Recession Finds Banks Collecting Debts More Aggressively
While economists continue to disagree on whether the U.S. economy is ‘formally’ in a recession, banks apparently believe that it is and have stepped up their debt collection processes as a result. In fact, some of the largest banks in the country are getting downright aggressive.
Why you may get that collection call earlier.
Some of the largest banks in the nation such as Citigroup and Bank of America have reportedly stepped up their debt collection practices by hiring more collection representatives and by contacting late paying customers much earlier and more frequently than they would have in the past. Economists say that due to the troubles in the lending market, financial institutions which also extend credit are feeling the crunch and doing everything in their powers to collect on that debt – and they’re getting creative.
Gift cards, online plans & special incentives
According to a recent article in the Wall Street Journal, banks are increasingly finding it more difficult to contact their debtors by phone due to caller id telephone systems. As a result, some banks are sending debtors gift cards that can only be activated by calling the company – and forcing them to talk with a representative.
Others are providing websites that allow you to pay your bill or work out a payment plan online to avoid having to talk with a collection representative. Still others are providing special, and quite substantial, incentives to those who owe a great deal of money or are severely past due on their account such as agreeing to accept less than is due if payments are made now. However, some banks are simply selling their accounts to debt buyers who, instead of offering a free gift, may use harassing tactics to get you to pay.
How debt buyers operate
According to Steve Recordon, an attorney from San Diego, California whose firm represents individuals who have been sued or harassed by debt buyers, “Sellers will sell their debt, or account, for pennies on the dollar depending on the age of the account. The older it is, the cheaper it is. I’ve seen some that have been sold for a-half a cent on the dollar.”
“For example, let’s say that [a credit card company] has an account that’s not being paid. It then goes into default, and [that company] tries to collect. If [it’s] unable to collect, [it] sells the account to a debt buyer. Debt buyer No. 1 picks it up and tries to collect. If they’re unable to collect, they’re going to sell it to Debt Buyer No. 2.” Recordon says that the tactics that these debt buyers use also get progressively worse the further down the line the debt goes – including tactics such as calling co-workers, neighbors and showing up at your home.
While it would be better to get a gift card, chances are that you may be getting calls from debt buyers instead. If you’ve been sued or harassed by a debt buyer / collection agency, contact an attorney whose practice focuses in this area of the law to discuss your situation. Consultations are free, without obligation and strictly confidential. To contact an experienced attorney, please click here. We may be able to help.
Read more for related video clips.