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A look at the debt collection industry, along with a notable tale

Well, here's a tale that many of our readers in Orange County and elsewhere might have a bit of trouble believing initially.

Here's why: It's about a couple of former debt collectors who came to the realization one day that they would rather forgive debt than pursue debtors for it.

You heard that right. Such a story is not one that is customarily heard regarding an industry that is often typified by many actors within it that pursue debtors in merciless and unrelenting fashion. Largesse and magnanimity are not characteristics that most people readily associate with debt collectors.

Conversely, harassing collection behaviors and outright illegal conduct -- calling after hours, contacting employers, engaging in various misrepresentations and making threats -- do spell tactics that many hard-pressed consumers are intimately familiar with.

The above-cited ex-collectors appear to have seen the light, with one of them -- a 30 year-plus industry veteran -- saying that reflection over time ultimately led him to regard his former industry as being "unconscionable."

So now, and in lieu of pushing debtors hard for repayment on things like credit card debt, student loans and medical bill exactions, he and his business partner use their recent start-up nonprofit organization to contact select debtors and forgive their debts entirely.

How is that even possible?

Here's how: Collectors often buy up debt from creditors that don't want to continue pursuing it for pennies on the dollar.

Thus, it costs very little for deep-pocketed collection companies to amass a huge portfolio of debt, which they then pursue. Reportedly, debtors end up paying collection companies about 60 percent of original loan amounts.

Of course, it is a very thin population of debtors that can expect a phone call from a collection company that is eager to forgive debt. For most consumers, such entities press hard and consistently for repayment, with some of them walking a fine line between lawful behavior and outright illegality. In many confirmed instances, that line is unquestionably crossed.

Suffering protracted misery at the hands of debt collectors is not a required outcome for individuals and families that have come upon hard financial times. Federal and state laws provide for remedies against egregious debt and penury, including bankruptcy options that can be a virtual lifeline in many instances. An experienced debt relief attorney can provide further information.

Source: Yes! Magazine, "These former debt collectors decided to ditch the industry, buy up medical debt, and forgive it," Araz Hachadourian, Aug. 17, 2015

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