One of the nation’s largest debt collectors,Portfolio Recovery Associates, has been in the news lately, and this article exposes a hard truth about the collections system: Debt collectors know when your finances improve. Because debt collectors pay the credit bureaus to tell them.
I’m a bankruptcy attorney, and I know people want to put off filing bankruptcy for as long as possible.
Some people come to see me when they have a good job again, after unemployment. They start to settle some of their smaller debts, and when they do, everybody jumps them.
Debt collectors call from everywhere. The sheriff comes around with a pile of summons. Old judgments suddenly are trying to attach your wages.
“I’m trying to do the ‘right thing,’” people tell me, “But I can’t pay everybody at once! How do they know?”
Portfolio Recovery are a high tech debt collectors. When they see your credit score start to improve, they know it’s time to jump on you.
Portfolio’s Recovery Associates is one of the top debt collectors in the country. They are good at what they do as debt collectors because of their technology.
Portfolio’s president has bragged in the newspaper about how they use computers to identify people who just now have some money.
Most people they leave alone: “Let’s face it,” says Steve Fredrickson, the company’s co-founder and CEO, “if you’re a consumer that’s in dire financial straits and you can’t pay us anything, I don’t want to talk to you, and you don’t want to talk to me.”
But when your credit report starts to improve, they pounce. When an unemployed mom gets a job or signs up for a cellphone contract, for example, her score goes up. PRA pays to access data from credit reporting agencies, among other sources of information.
“When something does change, you want to be the first one to get them on the phone,” [PRA Vice President Neal] Stern says. “They probably owe five or six other people.”
The lesson here is that unless you have cash to settle with everybody, trying to settle one creditor at a time, does NOT buy you peace. (Bankruptcy does that.) Trying to settle your bad debts, sadly, just leads to more headaches.