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LAGUNA BEACH OCTOBER 22, 2009 VOL V
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News & Views
Debt Buyers & Sellers Resource
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Editor's Message
We have assembled a great deal of material for this issue of News and Views including a first page summary of the recently released report by the GAO (US Government Accounting Office) on the Fair Debt Collection Practice Act that makes recommendations to Congress about modifying the FDCPA. We also have a very special article written just for this newsletter by Michelle Dunn. Michelle has the distinction of being called the Nations authority on collecting money. Her article is titled "How to Choose the Right Collection Agency for Your Business"
Other articles in this issue include "New Industry Hazards" where we bring to your attention some important news about a whole cottage industry that has emerged to teach people how to "set up" a collector and file a claim for FDCPA violations. In "On The Lighter Side" we share a piece about a novel way that one collector is getting people to pay their debts. And, our ongoing process of researching, monitoring news and dealing directly with people in the industry, including my recent efforts in obtaining national portfolios for the Loan Buyers Group, has confirmed our belief that the small Debt Buyers are handicapped in this business. We address this in "We Need A Bigger Footprint".
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GAO Study Recommends FDCPA Overhaul
From the Government Accounting Office Website
Here are the highlights of a September 2009 Report to congressional requesters:
CREDIT CARDS
Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology
What GAO Found
The primary federal law governing third-party debt collection is the Fair Debt Collection Practices Act (FDCPA), which contains provisions on how collectors can communicate with consumers and prohibits collectors from using abusive, deceptive, and unfair collection practices. Some states have fair debt collection laws that provide protections additional to those of FDCPA. The Federal Trade Commission (FTC) is the primary enforcement agency for the debt collection industry; it collects consumer complaints, enforces violations of relevant laws, and undertakes consumer education efforts. Federal depository regulators oversee credit card issuers' collection practices, and various state agencies enforce state fair debt collection laws.
Collecting and selling delinquent debt involves multiple parties. Credit card issuers typically collect on accounts less than 6 months delinquent using internal collection departments or "first-party" agencies that collect under the issuer's name, and often hire third-party collection agencies or law firms to collect on older accounts. Contracts between issuers and collectors often specify the collection policies and practices used. Third-party collection agencies rely primarily on telephone calls and postal mail in their operations, but often use automated mail systems and other technologies to do so efficiently in large volume. Credit card accounts often are sold-and may be resold multiple times. Several factors influence the price of these accounts, including their age, location, and number of times previously placed for collection.
State and federal enforcement actions, anecdotal evidence, and the volume of consumer complaints to federal agencies-about such things as excessive telephone calls or the addition of unauthorized fees-suggest that problems exist with some processes and practices involved in the collection of credit card debt, although the prevalence of such problems is not known. One issue is that collection agencies and debt buyers often may not have adequate information about their accounts-sometimes leading the collector to try to collect from the wrong consumer or for the wrong amount-or may not have access to billing statements or other documentation needed to verify the debt. Further, with the advent of the debt-buying industry, accounts are frequently sold and resold, which can make verification more difficult as the owner of the debt becomes farther removed from the original creditor. Communications technologies that are ubiquitous today, such as mobile telephones, e-mail, and voice mail, were not prevalent when FDCPA was enacted in 1977. Significant uncertainty exists about how to use these technologies in compliance with the statute-for example, a debt collector may violate FDCPA if someone other than the debtor overhears a voice mail message revealing the debt collection effort. Additionally, FDCPA does not provide FTC with rulemaking authority, which has limited the agency's ability to address concerns related to the adequacy of account information, collectors' use of modern technologies, and other issues that arise in an evolving marketplace.
Why GAO Did This Study
Approximately 6.6 percent of credit cards were 30 or more days past due in the first quarter of 2009-the highest rate in 18 years. To recover delinquent debt, credit card issuers may use their own collection departments, outside collection agencies, collection law firms, or sell the debt.
GAO was asked to examine (1) the federal and state consumer protections and enforcement responsibilities related to credit card debt collection, (2) the processes and practices involved in collecting and selling delinquent credit card debt, and (3) any issues that may exist related to some of these processes and practices. To address these objectives, GAO analyzed documents and interviewed representatives from six large credit card issuers, six third-party debt collection agencies, six debt buyers, two law firms, federal and state agencies, and attorneys and organizations representing consumers and collectors.
What GAO Recommends
Congress should consider modifying FDCPA to (1) help ensure that collectors and buyers have adequate information about debt transferred and have adequate documentation to verify debts, (2) reflect technologies that were not prevalent when the act was written, and (3) provide FTC with rulemaking authority.
The full 66 page report can be obtained by clicking here.
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How to Choose the Right Collection Agency for Your Business by Michelle Dunn
As an account ages, the chances of collecting on it decrease dramatically. It's expensive to carry accounts that you will not be able to collect using the methods at your disposal. It's often a better use of your company's time and resources to concentrate on other aspects of your business.
A Professional collection service can assist you in collecting accounts that remain delinquent. Collectors have a vast knowledge of collection techniques, technology and compliance issues. Using a professional collection service will save time and likely yield better results.
Look for the following signs that you may need to work with a collection service:
- A new customer does not respond to the first reselling notices. For some unknown reason, the consumer will not or cannot pay. Potential losses could be kept to a minimum by prompt referral to a collection service.
- Payment terms fail. In some cases irresponsible consumers pay when and if they want to. This group is responsible for 25 to 50% of the cost of collections. Cost and potential losses are reduced by quick action.
- The consumer makes repetitious, unfounded complaints. Such consumers are often better handled by collection specialists.
- The consumer totally denies responsibility. Without professional help, these accounts are usually written off as total losses.
- Delinquency coexists with serious marital difficulties. These also require professional collection help, with the added urgency of obtaining payment before the disappearance of one or both of the responsible parties.
- Repeated delinquencies occur along frequent changes of address or jobs. This group is responsible for 90% of all "skips". A skip is a consumer who has moved without informing creditors or leaving a forwarding address. The chance of finding a consumer and collecting a debt will decrease over time, so quick action is important.
- Obvious financial irresponsibility is apparent. In such cases, little hope exists for voluntary payments and a quick settlement.
- There is an unauthorized transfer or disposal of goods delivered in a conditional sales contract. Often only prompt professional assistance can make any recovery.
List collection agency accounts on special listing forms. Accurate information about the account will improve collections. In all cases, the minimum information should include:
- the correct name, address & telephone number of the debtor
- name of debtors spouse
- whether mail has been returned
- debtors occupation or last known occupation & phone number
- names of relatives, friends, and references
- summary of any disputes
- date of last transaction
- cellular phone, fax, pager numbers
- nick names or aliases, maiden name
Cooperate with your collection service. Rely on the experience, diligence and judgment of your collection service for the best and quickest results and promptly refer any developments on the assigned accounts to the collector.
See that your collection service is fully acquainted with the nature of the goods or services involved. Professional collection services are personal in nature. If the collection service is familiar with the goods and services your company provides, it will be better suited to handle the complex situations that arise during collection.
Do not place an account with more than one collection service. Make sure that if you change collection agencies, the account is only being worked on by one service.
Choosing a professional collection service to manage delinquent accounts and other related tasks is a wise decision. The agency should represent your organization in a responsible and professional manner, and provide a satisfactory rate of recovery while maintaining your public image. This decision involves more that just giving your business to the lowest bidder - it requires careful consideration.
Consider the following qualifications and credentials when choosing a collection service.
- Is the agency a member of a national trade association? Membership is an indication of professional integrity.
- Does the agency belong to a local Chamber of Commerce?
- Does the agency charge fees that are clearly stated?
- Is the agency prepared to give the best possible service? An agency cannot guarantee results on any specific date, but will often estimate an average recovery rate that one can expect.
- Will the agency be sensitive to a consumer's individual situation? The agency should promptly notify you when it discovers a consumer who is a hardship case and recommend a proper procedure to follow.
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MICHELLE DUNN BIO
Called the Nations authority on collecting money, Michelle Dunn is an award winning author and columnist. She is the founder and CEO of the American Credit & Collections Association, one of the Top 5 women in Collections, and one of the Top 50 most influential collection professionals in her industry. Michelle has been quoted and featured in The Wall Street Journal, Smart Money Magazine, CNN & other National publications.
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New Industry Hazards
Gary M. Baker - Crescent Bay Financial LLC
Many challenges face debt buyers. We have of course the obvious concerns relating to the question of fair pricing of our purchases, about projecting the collectability of our accounts, and managing our own operations, in addition to securing funding. While certainly don't need a another set of headaches, the industry is evolving and with that change, there are some new trials emerging as threats to the industry that we should be aware of in assuring the healthy growth of our businesses and protecting our future.
As our industry becomes It is important to recognize that we are being faced by a whole new breed of customer. Aside from those who just can't pay there are the debtors who just won't pay, including those who have found a big new world of resources on-line that gives them tools, letters and legal advice on how to "trap" a Collection Agency in an FDCPA violation and sue them to avoid paying their bills. These suits have crossed over to include debt buyers with some regularity, particularly in cases based on a customer challenges to the debt buyers proof that they owe the debt.
The other morning I made a search on Google for the term "FDCPA" and over 205,000 results were displayed. A similar search for "How to deal with debt collectors" brings up more than 18,600,000 results. When you start reading some of the information that is being published on these sites, you will quickly learn that a whole new cottage industry exists to teach people how to "set up" a collector and in many cases, how to sue a collector. This information is deeply disturbing and it is apparent that it is just the tip of the iceberg and that some of the practices that are actually going on are far more deceitful. We know, for example, that individual debtors have hired (for fairly large fees) former collectors with inside knowledge of the business to make calls on their behalf. These "agents" work to have debts removed from their clients records, at times making false implications about the possible bankruptcy of their client, or, alleging a FDCPA violation that never occurred. Many of the manipulative, misleading and false threats pay these paid "guns for hire" have indeed resulted in debts being greatly reduced or dismissed entirely to avoid another frivolous lawsuit.
In the first two weeks of September 2009, approximately 445 collections companies and creditors were named in lawsuits citing FDCPA violations and violations of other consumer rights statutes. There were multiple plaintiffs involved in one of those cases. Year to date there have been 6,376 FDCPA, FCRA or TCPA lawsuits filed in the United States and in 2008, the Federal Trade Commission received 78,838 complaints about third party debt collectors which accounted for about 19% of all complaints received by consumers this past year.
While it is no secret that there are abuses withing the collection industry, one wonders if the large increase in complaints is a result of actual violations, or, if some of these complaints and claims are a way for savvy debtors to manipulate the system to avoid paying their debt? A little more than ten years ago, filing a complaint with a state or federal regulatory agency was a time consuming and entirely manual process. Today debtors can report alleged regulatory violations online in minutes, at no cost, and there are many resources that encourage customers to do just that. These complaints to the FTC or state attorney general's office can lead to action against a collection agency. This is more than just a nuisance to debt collectors and debt buyers. In 2008, an average of 455 FDCPA cases was filed against collectors every month. In the first four months of 2009, that number now exceeds 600 cases every month.
One article in the Personal Finance section of last months' Forbes Magazine was disturbingly titled "How to Outsmart Your Debt Collector". In this national publication, the article outlines a series of steps relating to FDCPA violations on technical aspects of the 30 day introduction letter. Other aspects of their advice on how to beat the system dealt with licenses, recording the phone calls and even providing advice from lawyers on how to sue the collector. A few days later, there was a response to this article from a collector who pointed out:
"we are swamped with hyper-technical lawsuits from "ambulance chasing" attorneys and debtors who are searching for a way to get out of paying a legitimately owed debt. The number of these suits has increased dramatically over the past few years, and the merit of these suits are typically laughable with absolutely no damage suffered by the debtor. The primary reason for this is that attorneys have become aware of the fact that a third-party debt collector cannot win when sued. It is simply a matter of how bad you are going to lose. Even if you win in court, you have lost big-time in that it will likely cost you tens of thousands of dollars to prove your case. Let's see, settle for $4,000 even though you did nothing wrong and the charges against you were completely unreasonable or fabricated, or roll the dice to prove your innocence and spend $30,000 in the process. That is, $30,000 if you win, and by the way, you will have no meaningful chance of recovering any of your costs.
The Fair Debt Collection Practices Act (FDCPA) is over 30 years old and largely regulates communication pertaining to debt collecting. Keep in mind, when FDCPA was crafted over 30 years ago, answering machines were not even used, let alone faxing, e-mailing, texting, etc. ... The FDCPA is in desperate need of being updated, and many attorneys take advantage of this fact. It is filled with vague language and gray areas that are ripe for misinterpretation, which is just wonderful for low-level plaintiff's attorneys who are looking to make a quick buck at the expense of those performing an honest and needed service. Most third-party collectors go to great lengths and expense in an effort to comply with the FDCPA. Third-party collectors, at least the vast, vast majority of us, are simply attempting to get someone, the debtor, to make good on his/her legitimate obligation. What's not good and noble about that?
It seems that your article actually encourages bad behavior and "making out" on a trivial technicality. Just because you can get away with something does not make it right."
Intimidation Pays Off
There are numerous consumer protection groups out there offering information on how to deal with Collectors. Recently much of the information goes well beyond educating consumers about their rights. Some of these groups are as ruthless as those that they claim they are protecting people from. On one site, if you have a complaint against a Collection Agency, consumers are urged to call the Collection Complaint Hotline where they may speak with a legal expert in the area of fair debt collection law, free of charge. If considered, they will even file the complaint for you. Where a letter requesting a Collection Agency to stop calling would suffice, these groups have found that intimidation pays, for both the debtor and their defender.
In researching the subject, Collection agencies have found that over 18% of all complaints in the form of a lawsuit are brought by consumers who have sued in the past. Settlements for violations of FDCPA are typically in the $1500 range. To avoid these losses, many Creditors and Collections firms subscribe to daily data services like WebRecon and LexisNexis to screen for the names of people filing collection complaints. They then scrub those names from collection campaigns, according to WebRecon, to segregate predictably litigious consumers from their databases. Since a significant percentage of consumer litigation is initiated by the same consumers over and over again, screening them out of the general population can reduce lawsuits by as much as a third."
Armed with inside information, debtors are emboldened to become proactive, because the pay off is worth it. Firstly, there are good odds that they could receive a cash settlement just for filing the collection complaint. Secondly,there is a strong possibility that they will be scrubbed from future collection activity.
And One More from One of the Web Sites
This is from a Blog called Credit / Debt Recovery
"Junk Debt Buyers - a growing slime pit"
"There's a thriving industry of debt buyers who purchase very old and long-neglected debts for pennies on the dollar. They tack on fees and interest, and then try to collect the entire amount for the full amount plus interest.
They're junk debt buyers, and while their business isn't necessarily wrong or illegal, their practices often are. Problem is, a lot of debt buying firms are bottom-feeding scumbags who will resort to any sleazy tactic to make a buck, and have no respect for the law. Specifically the Fair Debt Collection Practices Act, which they regularly abuse, taking advantage of consumers' ignorance of their rights and timidity when confronted by tough collectors".......
Posted by: Mark | May 28, 2008 at 03:14 PM
"Junk debt buyers are the worst form of human being. They should be waterboarded! The ultimate weapon that makes that makes a junk debt collector cry is VALIDATION Letter. Ask the scumbug to Validate the debt pursuant to the FDCPA. Here is a good Validation letter:"
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Your Name
Address
City, State Zip
Junk Debt Buyers Name
Address
City, State Zip
Date
Re: Acct # xxxxxx
To whom it may concern,
This letter is being sent to you in response to a notice sent to me on (date). Be advised that this is not a refusal to pay, but a notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested.
This is NOT a request for "verification" or proof of my mailing address, but a request for VALIDATION made pursuant to the above named Title and Section. I respectfully request that your offices provide me with competent evidence that I have any legal obligation to pay you.
Please provide me with the following:
· What the money you say I owe is for;
·Explain and show me how you calculated what you say I owe;
·Provide me with copies of any papers that show I agreed to pay what you say I owe;
·Provide a verification or copy of any judgment if applicable;
·Identify the original creditor;
·Provide me with contract of said account with my original signature.
·Provide me with complete billing and payment history.
·Prove the Statute of Limitations has not expired on this account
·Show me that you are licensed to collect in my state
·Provide me with your license numbers and Registered Agent
If your offices are able to provide the proper documentation as requested in the following Declaration, I will require at least 30 days to investigate this information and during such time all collection activity must cease and desist.
If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me immediately.
You should also be aware that reporting such invalidated information to major credit bureaus might constitute defamation of character, as the negative marks on my credit report harm my credit and prevent me from enjoying all the benefits of good credit. In addition, until you provide me with proper validation of this debt, you are not allowed to pursue any collection activities, including reporting this information on my credit report. I'm sure your legal staff will agree that non-compliance with this request could put your company in serious legal trouble with the FTC and other state or federal agencies.
I would also like to request, in writing, that no telephone contact be made by your offices to my home or to my place of employment. If your offices attempt telephone communication with me, including but not limited to computer generated calls and calls or correspondence sent to or with any third parties, it will be considered harassment and I will have no choice but to file suit. All future communications with me MUST be done in writing and sent to the address noted in this letter by USPS.
It would be advisable that you assure that your records are in order before I am forced to take legal action. This is an attempt to correct your records, any information obtained shall be used for that purpose.
Best Regards,
(Your Signature)
Your Name
Protect Yourself
The best advice for Collectors is to make sure that your agency is following the law when they deal with any customer. Make sure everyone knows the FDCPA rules as well as the FCRA and the FACTA regulations. Provide regular training, review your collection scripts thoroughly with your legal counsel. Record every single conversation with your customers and have every piece of correspondence reviewed by your legal counsel who is an expert in the collections business. Even these steps may not stop a frivolous lawsuit by a professional debtor or hired gun with a history of suing agencies. If you own the debt, make sure you have all of the documentation so you can prove the debtor owes the money. This would include credit card statements and credit applications. If you are a debt buyer, be sure you are licensed in the states that now treat debt buyers as collectors. Several other states now require a debt buyer to have a license if they are taking legal action against a debtor. (More to come on the topic of Debt Buyer licensing in another issue)
Finally, take some time to look at some of sites and make your own thoughtful comments. Many people who contribute to these websites and blogs feed on each other and reinforce the negative image. There is seldom any input from Debt Owners or Collectors. While responses like "Pay up you Deadbeats" will probably not win anyone over, we can and should be proactive about getting a balance view out there. A thoughtful paragraph about maybe credit counseling or recognition that the collection industry is aware of the tough economy and has been working with many consumers to structure reasonable payments to retire old debt, may start to diffuse this underground network. It's time that we take action to improve the reputation of this industry. Get involved with the legislative process that is going on to clean up this business and support an updated FDCPA that deals with 21st century issues. Let's have a standard national policy and set of uniform rules for the credit and collections industry where abuse on either side is regulated.
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On the Lighter Side
There was an article in the New England Business Bulletin recently about some very different tactics being used by seafood debt collector. They practice a new and unique type of business model in the collections business. The following is an exerpt.
Business Model Uses Exposure to Collect Debt
"We practice accountability through exposure" said Workman of Seafood Debtors, "Public disclosure is a debtors worst enemy. They run a website which lists seafood companies that have been placed for collections. After notifying debtors by telephone, fax and e-mail, workman and his staff allow 48 hours to respond to collection demands before being posted on the site.
"Debtors hate publicity," said Workman, "and because of our relationship with all the major internet search engines, that's exactly what we give them."
Workman's penchant for innovation in debt collection pre-dates the internet. In a story still occasionally making the rounds on the New Bedford waterfront, Workman once entered a fancy New York City restaurant with a bullhorn, announcing to startled patrons that the food they were eating hadn't been paid for by the establishment's celebrity owner/chef. "I had notified the media beforehand and had it filmed," said Workman, "it caused quite a commotion around the maitre d's check-in desk."
Once, at the annual International Boston Seafood Show, the largest seafood exposition in North America, Workman equipped his booth with a continuously scrolling ticker with 18-inch high letters listing delinquent debtors. "Many of these companies were also exhibiting at the show," he said. "It got their attention."
According to Workman, his company's debt recovery rate is twice the industry average and well worth the standard 25 percent contingency fee to creditors who otherwise might never collect anything. "A significant number of companies remit within the 48 hour window to avoid being listed," he said. "Our average collection time is eight days and we rarely go beyond three weeks."
Workman and his innovative collection methods are popular with clients and his web site includes several positive testimonials. "We were selling one restaurant that was 90 to 100 days over their bill date," said John Ready, of Ready Seafood of Portland, Maine. "We gave it to SeafoodDebtors.com and within two weeks we were paid in full. The basic tool behind it is that the appearance online was killing this restaurant because it showed that they had all this massive debt. They panicked and paid us immediately so I'm extremely satisfied with those results."
Workman answers critics who suggest his methods are harsh by reminding them that for every debtor exposed, there is a creditor who trusted them on the other side of the transaction. "Many of my clients are hard working fishermen," he said, "To them steady cash flow is vital to staying in business." "We're not out to punish or embarrass anybody," Workman added. "All listings on the Web site have been screened by SDDC and determined to be just and legal debts before they are accepted. Truth is always the best defense."
Workman's innovative internet collection techniques are not limited to the seafood industry. He recently launched a sister site, restaurantdebtors.com, and has similar sites for the meat, poultry, and produce, industries in the works.
I guess they don't have to contend with the FDCPA......
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GET OUT OF YOUR COMFORT ZONE!
" To get something you never had, you have to do something you never did." - unknown
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Is Debt Collection Booming?
By Gary Baker
There is an interesting dynamic occurring in the market right now. Debt Collectors are in favor with Issuers right now over Debt Buyers because buyers are not paying what they once did for debt portfolios. With the glut of inventory, leading banks are turning their portfolios over to a handful of the larger collection houses. Some of these collection firms, already the nation's largest, have increased their workforce by as much as 50% this year to handle the increase in business, while others are laying off due to poor collections rates.
Bad credit card debt and foreclosures are rising, lost jobs have not been replaced and billions of dollars are outstanding on millions of past due accounts. Creditors want their money, and while some are willing to sit on the inventory for while rather than accept a nickle on the dollar, others want their money now and they are getting more proactive in ramping up their own collection efforts before and after charge off. With heavy pressure on the banking industry to increase revenue streams, they are not willing to waste time shopping for collection agencies, so for the most part the companies with the existing realtionships and demonstrated track records are getting all the new work. These firms are responding by ratcheting up their capacities and hiring new collectors and managers.
The addition of new accounts for these agencies has been a mixed blessing. Hiring has expanded, but collection rates are down because of the economy, and while the agencies have had to expand to meet the needs of their clients, to remain profitable they have also had to bring more revenue in the door. The strategy that seems to be working the best for most is targeting. Utilizing complex scoring models they are able to determine the 20% of accounts that will pay 80% of the debt within any given portfolio. These top accounts are then assigned to their best collectors and the remaining files are dumped into auto-dialers.
Even with the these sophisticated practices, the virdict is out as to whether the agencies may have ended up hiring more people than they really need. During the first quarter of 2009, some 26% of all collection agencies in the U.S. had laid off workers and that number increased to 33% by the second quarter, according to one industry survey. Some firms have determined that they needed to terminate clients whose accounts were not profitable. Third quarter statistics should be very revealing. While collections normally pick up in the third quarter, apparently that does not seem to be the case this year to date. There has only been a modest improvement reported so far this quarter and many more creditors are willing to accept payment plans or negotiate debt settlements with their customers. Getting something now is better than nothing.
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We Need a Bigger Footprint
By Gary Baker - Crescent Bay Financial LLC
All of the research that I have found recently points me in the same direction. To be a player in the business we need to be bigger. This past month, there was an article by in Inside Arm by Paul Legrady, about the shift that is underway by the Creditors in this industry that has the potential to reshape many collection activities in the coming years. He talks about how the Issuers are reducing the number of collection agencies that they work with (See our article - Is Debt Collection Booming?" in this issue) and Paul then goes on to talk about the shift that is taking Place for Debt Buyers. "The same type of shift is also taking place within the debt buying market. Rather than call on more debt buyers, as credit issuers did in the boom years before the recession began, some credit issuers are reducing the number of companies they approach for portfolio sales, preferring to negotiate directly with a specific buyer rather than conduct a broader auction process. Smaller, less capable debt buyers will see fewer purchase opportunities from these issuers. Here again, concentration within the primary debt sales market will increase. (This does not include the re-sales.)" See the full article here
We launched the Loan Buyers Group so that we will have a bigger footprint. It is abundantly clear to me, that if we want to obtain the best inventory for the best possible pricing, we need to be buying in larger volumes. And, we need to be buying directly from the source. By buying on the national level through a network of approved agents, purchasing directly from Issuers, we can obtain a consistent flow of Fresh accounts and eliminate the possibility of adverse selection by Brokers and Resellers. With the current recovery rates being so low we need every possible advantage working in our favor and cannot afford to buy someone else's "custom made" portfolio that is tailored for our needs. We also have a rigorous process that we follow on buying Zero and One agency files on a national level with the Group.
We are currently targeting lower balance accounts covering a variety of products. We have in place a network of suppliers who obtain files direct from Issuers for the Fresh products as well as a broad array of National files from various Issuers that have been through an Agency. As we will gather these portfolios and score them to determine the projected recovery rates, we also maintain a ranking of each modeled portfolio and present the results to the Group. In addition to credit cards, we have been evaluating some interesting alternative portfolios which have a good and proven history of collection performance. We want to be diversified in the accounts that we acquire as all products do not liquidate in the same way or in the same time frame.
As always, our process is completely transparent. Each Buyer will know the actual cost of the product before it is purchased. We also provide computer modeled projected recovery rates as well the estimated liquidation time frames for every portfolio that we evaluate prior to the Group selecting a file for purchase. These are proprietary, back-tested models which compare projected returns to current collections. Each member also has the option to continue to work together as a group for the collection of the accounts for further risk reduction. These files are owned individually by each group member proportionate to their appetite, and everyone is free at any time to move their accounts anywhere they please. If you would be interested to know more about the Loan Buying Group, please drop me a line at: gary@crescentbayfinancial.com
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Business Funding Resources
Here is a list of previously published resources to have at your fingertips:
Private Placement Memorandum (Published in Volume II)
Ken Hollowell has 28 years of experience in creating private Placement Memorandums or PPM's, which is one of the only legal ways to raise money from private investors. Ken brings more than just a document to the table. He helps bring the PPM to the investment community and he will coach you through the entire fund raising process. Contact Ken at (407) 363-3545, or email him at www.kenhollowell@profranconsultants.com
Self Directed Retirement Accounts (Published in Volume III)
15 years ago BeneTrends was the first company to introduce the 401(k) self-reliant business funding program. With this IRS approved plan in place, you will have the ability to use your own retirement account start a business or grow your existing business with out incurring taxes, penalties or loan payments. (We have confirmed that your debt buying business is eligible) Contact BeneTrends.
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