Florida Broadens the Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act (FDCPA) gives all debtors some rights when it comes to collecting debt.  Often times, collectors only have one motive, and that is to collect the money.  The collectors or creditors don’t tend to take into consideration the damage they are causing in the process of them gaining their claim. The Fair Debt Collection Practices Act is provided to protect the debtors from unlawful collecting tactics that have been used in the past.

Some of the things that the Fair Debt Collection Practices Act prohibits are:

·         Contacting consumers outside of  8:00 AM and 9:00 PM

·         Misrepresentation

·         Harassing the consumer with phone calls

·         Publishing the consumer’s name on a ‘bad debt’ list

·         Communicating with a consumer at their work after being asked not to

The list of protection that the FDCPA offers extends far past that, however Florida has taken those laws and broadened them.  Florida’s laws protect the consumer more.  Their laws also apply to creditors as opposed to the FDCPA whose laws only apply to collectors. 

Florida also gives legal rights to the consumer.  If a collector or creditor has been abusive, or has broken one of Florida’s guidelines, the consumer may sue in a court of law.  The compensation that would be received would be for punitive damages. 

Some of the statutes that Florida upholds include:

·         Collectors are not allowed to communicate with the debtor during inconvenient times

·         Collectors are prohibited from mailing collection requests in a clear envelope

·         Collectors are not allowed to harass the debtor’s family

When it comes to debt collectors, Florida’s laws seem to favor the consumer.  Florida takes an already strict set of guidelines and expands them further in hopes to make a fairer environment for the debtor.  

Debt Collecting - A Psychological Approach

Debt collecting is a frustrating Endeavour, because it is so inconsistent in nature.  While one borrower pays, the other doesn’t.  Collecting debt is not easy, however there are a few things that should be taken in mind when it comes to bank debt collection. 

Recent studies have shown that bank debt collectors are starting to take a psychological approach to collecting their debt.  After all, psychology is the study of the mind, so wouldn’t it make sense to want to get into the heads of the borrower? 

In previous years, debt collectors have taken an aggressive approach.  When one was attempting to collect they would do so by calling the borrower’s phone constantly.  This is not the approach that is psychologically sound.  Studies show that people in debt are more likely to pay when they receive a letter vs. a phone call.  This is contrary to what has been previously thought.  The reason for this is because when someone has a piece of paper sitting in front of them they feel more contractually obligated than if they had received a phone call.  The piece of paper also is a constant reminder of the debt, whereas a phone call is brief and soon forgotten.

 

Another psychological strategy that bank debt collectors are taking is to be friendlier to those they are attempting to collect from.  Studies have shown that people are more likely to pay to companies that are kind to them.  It’s also important to offer flexible paying options.  If a collector were to start a conversation with demanding an absurd amount of money for a monthly payment, chances are the borrower will get overwhelmed, and instead of paying little by little, they will pay nothing at all.

When it comes to debt collecting, don’t neglect the aspects of psychological science in your strategies.  By understanding the mind, and how it works, you are better equipped to handle the task of debt collecting. 

Which Kind of Debt is Easier to Collect?

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When it comes to debt there are two main types- unsecured and secured.  These two forms then proceed to break into smaller sections, however for the purpose of this post we will just focus on secured and unsecured.

Secured

Secured debt is explained in its name.  Secured debt is secured by the borrower with an asset.  This asset is what is used for collateral in order to get the money back.  A secured loan has both its positives and negatives for the borrower.  Usually, a secured loan will have a lower interest rate.  The main drawback to a secured loan is that the asset that was put up as collateral could easily be taken if the money is not paid back.  

Some examples of secured debt would be:

• Mortgage loan
• Car loan
• Boat loan
• RV
• Other large loans

Unsecured

Unsecured debt is pretty much the same as secured, except for the fact of not having collateral.  In an unsecured loan the promise to pay back the money is there, however there isn’t the security that you have for a secured loan.  The good aspects of unsecured debt would be its convenient and it’s easy to qualify for. With that being said, the negatives can be quite costly.  Some of the negatives of unsecured debt include high interest rates, and pricy fees. 

Some examples of unsecured debt would include:

• Student loan debt     
• Small bank loans
• Credit card debt

When it comes to collecting debt, it is a little easier to collect secured debt than it is unsecured.  Secured loans are less risky than lending under unsecured loan pretenses.  The reason for this is because the secured debt will have an asset to go after if the borrower doesn’t pay.  This makes secured loans the most sought after form when lending out money.  

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?