Lots of sending out letters and making phone calls. I spent a lot of time and energy trying to automate the process but the industry refuses to modernize.
I left because I fell in love with building software and I hated debt collections.
The financial literacy angle is interesting but there's an even arguably more predatory industry around credit repair. People tend to stop caring about their credit until there's a life event like wanting to buy a house. Then they only care until the score hits 640.
Arguably Credit Karma uses credit scores and credit literacy as the hook which is probably a loss-leader because they need to pay for the scores.
I'm very skeptical about debt cancellation because if there was a way to make it into a business, it'd be a business. The people who talk about doing that all lose money as a charity, or they're sovereign citizens who think they found some tax loophole.
The credit bureau thing is funny because again, ethically you should but once you do you open yourself up to a LOT more liability. So most agencies won't unless it's an in-house agency for CapitalOne or something.
You as the consumer should always dispute everything on your credit report every so often.
It depends on the age of the debt and how many agencies it's been through. Medical debt is also much harder to pursue legally if need be, plus everyone hates the guys who sue medical debtors. So I never worked with it.
But I'd guess that direct from the client would be 8%, 1 agency ~1 year old debt would probably cost 5%, 2 agency 2 year old debt probably about 2% and then down to 1% and 75bps after that.
A lot of times you don't turn a profit working zeros. You barely make your money back and then turn a profit reselling it. Small margins but easier to work. Happier employees.
We had low liquidation but we went through accounts fast. So clients didn't like us. Banks would rather pass off debt to an agency that will threaten people and liquidate higher. So overall, no but I had a solid run.
Because you can't prove a negative. I can never prove that you didn't pay something but you can prove that you have. As an agency, you're operating from a spreadsheet that Discover or B of A sends you. The consumer needs to keep good records until we get some sort of centralized database.
A centralized DB will probably never happen. Different states can't even agree on collection laws.
It's a legitimate need, it's just a corrupted industry because of misaligned incentives. We need some form of debt collections otherwise credit couldn't exist. The problem is that regulations are absolutely inconsistent and don't incentivize people to operate ethically. It's a regulatory problem.
An interesting fact is that a lot of agencies buy debt for about 1 cent on the dollar and liquidate around 2%. Collecting debt is actually very hard and the success rates are super low.
I probably have. I've been out of the industry since 2019 and I tend to create a lot of content. Since that is currently how I align I'd be surprised if I haven't done that somewhere.
This article leads a lot of people who want to break into the industry to reach out to me and I turn everyone away. Once I tell them what they can expect they're rarely still interested.
I can answer any specific questions anybody has but basically, I landed in the industry by chance and got good at automating the collection process. I never had the backbone to strong arm people so I played the numbers game. Technology was my advantage.
Meanwhile, all of my peers were getting rich running unlicensed agencies and lying to debtors. I was getting sued constantly for following the rules. I'd win the lawsuits but it would cost me as much as $30k to fight them.
I employed over 500 people over about 8 years, many of them stole from me, overdosed, or ended up in jail because debt collectors tend to be troubled people. I shifted my focus to building software for the debt industry and went through a startup accelerator. That's when I fell in love with software and sold my agency.
Other than that, I'll answer any specific questions.
I wrote this article years ago. I can't believe it's on HN today. As someone who spent almost a decade trying to run as ethical an agency as possible, I realized that there's no room for people who want to operate the right way.
I could go on for days about all of the crazy stuff I saw while I was involved but leaving the debt industry was the best decision I ever made. Terrible industry, terrible people.
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When I highlight "hello world" and press ', I want to see "'hello world'" instead of "'"
All that aside, awesome project