Curtain Raiser

The Dignity Collectors, Colltales

If you’re an American resident, you may live in a household that owes $15K in credit card debt. If there’s a mortgage, its outstanding debt may be $150K. And if there’s one or more college students sharing your last name, then there’s another $33K each to be added to the bill.
Thus, without counting living expenses, just the fact that you live in the world’s richest country means that you’re also one of its most indebted human beings. No wonder that, amid a troubled economy, there’s a seemingly unbeatable business, reaping profits: debt collection agencies.
Now, the data above may be gathered via Internet under the grand total of 5 minutes or less. No need to add insult, reminding those who owe money how hard it is to even make it, either. There’s a crucial, invisible, component to this dire calculation, however, that most are unaware of.
And what average Americans don’t know about their own debt can actually ruin them, and it’s actually already doing it, stealthily. That is because, pinch your nose and hold your breath, no matter the amount that they owe, it has already being sold over for pennies on the dollar.
This devious aspect of consumer debt is the hidden side behind the moralistic rhetoric of Dickensian concepts such as ‘living within one’s means’ and ‘personal responsibility.’ For these are all sound and truthful only and for as long as those who owe money remain indebted.
The financial system, and in fact the entire economy, rest on the notion that debt is as much a factor of their liquidity as earned income and capital invested. But while for a government, the amount of debt is often an indication that it’s being used to build and provide infrastructure so to support the functioning of society, for an individual, such amount is indicative of his or her ability to receive more or less credit.
Contrary to concerns of the ultra-rich, it’s not a government’s highest priority to be debt-free, as long as it’s under a well-determined balance of spending and output. But for individuals, such condition is often the key to opportunities for material improvement and security. As it happens, unlike governments, one can’t issue debt to cover bills, so if you owe money, you need to pay it up, and fast.
Unfortunately, while a different set of rules applies to the wealthy, for the rest of us, falling into debt is often a condition that leads to even more indebtedness, and even social ruin. So we may struggle and skip meals to pay that bill on time, and not having to be burdened by higher rates.
That’s when that utterly non-productive but highly profitable industry comes into play: the collection business. Most people think that its job is to contact debtors on behalf of creditors, work some kind of plan, collect a commission for their service, and be on their way. Since there are plenty of people behind on their bill payment schedules, one would think that’s enough of a business. They’d be wrong, of course.
A debt collection agency’s main purpose is to purchase people’s debts, and they do so, legally, by pennies on the dollar. (To find out exactly how much less than the principal they’d pay for your debt is one of those Internet searches that will take way more than five minutes to know.)
But the moment they purchase your debt, you have, in practice, two creditors coming after you: that agency, and your original credit card company, or mortgage holder, or online gaming provider, or retailer of specialty bras, whoever you owe money to. While the agency may offer you a deal, your original creditor will most likely not, adding instead, a stiff rate and penalties for your non payment.
Now, at this point, while you scramble to sell stuff on eBay, or contact that distant relative/friend who owe you money, in order to come up with some to quench the monster, you debt is already on its way to change hands yet again. The agency that’s still sending you letters proposing you to settle, is also negotiating to sell that debt, again at a discount, to yet another agency, which may, you guessed it, come after you too.
You’d ask, how can this be possible, that one bill’s default has potentially generated two others, and you’re being charged the original amount even as third-parties are buying it at a discount? Well, it’s a loophole or it’s a way for the system to feed itself, even as it pressures you to stop feeding yourself, so to speak. Also, by now, you may be wisen up to the scheme and thinking, why can’t I buy my own debt for pennies too?
You can’t, as a matter of fact. Or you could, if you become, yourself, a licensed debt broker. We don’t know how are the job prospects on that market, so it’s up to you. Continue reading