"What to do about Debt Collectors?" Chat at the Sacramento Bee

The Sacramento Bee hosted a live chat yesterday with Robert Tavelli, past president of the California Association of Collectors, taking consumer questions about debt collection and collection agencies.

Every question was, “How awesome is it being a debt collector?” and “How can I get collection agencies to call even more?”

[I'm being told by our Senior Editor, Patrick Lunsford, that those actually weren't real questions.]

Here are a couple of the highlights (if you will) from the Q&A:

Q: I’ve been told that even if you consolidate all your delinquent debts through an organization like Consumer Credit Counseling, and pay off the negotiated amounts, your credit score will not improve anyway. So what is the incentive to do that rather than simply file bankruptcy for a fresh start? If your credit is wrecked and will stay that way for at least 7 years, it’s really no different than bankruptcy.

A: Credit scores and ratings are improved over time. If you have debts, the accumulation of those debts will lower your score and credit rating. Just as this takes time, cleaning up your credit also takes a period of time in order to better your credit score. Bad debt is reported for 6 years 9 months from the date it is charged off. It should not report from the date of last payment if it is a charged off debt. Bankruptcy reports on credit for 10 years.

What I love about this question is the assumption that instant gratification takes too long. “BUT I WANT IT NOW!” is the wail that assumes that everything should immediately be fixed once you’ve (finally) paid off your debt. Of course, it doesn’t — nor should it — work that way. If we break it down to a personal level: If you loan me money, and then I don’t pay you back for, like, forever, and we keep having awkward non-conversations about it in the kitchen at work (You: “Oh, I see you went out for lunch. Again. I can’t pay for lunch every day because I’ve been a little short of cash because…” Me: “These McNuggets are McLicious!”), and then I finally pay you back, how likely are you going to be to lend me money again right away? Like, the very next day? “But I’ve learned my lesson!” Well, learn it for six more months and then we’ll talk.

Q: I have never had credit problems, but I am contacted frequently because my last name is a common one, and debt collectors, often using robo-dialing equipment, make blind calls to anyone named Smith, Jones or in my case, Gibson.

A: [This question is representative of about a frillion other similar questions in this particular chat.] Find out the name of the company and contact information. Send a letter requesting that your number is being called in error. If you know the name of the person they are asking for, provide that to assist them in removing your phone number from that persons profile.

This answer is a little frustrating — and I find I’m more on the consumer side. If this worked, the aforementioned frillion people wouldn’t be asking the same question over and over. There has to be a better way for a person who is not the debtor to get off the calling roster of a collection agency. Granted, honesty is often the first casualty of a person in dutch with a collection agency, and I’m sure a lot of collectors have heard the “You’ve got the wrong man!” excuse ad nauseum from, actually, the right man, as it turns out. But still: This is such a thorn in the side of the industry. What are you guys doing to address it?

The whole chat is worth reading — if you can deal with the frustration. (The questions don’t necessarily come in in an orderly fashion, and it can take the host, Claudia Bick, prompting Mr Tavelli to get him back on track. Still.)