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The public perception of the debt collection industry is fairly easy to describe: debt collectors are bottom-feeding scum that will stop at nothing to squeeze a penny out of consumers that can’t pay. And given the high-profile actions of some nefarious debt collectors, that perception can be warranted.

But the legitimate debt collection industry has been shockingly consistent in pushing a central message – work with us, don’t ignore us, and things might turn out better than expected.

This message was underscored in two unrelated feature-length articles appearing recently in major news outlets. Both flip the popular narrative for those dealing with debt problems; consumer-focused “debt relief” can lead to disaster, while working with debt collectors and creditors can solve a lot of problems.

In a very intimate and detailed account of a credit card debt gone sideways, Nathan Rabin concedes on Gawker that “I had stopped paying my credit card bills. My credit card company sued me.” His essay, “Getting Sued by American Express Led Me Out of the Ruins of My Life,” offers a scathing critique of the debt consolidation and settlement process in the U.S.

The story chronicles his experience with a debt consolidation firm that promised to help with $36,000 in credit card debt. Instead, his credit was ruined and he got sued by American Express anyway. At one point in the process, frustrated by the monthly payments to the debt relief firm coupled with marked inaction on their part, Rabin decided to actually face the debt collectors that were coming after him:

I started opening the letters debt collectors sent me and was pleasantly surprised to find them filled with exceedingly reasonable offers to settle my outstanding debts for twenty five to thirty five percent of the original total. At this point a strange reversal occurred as the debt collectors I had considered the enemy I now came to see as allies with the same goal as me: ending my debt as quickly and cleanly as possible. I similarly came to see the debt consolidation group as a formidable obstacle intent on eking every last penny out of me and keeping me in debt as long as possible.

So I started calling up the debt collectors and settling with them outside the debt consolidation program, which wouldn’t even speak to many of my creditors until much further along in the process (i.e after the debt consolidation group collected all of its own fees). Little by little, I started scrounging up enough money to start paying off my creditors one at a time. It was incredibly liberating paying off a six thousand dollar debt for two thousand dollars. I began to see a sliver of light in a vast eternity of darkness.

A very similar tale is told by John Hechinger on Bloomberg. His piece, “Student Debt Relief Industry Profits From Desperation,” details the story of an unemployed Cleveland mother, Polly Williams, as she attempted to address her $23,000 student loan using a debt relief firm advertised online. Williams paid an up-front fee for the services, but said it offered no help in lowering her monthly payments.

Resolution came when she reached out to a debt collector:

On her own, Williams got in touch with a debt-collection company working for the Education Department, she said. Williams spent 10 minutes filling out forms to sign up for a new plan, which reduced her monthly outlays to $8 from $136, she said.

Hechinger, the author of a piece last year titled “Obama Relies on Debt Collectors Profiting From Student Loan Woe,” (which some saw as an exposé and others as a straight up hit piece) allows that public perception of the debt collection industry may have driven Williams into the arms of the debt relief industry, writing:

Private debt collectors working for the Education Department have the power to seize paychecks, tax refunds and social security payments. Williams, the Cleveland borrower who supports a 17-year-old son, turned to a debt-relief company because she faced the prospect of wage garnishment on her defaulted loans, she said.

The two pieces help to reinforce what debt collectors have been saying for years: if you owe the debt, talk to us. With so much information available on how to avoid paying legitimate debt and how to “stick it to debt collectors,” it’s encouraging that messages like this are seeing the light of day.

 


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