 %
[+] [-] eru|2 years ago|reply
> What can be done about this?
> Many people have suggestions for obvious improvements here, which might rhyme with the Federal Trade Commission’s suggestions from 2010 or the Consumer Financial Protection Bureau’s spate of rulemaking from 2021 through 2023 or the FDCPA from 1978.
I would humbly suggest looking at how different countries deal with the same issues, and seeing what works and what doesn't work. Many of the differences will be cultural, some will be differences in laws and regulations. Some will be systematic differences, some will be down to random chance.
[+] [-] simonw|2 years ago|reply
[+] [-] cm2012|2 years ago|reply
[+] [-] patmcc|2 years ago|reply
[+] [-] Aardwolf|2 years ago|reply
Reader from Europe here. I use debit cards for daily payments, that's just the most standard expected payment method in Europe (with mobile payments now replacing it. Is a mobile payment app more like a debit or like a credit card? I have no idea actually!).
But credit cards for online payments on the internet because (despite some debit card based systems existing which don't seem to work by default) on the internet credit cards seems to be the main supported payment method, including e.g. through Paypal, but also for local online shops, airlines, ...
So in the US credit card vs debit card is probably an important distinction between buying on actual credit or not and all the fun stuff they have there like credit ratings, but in Europe the main distinction seems to simply be which one works for online purchases or not. Of course some reward programs for credit cards do exist here, I think American Express specifically has some benefits to the user but isn't accepted everywhere (Heard from other users, don't have this one myself. I'm not really into rewards programs myself, why not just make the stuff you buy cheaper instead?). Also, visa and mastercard seem to have no practical difference and some banks just give both.
If this view is naive or incomplete, it probably just shows credit cards are indeed not as important in Europe, if they gave some huge benefit I'd have known!
Edit: I don't mean to say credit and debt collection doesn't exist in Europe. All the stuff like payday loans, car loans and buying on credit from some stores exists.
[+] [-] beaviskhan|2 years ago|reply
- With a debit card, I am out $X of my own money, until the bank can be bothered to agree that the charge is fraudulent and refund my money, which can take weeks or months, if at all. Good luck paying rent or buying food or whatnot in the meantime if you don't have a nice savings cushion.
- With a credit card, I am out $0 of my own money, and now the bank is potentially out $X of THEIR own money, making them significantly more motivated to investigate promptly and agree that the charge is fraudulent. For however long this takes, I still have my own money to pay rent and buy food, and I'm not on the hook for paying the fraudulent charge.
The fact that credit cards tend to have "rewards" in the form of cash back or airline miles or whatever is secondary to me, personally, although I do take advantage of this as much as possible.
[+] [-] paulsutter|2 years ago|reply
The terms on credit cards are expensive for issuers, so debit cards were introduced with terms more favorable to issuers. Even if they improved the terms, consumers would still be hesitant to use them because US debit cards' reputation is tainted.
Europe has much stronger consumer protections, so I can only assume EU debit cards dont share the disadvantages of US debit cards.
[Edited for balance and clarity, thanks]
[+] [-] prophet_|2 years ago|reply
If you have no money you will go into overdraft and that’s about it, you basically have a problem and the bank will keep nagging about that overdraft if you don’t have an agreement.
The goal is to use the “credit” of the credit card for 30 days as a convenience. The implicit expectation is that it will be paid in full at the end of the month.
In countries like US and South America (e.g.) many people see credit card as free money (that they don’t have), so when the end of the month comes they simply don’t have the money to pay the balance or pay very little of it. The consequence is what we all know: high interest on the balance which keeps snowballing.
I know in south america banks even have interface for payment in instalments etc. Here in Europe, at least my bank they don’t have have such feature, I guess it’s just not meant to be used and abused they way it happens in other places.
This is my view at least.
[+] [-] didntcheck|2 years ago|reply
Edit: it's possible that this is an issue of semantics. My cards have been debit cards in every sense of the term - they are labelled as such, are linked to a specific current account, and debit it immediately - but I don't think any of mine have actually said Visa/Mastercard Debit. So strictly speaking they may be implemented as a sort of instant-clearing credit card - essentially shimming debit onto credit infra. I don't know a whole lot about the finance industry or its tech, so if anyone can chip in please do
Edit 2: Ah, my current one does have "debit" in the MC hologram on the back
[+] [-] williamdclt|2 years ago|reply
My understanding is that the mobile payment app is just a medium for a virtual debit or credit card
> on the internet credit cards seems to be the main supported payment method
Over many years, I've never had any issue paying with debit cards on the internet, except _once_ to rent a bike on a taiwanese website (bc they do a credit card hold).
[+] [-] pm215|2 years ago|reply
For daily payments shops all accept both credit and debit and there's no difference to the consumer whether they happen to tap a credit or debit card.
[+] [-] metafunctor|2 years ago|reply
For all purposes, they are the same. In fact, they are bundled in the same physical card. The only difference is that one debits my account immediately (usually, unless the point of sale is not networked), and the other collects debt I usually pay off at the end of the next month.
I've never had any special rewards or cash back programs associated with my cards. There is some kind of travel insurance bundled with my Visa Credit cards, but that's kind of worthless for me as I usually have other insurance in place already.
[+] [-] pests|2 years ago|reply
Can we get a summary of which letters / rights to invoke?
[+] [-] metadat|2 years ago|reply
https://news.ycombinator.com/item?id=37106001 (30 days ago, 21 comments)
https://news.ycombinator.com/item?id=37093095 (32 days ago, 1 comment)
[+] [-] vladgur|2 years ago|reply
* Amex with 6% cashback on groceries
* Visa with 5.25% cashback on gas
* Visa that adds 2 years or more to manufacturers warranty.
* Credit cards with promotions that end up paying for my family trips around the country and abroad. E.g airline miles or transferable points that are equivalent to $500-$1500 per promotional period
I see no point in using debit cards except for the rarest event of me getting some cash out of ATM
[+] [-] PeterStuer|2 years ago|reply
Their office was located in a low tier residential appartment. Debtors had to interact and pay through an improvised hatch DIY'd into the appartment's front door.
[+] [-] noduerme|2 years ago|reply
I'd just like to credit the author for acknowledging what virtually no one these days is willing to admit about their true motivations.
[+] [-] tomcam|2 years ago|reply
My sleep went from bad to utterly shittastic a few years ago and I ended up missing several items that went to debt collection. They were medical bills I would only be too happy to pay and it’s a very weird feeling. I haven’t carried any debt for decades at this point, not even car or house.
I am still scheming ways to pay the creditors by getting them to accept a check, but it’s hard after they’ve gone to collection.
[+] [-] jmspring|2 years ago|reply
When one uses credit to an extreme and it suddenly changes under you, the conversation becomes interesting. The issue is - one negative thing like a 30 day lack of payment - tanks a score based on things you mostly can't control aside from paying bills.
I had this happen recently because in the US mortgages get sold repeatedly and on one propery I have it was sold 3x in a year and somehow I missed one thing. Shouldn't have, but multiple addresses, shifting mortgages, etc. The funny thing, once the "deliquenct" account agency wasn't involved, the score ticked back up.
In the US - credit is a game, it's based on how much you make (or how much you claim you can make), making payments, an keeping a score high. If you hit a high threshhold and suddenly sink after years of relationships...those old relationships can help with debt and collection.
At a certain point, institutions you have dealt with want to maintain healthy relationships.
I've have great credit situations with Amex and Citi going back decades and leveraged those to offset/erase turmoil issues.