Debt and Its Discontents: The Depressing World of Collections Part Three

This series is by Patrick Sahr, a Naked Capitalism reader and a former debt collector. Sahr is a graduate of Buffalo State College’s Print Journalism Program.

[Matt here]: This series is running because it’s important to understand the culture of debt collectors, who are increasingly a form of policing in our society. One in seven Americans is currently being pursued by a debt collector.

Debtors:  From Credit Enthusiasts to Cleaned Out in Seven Years

Debtors are different today than they were in 2004.  In 2004, debtors were generally, in conversation, wildly arrogant and optimistic.  Many were wise enough to know that paying a “charge-off” sometimes adversely affects a credit score and others bragged about securing additional lines of credit despite having others in default.  The type of debtor you speak with is contingent on the product you are collecting.  The recently charged-off sub-prime portfolio, in 04, was filled with arrogant knuckleheads who bought the bank’s program of wealth transfer hook, line and sinker ignoring their modest wages and assets.  They leveraged everything they owned to the max just like the banks.  The defaulted amex black card portfolio contained penny-ante corporate villains and upper-middle class people at the beginning of an unpleasant journey, a titanic professional and financial storm.  Letting go of your credit cards is the recommended first step when you batton down the hatches in preparation for that storm.

In 2011, the tone was much different.  People answered the phone, happy to tell you that haven’t got it so the bank is not going to get it.  They weren’t happy. They were just happy to have a simple solution to the unpaid credit card problem:  No money, so it’s not getting paid.  If only the solutions to food and rent problems were as simple.  People weren’t delusional about paying next week or next month anymore, they simply didn’t have it and weren’t going to have it in a month, two months or more.   Almost every single consumer credit report had a foreclosure on it with about five defaulted lines.  Most were bankruptcy candidates. The fifteen contacts you made in a day dwindled to five.  As the banks imposed their own program of austerity on the middle and working classes, access to credit and real wealth plunged in the United States.  The banks were not throwing any lifelines out and high unemployment created an enormous new class of debtors who are responsible but broke.

The Economy Changed Collections, But the Industry Remains the Same

Agencies now enforce federal and state regulations with more fervor, although selectively, so the rampant violations are confined to only a handful of collectors.  Overall, collectors are not earning as much in commission as they once did, the result of better compliance and a nationwide reduction in wealth.  One Buffalo agency pink-slipped roughly 100 collectors in the early months of the Recession in 2009.  The large agencies remain open for business and continue the revolving-door hiring practice and collections as a whole seems to grow.  The last three years has brought many smaller, payday loan collection agencies to Buffalo.  These offices usually employ fewer collectors and require less start-up money, so they are ubiquitous in Buffalo.  The payday loan collection racket is where “Bags O’ Money” cut his teeth between prison stints.  Another growing tangent in the collections industry is student loan paper.  Many recent and not-so recent college graduates grapple with frozen wages and scant employment prospects, often unsuccessfully, causing their federal and private student loans to fall into default.  This has produced a minor uptick in the collections industry as agencies vie for the contract to collect these debts also.

The collection agency continues to thrive in Buffalo, employing thousands of people, the sons and daughters of the previous generation who generally enjoyed steady, gainful, union-protected employment even into the eighties and early nineties.  The local economy that sprouted up in the absence of manufacturing is non-union and low-paying.  The call center environment in general is one where employees have a tenuous connection with their employer at best.   Management doesn’t engage their workforce at all, instead believing that social Darwinism will remove the riff-raff and the survivors will take on the workload.  The typical tin-horn manager in these operations is crude, stupid and intoxicated on the minor priveleges their authority provides.  They work 55 or 60 hours a week, so they are miserable and that misery is usually transferred downward.   The call center and the collection agency may be the model for the new American economy.  It raises some questions about how we are to sustain our way of life with these kinds of industries as the mainstays of the working-class.


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About Matt Stoller

From 2011-2012, Matt was a fellow at the Roosevelt Institute. He contributed to Politico, Alternet, Salon, The Nation and Reuters, focusing on the intersection of foreclosures, the financial system, and political corruption. In 2012, he starred in “Brand X with Russell Brand” on the FX network, and was a writer and consultant for the show. He has also produced for MSNBC’s The Dylan Ratigan Show. From 2009-2010, he worked as Senior Policy Advisor for Congressman Alan Grayson. You can follow him on Twitter at @matthewstoller.


  1. Capo Regime

    What you don’t hear about much in the discussion of debts and the ancillary issues of un/underemployment is the issue of child support and alimony. Yes, we are all for the kids but the child support system is horrific in the details of its implementation. i.e. if a person (usually a male) becomes unemployed or has a significant reduction to income he must file for a modification of child support. To file a modification must go to court and must hire a lawyer (at least $1,000.00 up front) or have the time and skills to go pro se. Modificaton is filed and 9 times out of ten will be denied (you never get a downward mod–only up!) Why? Becuase income is imputed by “law” to what you have earned or should be earning in some happy fantasy world for you are not a victim of circumstance just a deadbeat shirking your obligations. Most assuredly there is a huge number of fathers falling behind and who are unable to get a break (due to impediments listed above) and thus “deadbeats” are created…..

    1. Capo Regime

      Oh and even for those who are able to get a downward modification based on their circumstances getting on a docket takes a long time and thus modification will be effective at time of filing not of change of circumstances–may take months to file especially if there are objections and so tab is growing for months! Nice system we have.

    2. JTFaraday

      “Thousands of so-called “deadbeat” parents are jailed each year in the U.S. after failing to pay court-ordered child support — the vast majority of them for withholding or hiding money out of spite or a feeling that they’ve been unfairly gouged by the courts.

      But in what might seem like an un-American plot twist from a Charles Dickens’ novel, advocates for the poor say, some parents are wrongly being locked away without any regard for their ability to pay — sometimes without the benefit of legal representation.”

      1. Capo Regime

        Most child support is paid via payroll deduction. Hard to do when folks are not on a payroll. The first half of the article is nonsense (my wife practiced family law for 20 years and gave up), most do not pay because they cannot pay and can;t afford a lawyer. A few do hide money and do not pay out of spite but are a tiny but well publicized bunch and a convenient ploy to keep a dysfunctional system as it is The msn piece (suprise) is a bit of a disortion though some parents (really fathers) are indeed gouged and without recourse so yes they do check out at times and so would most people if half of your after tax earnings were taken and you. For some time, high child suppor has led to many bankrupcies though not dischargeable other debts are discharged to enable paying child support and food and shelter.

        Main point—there is a lot of this going on due to job loss and earnings reductions this is serious. the deadbeat canard of hiding money and so on will dissapear and reality will pop in and yes children will suffer.

        1. JTFaraday

          No, you need to stop splitting hairs just because you enjoy it. The article largely supports your point.

          1. Capo Regime

            Yes you are correct–but its most unusual that the article is a year old and that this issue is getting so little coverage. If one quarter of minors are in “the system” you would think there would be much coverage and discussion of the seriousness and even thoughts of reforming the system.

            thanks for post and did not mean to split hairs.

    1. Capo Regime

      Indeed–one wonders what this “way of life” is or has become. The future has arrived and the “way of life” ain’t pretty and not going to get prettier….

  2. kevinearick

    we police each other, implicitly. with false assumptions, ina positive feedback loop that we “see” as the derivative empire.

    way too many people are way too far behind, arguing over symptoms that are only relevant to the genes headed back to the churn pool.

    look to the future to locate the magnet that you want to pull you forward, identify all possible gates to that future and go to work. constantly re-evaluate. only when you have surplus can you help others, and spending your time gossiping and judging those on their way back to the churn pool, empire tv, should be your last priority, entertainment.

    the empire is nothing more than a sh-show, life in reverse, only as powerful as you choose it to be.

    look at the “free” credit associated with education, which is really debt slavery, resulting in hyperinflation far greater than the sickcare fiasco.

    educate yourself as you move forward; that is the point of the sword, not the nonsense on the movie screen. i “loved” to watch john wayne movies, but he was a patriotic draft dodger. you love your children, but you don’t have sex with them, unless you want to go staight back to the churn pool.

  3. Ms G

    Patrick, I want to thank you for this and the 2 previous installments on this critical subject. Your insights as a former insider in the industry are full of rich observations that flesh out who the human beings are in the indutry (collectors and “clients”) and how the processes and business model and “personality” of the collections business reflect the broader social-political-economic circumstances.

    That is a gift to all of us who are reading your pieces.

  4. mac

    The people forced by circumstances into this scam are very likely much like those who merrily peddled the “liar loans” and the like.
    What ever the next scam is they will be forced to be there also.

  5. Bobok

    “He felt his great body again aching for the comfort of the public-house. The fog had begun to chill him and he wondered could he touch Pat in O’Neill’s. He could not touch him for more than a bob — and a bob was no use. Yet he must get money somewhere or other: he had spent his last penny for the g.p. and soon it would be too late for getting money anywhere. Suddenly, as he was fingering his watch-chain, he thought of Terry Kelly’s pawn-office in Fleet Street. That was the dart! Why didn’t he think of it sooner?” – from Counterparts by James Joyce:

    The system is functioning by design.

  6. steelhead23

    Bellum omnium contra omnes. Life, as Thomas Hobbes argues is “solitary, poor, nasty, brutish, and short,” when each of us attempts to manage our affairs in a manner that maximizes our benefit without consideration of other’s welfare. This short series has given testimony to the essential nature of our society. To the extent I gained any benefit at all from my years of Catechism, it was self-deprecation – a grace our society has not merely lost, but actively shuns. Jubilee, the forgiveness of debts, would not merely bring about an economic rebirth, it would bring about social change of an epic scale. Let the debt forgiveness begin.

  7. fleeting

    Buffalo’s moment in the sun may be fleeting. I did consulting work for a financial services firm that outsourced part of its collections to a call center in india.

    The US operations have dwindled to a small team that opens envelopes and cashes the checks.

  8. craazyman

    You Can Get it Down to Almost Zero

    This is depressing. Buffalo’s come a long way down from the Marv Levy / Jim Kelley Buffalo Bills superbowl contenders.

    It makes me wonder if some call center debt collectors are themelves being pursued by other call center debt collectors, maybe even in the same center.

    That would be weird. You’re between calls in your cube and your cellphone rings and it’s the dude three cubes over.

    That’s a weird concept, that if you’re running a call center you might actually get back your employees salaries as revenue. That’s almost a negative wage, which recently has been getting some credibility as a concept in economic philosophy.

    You could also think of netting it out, in which case the collector who owed money would simply work for free and nobody would have to call anybody. That would save on the overhead too.

    Eventually nobody would have to do anything except hand money over to the call center. They wouldn’t even have to come to work at all. They could just do it via Pay Pal. That way anybody servicing the call center — like pizza shops or groundskeepers — would also get blown up.

    It reminds me of the Star Trek where Kirk and the crew found a planet at war, but there was no violence. It was all simulated by computers and whenver a bomb hit a target (not in reality, only in computer simulation that both sides observed as the official reality) the people afected would voluntarily walk into a rectangle and get vaporized. I can’t explain it, you need to see it, maybe on Youtube. It’s like that.

    1. Ms G

      Craazyman, this is dynamite. It’s your genre: teasing out the absurd and sci-fi inherent in our everyday (often grim) world. Plus ya just have a way with words and the plume!

    2. Mr. Incognito

      “It reminds me of the Star Trek where Kirk and the crew found a planet at war, but there was no violence. It was all simulated by computers and whenver a bomb hit a target (not in reality, only in computer simulation that both sides observed as the official reality) the people afected would voluntarily walk into a rectangle and get vaporized. I can’t explain it, you need to see it, maybe on Youtube. It’s like that.”

      …Death, destruction, disease, horror. That’s what war is all about, Anan. That’s what makes it a thing to be avoided. You’ve made it neat and painless. So neat and painless, you’ve had no reason to stop it. And you’ve had it for five hundred years…

  9. Ray Phenicie

    This series is a cover up and whitewashing of the collections industry in general and there are just too many unsupported assertions made to let them pass without comment.

    “so the rampant violations are confined to only a handful of collectors.”
    Since there are no studies quoted nor any kind of backup support given showing this is the case, this statement can successfully be ignored and one can assume there are a great many violators out there.

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