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Syne 
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 Topic: Nobody asked you to buy our debts
Posted: 19/February/2009 at 7:11pm |
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See, this is the thing that really bothers me about collection agencies. Their smug sense of entitlement. I don't recall ever asking them to take over responsibility of my loan. As far as I'm concerned, it's an issue between myself and the person I borrowed from.
Case in point, they know absolutely nothing about the loan and the circumstances surrounding it. How am I supposed to take someone seriously who has nothing to do with my business in the first place? They simply stumbled into the scene one day and expect you to acknowledge them. Ridiculous.
I realize that there's probably some obscure clause of legalese that you sign in your initial loan agreement that allows them to sell your debt if it comes into arrears, but that's completely beside the point. I think it's clear from this site that there is a myriad of circumstances that can result in a debt going to collections. Just because someone can sell your debt, doesn't mean they should, and it certainly doesn't make it right.
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paulaffleck
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Posted: 22/February/2009 at 8:45am |
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It's absurd to suggest that debts should not be sold. How could businesses ever collect debts, if that were the case? Can you imagine if customers just did not pay, and you could not make an arrangement to collect? If you think that this is somehow a "corporate" issue, you're wrong. Plenty of mom and pop shops use the services of debt collectors to provide at least some compensation on delinquent accounts. I think the issue here is not that debts are sold, but that collectors for government-issued student loans should be bound by stricter criteria with respect to how they conduct themselves. But the selling of debts to collectors is certainly not something to be generally discouraged.
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SolveStudentDebt
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Posted: 22/February/2009 at 9:37am |
For the most part, debts are assigned out to third-party rec overy groups and not sold. There are compan ies that purchase receivables and collect them. However, the only student loans that are sold are the ones that are part of the put-back program with the federalies.
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Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting. solvestudentdebt.com
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Syne
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Posted: 22/February/2009 at 6:49pm |
 paulaffleck wrote:
It's absurd to suggest that debts should not be sold. How could businesses ever collect debts, if that were the case? Can you imagine if customers just did not pay, and you could not make an arrangement to collect? If you think that this is somehow a "corporate" issue, you're wrong. Plenty of mom and pop shops use the services of debt collectors to provide at least some compensation on delinquent accounts. I think the issue here is not that debts are sold, but that collectors for government-issued student loans should be bound by stricter criteria with respect to how they conduct themselves. But the selling of debts to collectors is certainly not something to be generally discouraged. |
How is suggesting that businesses collect their debts internally in favor of subcontracting, absurd? I'm only suggesting that the business owed takes the responsibility of collecting from consumers, rather than a 3rd party who has limited considerations. In fact, most businesses collect internally and have the same means of ruining a credit rating that collection agencies do. I don't find my suggestion absurd in the slightest.
There is a well known website where for $20 a month, you can absolutely destroy someone's credit rating. Why is that possible? Because the onus to prove against a debt falls on the debtor. Plots for revenge aside, there are disputes where a customer feels they haven't recieved a product or service they were invoiced for and refuse to pay. Instead of being able to dispute the debt with the company, that company can simply contract it out, or sell it off and be done with it. How is that at all fair to the consumer?
I eagerly await your reply.
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paulaffleck
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Posted: 23/February/2009 at 12:55am |
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Obviously, you know few small-business owners. How a three-person operation could assign one person to chase down recalcitrant accounts receivable, on top of the likely 60 hour work week, and still maintain adequate day-to-day operations, is extremely questionable. Hence, other businesses that collect debts. Collectors exist for a very good reason. I also doubt that you have any detailed knowledge about how many businesses use collectors. Usually collectors are called as a last resort, when the business' best efforts to collect have gone nowhere, most likely because those who owe you money tend to avoid you. How is it fair to the business owner, to impose some draconian law preventing the sale of debts, and thus prevent collection? Thankfully, your idea will never be implemented.
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Syne
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Posted: 23/February/2009 at 9:56am |
paulaffleck wrote:
Obviously, you know few small-business owners. How a three-person operation could assign one person to chase down recalcitrant accounts receivable, on top of the likely 60 hour work week, and still maintain adequate day-to-day operations, is extremely questionable. Hence, other businesses that collect debts. Collectors exist for a very good reason. I also doubt that you have any detailed knowledge about how many businesses use collectors. Usually collectors are called as a last resort, when the business' best efforts to collect have gone nowhere, most likely because those who owe you money tend to avoid you. How is it fair to the business owner, to impose some draconian law preventing the sale of debts, and thus prevent collection? Thankfully, your idea will never be implemented. |
I don't understand. Are you acknowledging the potential for consumer abuse, or writing it off as unimportant? It wasn't clear in your post, as you completely failed to address my primary concern.
I used to work for a small IT business. Two owners, myself, and a receptionist. Part of the receptionlist's job was to collect on defaulted invoices. She worked this into her other duties. It didn't make sense to contract this out to another party. She worked part-time. In Ontario, you can only call people 3 times in a 7 day period. How much time can that possibly take, that you need to contract that position out to a 3rd party? No, I don't buy it. Hence nothing. You're going to have to do better than that. 20 minutes a week per client (and I'm being liberal) doesn't necessitate collection agencies. Besides, collection agencies make money doing what they do, why can't you as a business owner do the same?
Perhaps you think my position is based on the idea that I simply want to give businesses less power to collect what's owed to them. Don't misunderstand. If you owe money you should pay it. What I'm suggesting is making providers accountable for their own black book. This isn't "preventing collection" it's simply preventing the hiring of 3rd party thugs to get it for you.
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paulaffleck
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Posted: 23/February/2009 at 12:55pm |
Many business owners appropriately only allow employees to spend only a certain amount of time chasing down bad debts. Levels of debtor avoidance differs markedly among different business types. It simply cannot be the case that all businesses can dedicate that amount of time to debt collection. Collection agencies exist because of this business reality, not in spite of it. Your experience is not universally shared. I also not that you were not an owner. Owners do not share all business realities with their employees, nor should they.
A certain level of maturity is required to understand collection agencies. Not every collection agency is "out to get you." The vast majority of right-thinking Canadians would agree that collection agencies are necessary to prevent people from simply deciding to not pay their debts. I don't believe that all collection agents are "third party thugs." The collectors with whom I dealt were rather direct, but I made appropriate arrangements to repay my debts, and I learned something in the process: They were not "thugs".
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Syne
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Posted: 24/February/2009 at 5:33am |
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I don't know if this will help you understand my position better, but I am not outstanding on any of my debts. My student loans are in good standing and I'm on interest relief at the moment while I pursue a second career.
I have only dealt with a collection agency once, and that was a few years ago on a Canadian Tire Mastercard. The collection agent told me that my credit rating would be repaired once I paid the debt. He explicitly told me that all history of the debt would be removed from my credit rating once it was paid. Rest assured, that evidence of my neglect very much exists to this day, and effects my credit rating immensely.
Your implication that I'm not mature enough to understand collection agencies is condescending. I have some experience on both ends, and I came to my conclusions about this industry as honestly as anyone else. I highly doubt the majority of these "right-thinking Canadians" have put half the thought into this matter that I have. Perhaps many have a knee-jerk reaction about people who don't pay their debts, and collection agencies make sense at a glance. If I took a few moments to educate them, (and I will if the topic arises) I assure you that their tune would change.
So far your only assertion in this matter is that collection agencies help offload work for companies so they can focus on their business. I think that's pretty obvious, don't you? My response to that is, too bad. The ends don't justify the means in my mind. There is too much grief, hassle, and negativity in this process to justify whatever pittance a business will save by offloading the work to a 3rd party.. and yes, all collection agents are 3rd party thugs. That's a perfectly valid comparison that I think most right-thinking people on this message board could agree with.
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Syne
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Posted: 24/February/2009 at 10:53am |
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Regardless of all this Paula, I'm willing to agree with your stance that collection agencies should be bound by stricter criteria. The outcome is the same. The minute you regulate collection agencies, they would no longer exist because they would lose that which makes them money: Deception and intimidation. Take those tools away, and businesses may as well collect their debts internally because it would no longer be cost-effective to contract them out.
So I say regulate the industry or take it away from the private sector altogether. I'll get my way regardless, just as long as things don't stay the way they are.
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paulaffleck
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Posted: 24/February/2009 at 3:53pm |
Collectors don't serve debtors' interests. If you wanted legal advice, you should have consulted a lawyer. Besides, you owed the debt. As a liberal democracy, we tolerate legal collection tactics because trust in payment is the backbone of commerce. Credit is a measure of that trust. That credit ratings reflect neglect of payment shows their merit, not their injustice.
Accounts receivable are assets. I can sell them. Only legislation could restrict this ability. Our liberal democracy demands that governments restrict commerce as little as possible. Once governments restrict commercial freedoms along ideological lines, they may more likely begin to restrict individual freedoms along similarly ideological lines. Whether you feel the collection industry constitutes an "off-loading" of work is simply irrelevant.
I sense the quality of moral outrage in your posting, but I don't find it particularly convincing.
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Syne
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Posted: 25/February/2009 at 11:45am |
paulaffleck wrote:
Collectors don't serve debtors' interests. If you wanted legal advice, you should have consulted a lawyer. Besides, you owed the debt. As a liberal democracy, we tolerate legal collection tactics because trust in payment is the backbone of commerce. Credit is a measure of that trust. That credit ratings reflect neglect of payment shows their merit, not their injustice. |
The interests of either party don't really matter as long as the law is followed. This brings me to my next point. These "tactics" you speak of are often borderline, if not outright illegal. Have you read this forum? It's rife with testimonials from people who have been harassed by collectors who don't follow the rules when it comes to call frequency, who they call, and what information they provide to people. This, no doubt, is why you called for stricter regulations, is it not? Well, I will reiterate. If stricter regulations are actually enforced, this industry will die. If collection agencies were somehow magically bound by the spirit of existing laws, I contend that they would not be able to collect enough to stay afloat. If a business cannot stay afloat within the confines of the law, then they should sink. You break the law, you get shut down. Simple.
| Accounts receivable are assets. I can sell them. |
Disputable accounts receivable are disputable assets. If I get dental work done and my tooth chips the following week, and the dentist refuses to fix it. In turn, I may refuse to pay my dental bill. Are you saying that as a consumer, I should just deal with the fact that my credit rating may get destroyed in this process? Is that another immature question? It happened to a good friend of mine. The onus to prove against the debt fell on her for no other reason than she was at the consumer end of the business transaction.
| Only legislation could restrict this ability. Our liberal democracy demands that governments restrict commerce as little as possible. Once governments restrict commercial freedoms along ideological lines, they may more likely begin to restrict individual freedoms along similarly ideological lines. Whether you feel the collection industry constitutes an "off-loading" of work is simply irrelevant. |
Somehow equating the demise of the collection industry as an affront to our individual freedoms is a stretch. Businesses are free to collect their outstanding accounts receivable. It's not like I'm proposing that they can't. I'm simply eliminating the outsourcing of the work due to the history of abuse and consumer discrimination.
| I sense the quality of moral outrage in your posting, but I don't find it particularly convincing. |
I don't see why not. Since we began this little debate I've run it through about a dozen people, and while some of them shared your concerns, every one conceded that my line of reasoning was the lesser of two evils.
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SolveStudentDebt
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Posted: 26/February/2009 at 3:28am |
Here is a question for both of you:
P, if you were a business carrying AR's, and knew of some way to service these accounts without labor intensity,not having to use a collection agency, and throw away money and relationships (customers), would you resort to it?
Syne, if you were a customer of that company, how would you feel about continuing to do business with this company knowing that they go the distance to manage assets?
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Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting. solvestudentdebt.com
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Madmorrigan
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Posted: 26/February/2009 at 6:57am |
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I just wanted to mention that I'm truly enjoying this debate...good points on both sides, well presented, etc.
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Syne
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Posted: 26/February/2009 at 5:11pm |
Johnny wrote:
Syne, if you were a customer of that company, how
would you feel about continuing to do business with this company
knowing that they go the distance to manage assets and customer
relationships? |
Fair question.
Myself, I think I would appreciate a company who continued to deal with
me personally rather than pass the buck. They would be able to address
concerns about the account, give detailed information, and better
understand my position. Since they are the people I originally agreed to do business with, it would seem natural to deal with them. As well,
I could continue to do business with them in the future and refer them
to other people, which in turn, helps them.
Now I acknowledge that most people who can't or don't want to pay, will avoid
the issue. It won't matter if it's the company itself, or a collection
agent. It must be frustrating as a business to feel as if you're taking the high road by dealing with the issue yourself, and getting nothing in return.
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paulaffleck
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Posted: 01/March/2009 at 2:35pm |
These collectors are avenues of last resort. They should be. Goodwill is often worth more than small accounts receivable. For obvious reasons, this forum mostly discusses the worst situation: powerful creditors who hastily hire strong-arm collectors to wrench, from poverty-stricken students every last dime lent. We can validly criticize a specific type of collection activity: That which provides an incentive for economically-challenged youth to avoid, and not pursue, higher education.
I would really like to see a person emerge from the student movement who can engender sympathy for financial assistance reform within the middle-class. Those people often identify themselves as tax-payers and small-business owners. If they were to buy into the notion that this incentive against higher education hurts our nation because it drives away from the professions, persons of limited economic means at the price of real brain power, we might be onto something.
Let's get on with real change, shall we?
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Syne
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Posted: 01/March/2009 at 6:13pm |
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Paula, I am interested in your feedback.
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paulaffleck
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Posted: 03/March/2009 at 2:01pm |
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Hi Syne -- I gave a response just above your posting, if that's what you mean...?
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Nobody asked you to buy our debts