Thank You, Debt Collectors!
Professor Warren recently wrote about the rise in complaints about debt collectors and some of their more questionable tactics. For many American families such stories are familiar territory.
But wait - the American Collectors Association has discovered that the conception of debt collecters as "bad guys" is a myth! In truth, they save us all staggering amounts of money, bolster the national economy, and keep market prices at reasonable levels... heck, maybe they even save kittens who are stranded in trees.
Lest you think I'm exaggerating, here is a juicy quote from the Washington Post regarding the ACA's latest PR campaign:
Put another way--as ACA's CEO Gary Rippentrop said in a press release: "The annual savings is the average household equivalent of 19 bags of groceries, 155 gallons of gas or more than four months of electric bills." The $39 billion "returned to the U.S. economy was equal to three percent of all U.S. corporate pre-tax profits," Rippentrop added. "Many companies might even end up in the red or in bankruptcy without the assistance of debt collection services."
Heck, I'm sold... thank you, debt collectors! What do the FTC and Attorney General know, anyway? (And nevermind other articles from the Washington Post to the contrary, such as this description of abusive debt collection techniques.)
Remember, kids - the next time your parents' bank account is frozen and your phone rings at all hours of the night, be thankful, because your life has actually been improved by 155 gallons of gas.
The Center for American Progress is having a free one day conference on debt tomorrow for all interested.
One of the worst examples of debt ravaging our nation is the housing bubble. The housing market in the DC area is particularly worrisome and the new fangled mortgages (interest-only, ARMS etc) being pushed by desperate agents and brokers are just making matters worse for vulnerable young families.
As the economist Dean Baker says, "The best and simplest way to burst a bubble is talk."
The Fed and top treasury officials should heed Baker's advice and warn the American public about the dangers of the current housing market (as they have done with budget deficits). If they arm U.S. consumers with all of the information NOW the bubble burst will leave fewer victims in its wake.
July 18, 2006 12:37 PM | Reply | Permalink
I work for a property management company and we do tell our people that being aggressive about collections is a good thing for everyone involved. (When I say aggressive, I mean that we don't wait to pursue late rents, not that we call people over and over or threaten them or anything like that.)
The reason that it is good for our residents is that if we chase them for their late rent payment right away, hopefully they pay, avoiding eviction most importantly, but also avoiding additional court costs, ongoing late charges, etc.
The reason it is good for our business is that we are in the business of collecting rent on occupied units, not in evicting people and creating vacancy for ourselves. Although late fees do create additional revenues, there are significant costs related to collecting past due balances, so we'd much rather just have our people pay on time.
If people come to us with special circumstances, we try to be accommodating (for example, someone who needs to pay by the 15th rather than the 10th due to their pay schedule or someone who has an unexpected expense like a medical bill or car repair and needs to pay their rent in installments for a month or two), but the key is communication. If the resident contacts us, we can help. If the rent is late, and we contact them, we can help. If there's no communication, they incur late charges, court costs, etc., and may ultimately end up being evicted. That, as I said above, isn't good for anyone.
As I tell my people, having a lot of excitement in your life is overrated.
I am not in any way saying that all aggressive debt collection is good, but it isn't all bad either.
July 22, 2006 9:44 AM | Reply | Permalink