If you have ever tried to settle a debt with a creditor you no doubt have experienced the frustration that comes with the realization that the process involves very little logic. It usually goes something like this: you owe a debt, you don’t have money to pay the debt so you fall behind. The creditor begins calling you (a lot). You answer their call and offer to start paying something. They say no. So they get nothing.
Maybe your situation is even so advanced that you are on the verge of bankruptcy. You make one last ditch effort to to avoid bankruptcy by calling your creditor and making a settlement offer. You tell the creditor that it is either this or nothing. They choose nothing. How is this good business? Certainly, it seems, that having something is better than having nothing. But that doesn’t seem the case when it comes to the debt collection process.
Policy Rules the World
This idea of taking nothing over something has bothered me for some time. One day I was talking to my brother-in-law who works for a large national company about this type of corporate thinking. While he doesn’t work in the debt collection field I think that his response does shed some light on why debt collectors react the way they do.
He said that in his company, that due to the large size of it, the number of employees, and the large numbers of customers, that policies must be put in place to handle routine situations or the company would come to a stand still. So, a policy is put in place in hopes that it will deal with most issues adequately while recognizing it is not set up to deal with the individual problems that may come up in a specific case.
I get this. I used to be a criminal prosecutor for the Maricopa County Attorney’s Office. This is the 5th largest prosecuting agency in the United States and handles tens of thousands of felony cases per year. Without policies in place the system would collapse. When I was hired they gave me a three-inch three ring binder full of policies and how to handle the various crimes. There was no deviation from policy, even if it resulted in something that was unfair or unjust.
So it likely is with the debt collectors. The person you speak to has their marching orders as to what they will and will not accept as a settlement, and if you don’t fall within those guidelines, they will take zero. The need for a policy makes sense, but I still don’t understand why $0 is better than $$$.
If you are looking to settle a debt, just know that what seems like a logical solution to you may not even register to the person you are speaking with. Maybe some of the debt collectors out there can enlighten me as to why such policies are in place?
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John Skiba, Esq.
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