Agent or Attorney- Who Gets You More Money?

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So you have some debtors who refuse to pay up, huh? You’ve tried everything in your power to get them to take responsibility for their debts, but they are either unresponsive or they simply refuse to pay you a single cent of the loan they owe you. It’s become clear that if you want to restore cash flow from this debtor’s account, you will need to take decisive action and hire a collection professional to settle the matter for you.

But who should you hire- a collection agent, or an attorney?

For most people, the choice between an agent and an attorney revolves around which professional will get them more money from their debtors. And in just about every case, hiring an attorney is the more profitable choice to make.

Debtors love to ignore collection agents. Debtors understand that collection agents don’t actually have any power in and of themselves. Agents are just normal employees who work for collection companies and have no leverage over their debtors. Even more importantly, a collection agent can’t personally take a debtor to court or levy serious action against them. Instead, a collection agent can only harass a debtor with phone calls and letters.

These days debtors are experts at dodging or otherwise ignoring these annoying attempts at communication, rendering collection agents effectively powerless. If a collection agent wants to take any sort of serious action against a debtor, they will need to contact an attorney.

Only an attorney can provide a debtor with the real pressure they need to begin repayment. If your collection agency needs to hire an attorney to enforce their actions, then why not skip the middle-man and simply hire an attorney from the start? Not only will you save money, but communication from an attorney bears the weight you need to actually see positive action from your debtors. 

Will Liquidations Rise or Fall in 2012?

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It’s difficult to say whether liquidations will rise or fall in the coming year. Both sides of the debate offer compelling arguments in their favor, and no clear winner can be determined.

On the one hand, there are powerful factors indicating our economy may be starting a slow gradual upswing. 2011 wasn’t a great year economically but it ended stronger than it started, with U.S. salaries rising in December of 2012 for the first time in 9 months. Consumer spending has begun to rise over the last couple of months, and while it’s growth hasn’t been dramatic, any growth is better than obvious stagnation. Unemployment is still a problem, holding strong at 10%, but it isn’t rising and there’s no indication it will do so anytime soon.

Overall the economy isn’t fantastic, but it has been much worse in recent years, and it isn’t showing any signs of getting worse in the immediate future. If the economy stays in essentially the same state it’s in right now, then we probably won’t see a sharp spike in liquidations during 2012.

That being said, there are a few indications that liquidations could take a turn upwards over the next year, depending on a few key factors. Americans have spent a couple years now saving money and paying down their debt, but the rise in consumer spending seems to indicate that those same Americans are starting to spend their savings discretionarily, and may be beginning to accumulate debt once more to help finance those purchases. Many Americans have also responded to the recent Recession by going back to school and furthering their education, accumulating additional student loans in the process.

The big wildcard in 2012 is going to be the price of gas, which continues to rise and may drag the price of everyday goods along with it. If the cost of living increases dramatically over the coming year, then Americans will find their cash-flow choked and could easily succumb to their increased debt load.

Our current economic indicators seem to state that 2012 will be an ok year and isn’t likely to see a huge jump in liquidations. But our economy is unnervingly precarious right now, and it wouldn’t take much to push many Americans to unexpectedly liquidate.

Medical and Student Loan Debt Sales Growing Explosively

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It’s a bit of an understatement to say the sale of student loans and medical debts are on the rise. The amount of student loans and medical debts being sold to collection agencies is surging. Why are we seeing this surge happening and what does it mean for lenders of these loans?

There are a few huge obvious reasons why student loan and medical debt sales are rising so rapidly. At a very base level, we’re buying more of these debt cases because there are simply far more people with student loans and medical debts than ever before. More people are going to colleges and universities than attended a decade ago, and we have more sick people than ever before. Not only is the Baby Boomer generation entering years of near-constant medical care and attention, but children are coming down with degenerative diseases and other illnesses at unprecedented rates. An increase in student loans and medical debts will naturally correspond with an increase in sales of those loans and debts.

Yet there are other factors at work here. Students have been taking on HUGE loan burdens over the last decade as tuition costs have spiked and financial aid has dwindled. Medical procedures are increasing in price as well, and the number of procedures, tests, and prescriptions the average individual undertakes has grown at the same time. The price of an education or of receiving medical care is greater than ever, and most people can’t afford either without taking on some level of debt.

Combined with a high unemployment rate and a less-than-stellar economy, it’s understandable why we’re seeing such a surge in student loan and medical debt sales these days. In fact, we expect this trend to escalate in the coming years. We won’t be surprised if, in five years, the majority of our cases are student loan or medical debt purchases! 

What Does the Rise in Consumer Spending Mean for Liquidations in 2012?

Consumer Spending- Is It Actually on the Rise?

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There are plenty of ways to determine whether an economy is on the upswing or not, and one of the most popular to identify and discuss is consumer spending.  Most experts believe consumer spending and the general health of the economy directly correlate - that increased consumer spending indicates a growing healthy economy, and that decreased consumer spending is a sign of a poor economy. For this reason, analysts have been watching consumer spending like a hawk to determine when exactly we’ll transcend our current economic state.

Looking over these expert’s findings, we have some good news and some bad news. On one hand, consumer spending is on the rise. On the other hand, it isn’t rising as quickly as some experts feels it should be.

After years of savings and paying down debt, consumers are spending more on relatively non-essential items such as restaurant meals and new cloths than they have in years. Consumers aren’t, however, spending lavishly or purchasing too many big-ticket items, like new cars. The sort of consumer spending we’re seeing is promising, but it doesn’t indicate we’re out of the hole just yet.

Some analysts even worry that consumer spending should be much higher than it is right now according to other economic indicators. For example, at the end of 2011 U.S. salaries increased for the first time in 9 months, which some analysts feel should have resulted in a massive surge of consumer spending, yet didn’t.

Consumer spending, like so much of economics, is as much about psychology as economics. We’re unlikely to see a huge jump in discretionary spending until consumers not only have the means to buy lavishly, but until they feel ready to buy big ticket items again. 

Do Debt Collectors REALLY Need to Follow Their Industry Regulations?

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You don’t need me to tell you the debt collection field is filled with unscrupulous individuals looking to make a quick buck by taking advantage of the desperation of both their clients and their debtors. Left to their own devices, most debt collectors would employ every thug tactic they could think of in order to get debtors to pay up. Thankfully the debt collection field is highly regulated and any law firm or agency looking to collect debts needs to comply with these laws to the letter if they want to stay in business.

The two primary sets of regulations relating to the debt collection field are the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA). Let’s take a minute to outline what these acts state when it comes to how we can perform our duties.

The TCPA was primarily designed to rein in telemarketers, but it applies to debt collection agencies and firms as well. Under the TCPA, no debt collection professional is allowed to do the following actions:

• Call between 9 p.m. and 8 a.m. local time
• Call individuals on the Do Not Call list
• Refuse to provide their agency’s identifying information
• Solicit using automated messages
• Engage more than 2 lines of a business with automated calls

Each instance of breaking one of these regulations can result in a fine of $500 - $1,500 a piece, making the TCPA costly to violate!

The FDCPA works in much the same way, but isn’t limited exclusively to regulating telephone calls. Under the FDCPA, debt collectors can’t misrepresent themselves, their intentions, or their capabilities. The FDCPA also prevents collectors from being able to embarrass or harass their debtors through a variety of once-common practices.

For legal, financial, and ethical reasons, it’s wise to ONLY work with debt collectors who follow these regulations as closely as possible!

Speed is Necessary in Debt Collection

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Which single element of debt collection contributes the most to the success, or failure, of receiving the payments you’re owed? Pin-pointing a single “most important” element of the process is difficult, but a strong case could be made for speed. The longer a debt is outstanding, the less likely it will be paid off, it’s as simple as that. For this reason, the most effective collection firms all work on the tightest timelines possible.

Many of our competitors will tell you that collecting outstanding debts takes a long time, and successful collections tend to occur at the end of an extended period of harassment and provocation. This is nonsense. With the right, respectful, and fully legal tactics, favorable debt collection will often occur within 30 days of handing your accounts over to a qualified collection firm. A truly qualified collection firm will be able to achieve fast results using the right combination of intelligently worded letters and non-harassing phone calls.

Cases that aren’t resolved by about a month’s worth of letters and phone calls aren’t going to be resolved by a year’s worth of letters and phone calls. For these accounts a different tactic is required- the threat, and eventual procedure, of legal action. If a debtor will only respond to legal action then there’s no reason to wait to levy this ace-in-the-hole. The explicit threat of legal action is often enough to elicit payment from stubborn problem debtors. For those debtors who still refuse to pay, court action is all but guaranteed to result in a ruling in your lender’s favor.

It doesn’t take a whole lot of time to determine whether a debtor will respond to conventional tactics or whether tougher measures are required. Once this determination is made, waiting around to proceed with those tougher measures will simply delay the receipt of your payments.