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Sun Aug 17, 2014, 08:55 AM

Inside the Dark, Lucrative World of Consumer Debt Collection


One afternoon in October 2009, a former banking executive named Aaron Siegel waited impatiently in the master bedroom of a house in Buffalo that served as his office. As he stared at the room’s old fireplace and then out the window to the quiet street beyond, he tried not to think about his investors and the $14 million they had entrusted to him. Siegel was no stranger to money. He grew up in one of the city’s wealthiest and most prominent families. His father, Herb Siegel, was a legendary playboy and the majority owner of a hugely profitable personal-injury law firm. During his late teenage years, Aaron lived essentially unchaperoned in a sprawling, 100-year-old mansion. His sister, Shana, recalls the parties she hosted — lavish affairs with plenty of Champagne — and how their private-school classmates would often spend the night, as if the place were a clubhouse for the young and privileged.

So how, Siegel wondered, had he gotten into his current predicament? His career started with such promise. He earned his M.B.A. from the highly regarded Simon Business School at the University of Rochester. He took a job at HSBC and completed the bank’s executive training course in London. By all indications, he was well on his way to a very respectable future in the financial world. Siegel was smart, hardworking and ambitious. All he had to do was keep moving up the corporate ladder.

Instead, he decided to take a gamble. Siegel struck out on his own, investing in distressed consumer debt — basically buying up the right to collect unpaid credit-card bills. When debtors stop paying those bills, the banks regard the balances as assets for 180 days. After that, they are of questionable worth. So banks “charge off” the accounts, taking a loss, and other creditors act similarly. These huge, routine sell-offs have created a vast market for unpaid debts — not just credit-card debts but also auto loans, medical loans, gym fees, payday loans, overdue cellphone tabs, old utility bills, delinquent book-club accounts. The scale is breathtaking. From 2006 to 2009, for example, the nation’s top nine debt buyers purchased almost 90 million consumer accounts with more than $140 billion in “face value.” And they bought at a steep discount. On average, they paid just 4.5 cents on the dollar. These debt buyers collect what they can and then sell the remaining accounts to other buyers, and so on. Those who trade in such debt call it “paper.” That was Aaron Siegel’s business.

It turned out to be a good one. Siegel quickly discovered that when he bought the right kind of paper, the profits were astronomical. He obtained one portfolio for $28,527, collected more than $90,000 on it in just six weeks and then sold the remaining uncollected accounts for $31,000. Siegel bought another portfolio of debt for $33,388, collected more than $147,000 on it in four months and sold the remaining accounts for $33,124. Even to a seasoned Wall Street man, the margins were jaw-dropping.

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http://www.nytimes.com/interactive/2014/08/15/magazine/bad-paper-debt-collector.html?ref=magazine&_r=1

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Reply Inside the Dark, Lucrative World of Consumer Debt Collection (Original post)
n2doc Aug 2014 OP
exboyfil Aug 2014 #1
tech3149 Aug 2014 #2
1StrongBlackMan Aug 2014 #3
elias49 Aug 2014 #4
Hoppy Aug 2014 #5

Response to n2doc (Original post)

Sun Aug 17, 2014, 09:29 AM

1. Great article

Anyone proposing cradle to grave responsibility for debt collection and personal information with strict liability for breaching personal information? This sounds like the wild west right now.

Advice to individuals with old debt - tell them they consider it harassment if they are called again and hang up.

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Response to n2doc (Original post)

Sun Aug 17, 2014, 10:16 AM

2. I couldn't finish reading it, I just got too angry n/t

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Response to n2doc (Original post)

Sun Aug 17, 2014, 04:06 PM

3. posted to for later.

 

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Response to n2doc (Original post)

Sun Aug 17, 2014, 06:01 PM

4. Money, money, money...

 

it's a rich man's world.

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Response to n2doc (Original post)

Mon Aug 18, 2014, 07:28 AM

5. There is a website "Defeat Pressler and Pressler"

 

P & P are a group of slimes that buy such notes. The website tells how to tie them and similar slugs in legal paper.

Sometimes it works. Since they are interested in a quick, streamlined buck and do not want to get bogged down, your "creditor" may go away.

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