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3 Everything You Ever Wanted to Know About Collections and Your Credit Report A TELECONFERENCE WITH BRIAN DIEZ Brian Diez: This is Brian Diez. I will be your host on our free teleconference today revealing everything you ever wanted to know about collections and your credit report. I can say we got a billion different questions that came in and because of time constraints we are going to limit it to the six or seven that were most the common. We are being joined today by Dave who had spent a number of years as a collection agent with one of the largest collection companies in the US. I don t know if he is on the phone just yet but we also have Ryan who is the owner of a collection agency. He is not on now but he will be on any minute. Let me just preface this by saying that I am not an attorney. No one speaking on the telephone is an attorney that I am aware of. So we are not offering legal advice. This is just for educational purposes only and is to offer a little bit of insight on what happens inside a collection agency. So Dave you are on the line right? Yes, I m here. How s it going today? Going good, going good. I had sent you over a little bit of an outline of what we were going to be discussing today. I just wanted to start out with your own personal experience inside a collection agency.

4 Could you tell me a little bit about how the collection agency obtains their debts and what their procedures are to collect them? There are a couple different ways. The collection agency that I worked at had a professional sales staff that would actually travel around the country and try and get the first placements which are the most valued placements for debts basically the first time they are turned over to a collection agency. These are fresh, usually the contact information is still good, and the people are aware that they owe the debt in most cases. That is the primary way. After that, there would be bidding, they would just bid on older pools, so second and third placements. The further and further along you get in the placements, the less and less likely they are to collect on the money so they are not worth as much. You really get into a few cents on the dollar when you get into third placements and beyond that. So those are the primary ways that they do it. Is that the reason why people can sometimes see two or three different collections agencies on their credit report usually with each showing the same dollar amount? They say transferred to different lenders so they are sometimes still showing with a balance and as open. Is that what is happening? Yes, in all honesty, collections only make their money in one way and that s by actually bringing in payments on the debts. They do not spend very much money and then the other capacity in a collection agency in terms of managing of the information, processing it, keeping it accurate, there is hardly any money spent on those areas. I worked in the collection agency with 270 collection agents. We had one attorney, one pre-legal person who was actually me for about a year and half, and that was it. So they really do not spend much in terms of keeping the information accurate. Ok. Did your company purchase the debt or did they just take it over and collect a portion of whatever they collected?

5 Both. They would just outright buy pools of debt like second and third placements. And then on the first placements we specialize in a couple areas: Capital One credit cards, Citibank credit cards, and then the biggest account I worked on was New York Higher Education s Student Loans. Ok. So how does a collection agency go about collecting on a debt? Collection agencies basically load their information in bulk and use an automatic dialer system. They have the computer s predictive dialer constantly calling people to maximize the amount of time that the agents are on the phone in terms of making contacts with people. The first contact is when most people are aware of the debt. They send them out a letter beforehand at the very beginning of the process explaining that they have 30 days to contact them in writing to dispute the debt. Most people don t do that. And then from that point on it is typically one letter a month, then phone calls as often as possible. Really, in my experience, there are two types of debt collectors. First, there is the kind of debt collector that would call and yell at people and harass them and people would pay just because they didn t want to get their calls. And then there was the other type of debt collector who are a little more educated and would actually sell a solution to the problem in terms of helping people find a way to restructure their bills, or set up payment plans. That s interesting. Are they paid a commission on what they collect or is it hourly? On some accounts like the bulk accounts which are small, maybe utility balances or small credit card balances, those people are often just paid maybe $12 or $15 an hour with a bonus for their team if their team collects a certain amount of revenue. But on bigger accounts, especially on larger ones such as higher education loans where someone could owe upwards of hundreds of thousands of dollars in student loans, the typical collection fees that I have seen added for those types of accounts were 15 to 33 percent and you would get a portion of that revenue. So it s not uncommon to make 80 to 100 thousand dollars as a debt collector if you have the right book of business.

6 Ok. Do they have a quota that they have to maintain? Yes, they do have minimum quotas. When they take on the new project or a new batch of debt, for the first 90 days there is usually no quota put in place because they are trying to feel out how current the information is and how easy it is to collect on the debts on themselves. So there is a lot of problem with debt accuracy and things like that for the first 90 days but once they have a feel for how much they can collect on it, then they do set quotas. Ok. So if I understand you correctly they have a quota that they have to beat, but they may have different training on how they go about doing the collections. They can be jerks or they can be solution providers. It s all based on the client, the person you are trying to collect from. If you are collecting from someone with student loans from graduate school, then obviously you have an educated person that you are dealing with. If you are dealing with someone that doesn t pay their $300 gas bill, then chances are you probably have someone that s not as easy to approach with a solution. I got it, that s interesting. If I was calling in, or receiving calls on how I should handle that person calling me on the other end, it s good to have a little bit of knowledge on hand. Here s an interesting question, if the collection agency isn t named on the original contract, what is the collection agency s authority on collecting that debt?

7 Ok, let s just clarify. On the original contract, to sign the original contract, you mean is if it s not a first placement? Well let s say that I don t pay my AT&T bill for some reason, and I have a dispute with AT&T, they charge it off, it gets sold to a collection agency, and I m getting phone calls from collection agencies now. What right does this collection agency have to even be calling me and why should I be paying them? Ok, that s a very good question and there s going to be two different ways that the collection agency would collect on the debt. First and foremost, would be that they have a contract with AT&T and they actually pass along the payments on the debt to AT&T, they would just take a service fee or a collection commission above and beyond that. That would be the first way that they would do it. Now if they outright bought the debt, then they would have to show you a copy of the contract stating that they bought the debt and they own it and that the right to collect it was assigned to them. So there s really two different ways that collection agencies take care of collecting. Ok. So as a person being collected upon, then I have the right to know if they own the debt or if they are just representing someone else. Oh yes, absolutely. There is around anywhere from 10 to 12 items that you can request from a collection agency in that preliminary 30 day period to dispute it and they have to provide you all of those things. Typically if you can come up with 8 to 10 things that you want from the collection agency, you ll just never hear back from them unless it s a large balance account because it takes up too much time to collect all of the information in the 30 day period.

8 I don t want you to get too deep into that because I know we are going to touch upon that in a second, but you just brought up an interesting comment. What would exactly constitute a large debt? Well, by definition, what I worked on, the small balances were considered $2,500 and less. Large balances in terms of credit cards, by companies such as Citibank who was a big client at that point in time, their definition of a large balance was $8,000 or more and that meant that they were willing to pursue a judgment or legal action on an account that size. Wow, ok. And then for student loans, any amount for a student loan is considered a large debt, especially in New York. They do wage garnishment and they will also suspend professional licenses for people that owe student loans in New York. Student loans were really the best accounts to be in because you had a lot of leverage to collect them. That s fascinating. From your experience you did mention that there were two different kinds of collection agencies. The guys who shout at you and the guys who are really solution providers. Right. In your experience, working with both types, what are some of the inside secrets that they use to get more money out of clients?

9 Well first of all, the first thing that I learned when going into collections was that you always listen to what your clients or the person you are collecting from, what their situation is at that exact moment in time. If someone tells you that they have a new job lined up or something on the near horizon, then they re going to be able to make payments, then you immediately try and put them into a monthly payment plan so that you ve got money coming in and so that it becomes routine and part of their new budget. So for smaller balances, that s balances under $1,700, if you can t get payment in full you try and break it into three payments or whatever you can do. That s basically where the collection agencies nail down their operating income, is on those monthly payments on the smaller balances, they have a consistent month-to-month cash flow coming in from that. Alright, good. That s been my experience when I try and break up a payment for a client over several months, the collection agents really don t want to hear it. They only want to get the one shot, lump sum deal, in order to bring that price down and all. I ve even heard that some collections agencies saying yeah, we ll settle today for this dollar amount which is maybe 50 percent, the client sending in the money, and then still coming after them for the balance. Well, the first thing I would advise is, and I guess I should have mentioned this in the very beginning, if you re calling in with a client or if you re having your clients call in, every time you contact the collection agency, you should always call in on a recorded line. The recorded line service that I used to use was called Spoof Card. You could buy 60 minutes of recorded time for 10 bucks. Use this every time you call in, because I would say 80 percent of the time the debt collectors are going to violate that FDCPA laws in their communication with you. So that s the first thing. And the second thing is, a lot of time you re dealing with call centers with teams so they don t have direct numbers for you to call them back so what you set up with one person may not have been documented very well. You re going to have to call in and have to renegotiate again with another person or get them up to speed with where you already were done. So for your own best interest, I think it s best to use a recorded line and tell them you are recording the call and then they re going to follow the law exactly as they should or a lot of people that work in collections are just ignorant and don t even know that PCD anyways. There s no type of certification that s required to become a collection agent and there s no license, so you know, on an individual basis. So a lot of people have no idea what the actual laws are.

10 Wow, we re moving incredibly fast so let me also mention that if anybody has any questions or if they want anything covered that I didn t address in any of the earlier questions please send in your question by at info@guaranteedcreditboost.com. I m trying not to open up the lines otherwise we ll have everyone s dial tones and background noise and I want to keep the focus here on Dave. Alright, getting down here to the nitty gritty of it which is probably the reason why everyone is on the call. They want to know you know what they can really do to decrease the stress they go through with collection agencies. From my own personal perspective, if I would ask you if your best friend were to call you up and say listen, I m getting these calls from a collection agent, what kind of advice would you give them? Let s say first of all they just want to settle their debt, you know they didn t have the money for the full amount, they owe them maybe 12 grand and they have maybe four or five thousand in the banking account. How would you recommend they go about settling? Ok, there are really two parts to your question. The first part was communication. If someone doesn t want to be bothered anymore you have the right to send a cease and desist letter that it asks them to only contact you in writing. So that s your right as a consumer. That way they can only contact you by mail. They can t call you at work and they can t call you on any of your phone numbers. I would also say anybody out there who doesn t have prepaid legal, and I m certainly not a salesperson of it, but to pay the $17 a month to have prepaid legal, you get all that stuff for free. I have a lot of people that I ve just told to go find a prepaid legal and pay the $17 and have the letter sent from an attorney and then they never hear from the collection agency by phone again. So, just send a quick letter. Send it certified mail, pay the 5 bucks to do it that way if you want, but you can certainly stop the phone calls right away. Now in terms of settlements, if you have someone that s going to settle, you don t have the type of leverage where you call in and say oh, I ll offer you 50 percent. I mean you have to have the money and you have to have a time frame for executing it if you seriously want to get a settlement off of her because if they are willing to offer you a settlement, they ll usually only do it one or two times and they ll give you an exact date to pay it. In my experience on the debts that I worked on because they were first placements, typically the maximum they would settle for would be 60 to 70 percent of what was owed. They won t do payment plans typically. I ve never seen them broke a settlement in full offer into multiple payments or anything like that. It s just you owe $12,000 and we ll settle for $8,000, you ve got 10 days to pay by certified funds and we ll send you a letter stating that we re willing to settle for that amount and that was pretty much it. On government backed student loans or the state secure student loans, you ll never get a

11 settlement for less than the principal and interest that s owed on the loans ever. With accounts like that, you re always best off to talk with the school that made the loan or the lender that made the loan and have them take it back from the collection agency and just deal with the lender directly. You can get the commission fees waived or most of them waived by having the account taken back. You can do that with some credit card account companies as well if the balance is descent or it just got put with the collection agency. Timing s really important. Are there any situations in which it would make sense to, such as extenuating circumstances, where I might be able to speak with a supervisor because there was a death in the family or are there any situations where I would, if the person isn t very cooperative with me, do I have any other options? Again, they only make their money by collecting. You re not going to get sympathies from someone that works at a collection agency. You might get a little bit of false sympathy, but the bottom line is they re still going to walk you to that end which is making payments on the account. If you really do have a life circumstance that you can document or you have someone that legitimately has a problem, and it s an account with a significant balance of more than a few thousand dollars, then you would always try and have the issuing bank or lender that had the account take it back from the collection agency and just deal with them directly, if possible. You had mentioned about sending in a letter to get a collection agency to stop calling. I ve heard of collection agencies calling someone at their job, calling them at eight o clock in the morning or six o clock in the morning on the weekends, maybe not realizing there was a difference in the time zones Right, yes.

12 Are you familiar with the laws collection agencies are supposed to be following as far as what they can be doing? Well, everyone can look up the preferred debt collection act online. You can find it in a million different places. It s actually written in very plain English, so anybody can read it. It specifies the rules and conduct for collection debts. As far as I know, if it s an explicit violation, the company can be fined, I believe it s five or ten thousand dollars per infraction if it s something where they re calling someone at work or something like that. The company that I worked for implemented some major changes to their auto dialer because of the time zone problem because they lost a couple of lawsuits because their software wasn t picking up on the time zone changes. I think it was because there were some new area codes created at the time that weren t registering correctly. But, yes, that s a big loss of money. And I mean it s not uncommon to see some settlements in the tens to hundreds of thousands of dollars for a collection agency that violate people s rights. So if you get the call at 8 o clock in the morning you should just say hey trade you the lawsuit and you can just delete my collection and we ll call it even. Well, deleting my collection as far as fair credit reporting goes, the bottom line with FCRA is that you have to report that accurate and truthful information on everybody, whether it s good or bad. You can t delete something that s correct. A court could certainly make the debt go away or say you re not liable for the debt, but as far as removing it from your credit, if it was placed there legitimately, there s really not much you can do. The credit companies are trying to clamp down on that because, obviously a lot of people for the last few years at least, have been using loopholes to get even an accurate bad credit removed from credit report, so we re seeing a lot of changes going through in that area right now. Ok

13 In terms of them, you know if a collection agency tells you that they can totally remove it from your credit report, they can t. If they tell you that if you make monthly payments for them that they can report it as like a new credit account, they can t. Now in some instances I can say, I ve had people that have been paying on collections for two years that time or 12 or more months, and I ve actually gotten a written rating to use their collection payments as alternative credit for an FHA loan or something like that. So you can do it that way, but in terms of having them put it on the credit report, like a new account or a good account, that s really not possible. Well, I ve had instances where I ve settle debts and a collection agency actually issued me a deletion. They gave me a letter saying it was removed and that the debt was settled. Well, that s probably because it was paid within that 30 day window that they had just received it? Is that a possibility? I don t know how much you remember on the cases. I couldn t tell you specifically that but I could probably come pretty accurate. It costs money to report to the credit agencies obviously and they report, most companies report in bulk electronically, either they are once a month or twice a month, so they probably wait 45 days on an initial placement to see who disputes what and what data comes in. So if you have it squared away before that time window then they probably just won t report it. That s probably true on the initial report, but once it s placed, if you re trying to negotiate on something they have been collecting on you for six months, and you never disputed it in that first 30 days, then I don t see how legally they could just delete it. Ok. Interesting. A question comes in from Reggie Williams. If the collection company does not own the account does the agency have the right to place a trade line on your credit report?

14 Ok. If the collection agency does not own the account well yes, because they are going to place it as a collection, so they re going to place it like a new negative account. Ok But not a trade line. This goes back to what I just talked about a couple minutes ago. A collection agency cannot set you up a new trade line like it s a new account that you ve been paying on for months and months. They can, do an alternative credit rating letter, which is just something they type up stating your payments that you made and the dates you made them, but that has nothing to do with your credit report itself, so if anybody is telling you that they can create a new trade in account it would only be those collection agencies that offer financing to consolidate collections and then they would report it as a new loan, a consumer loan of some sort. There are a few companies that do that. Oh ok. But, you re paying the maximum interest rate on top of the collection fees and the original debt so I don t know that that s the best way to pursue it. Ok. I had another question here that sometimes a collection agency will report a collection under several different account numbers even though it is the same collection.

15 It s just data. They don t do it on purpose. Again, it goes back to the fact that it costs them money to report to collection agencies, so they certainly don t want to spend five times the amount of money to report the same account. It s just data entry problems and there are a few different major software systems that collection agencies use and they re not necessarily the same as the software systems that the lenders or the initial account holders use so they have to create these programs that basically convert the previous data into a format that the new software systems can use and there are all kinds of problems with that. That s why I m saying that if it is in terms of data or you know data reporting or doing it correctly, they spend very little on the way of making sure they report things correctly. Alright, so you see it s not a spiteful thing, it s just a No.Well, on certain collection accounts you have the right to request new credit reports for people. I did see some violations where collection agents would consistently request credit reports on people just to inquire every single week for people, to see if anything changed, in terms of address, to make it virtually impossible for those people to regain anything on their credit score. Again, it s been six or seven years since I worked at the collection agency so I m not sure if they ve put regulations in place to stop collectors from doing that. Ok. And I know a lot of people are scared of dealing with collection agents. I ve heard some stories about sending in a letter to ask the collection agency to stop calling them and in turn the collection agency was no longer to settle or negotiate in any way shape or form. Have you had any experience with that? That s probably true, because when you send them a letter, a cease and desist letter, you re basically escalating your account from a regular collector to the pre-legal department and at that point they re going to follow the letter of the law. They figure if you re going through the trouble to protect your rights and use the law to protect yourself, then they re going to use the law to collect on the debt. So, that s true, you probably are shooting yourself in the foot. Again, timing s very important. If you can make any type of arrangement in that first

16 30 days, then by all means do it. If you can t and then you re getting into debts that are 5 years old, then, you know, you should just really look immediately to settle if it s an old debt because again, forth, fifth, sixth placements, the likelihood of the collections agencies collecting on those is very slim so, they ll take virtually whatever they can get at that point. Ok so if I understand you correctly, if I m a person who s got a collection letter and they are getting phone calls, my best bet is within the first 30 days, not to send a kind of a cease and desist letter, but to contact the collection agency and make an offer to settlement for deletion if at all possible because within the first 30 days they can legally not report it on the credit report. Right, if you know it s legitimate, if you know that your client owes the money and it was just something they put off and now they ve got the ways and means to pay it in full or settle it in full, yes go for the settlement in full. If you re client s not sure they owe the money I had that happen to myself and my wife. We had a hospital bill show up from 5 years ago when we had a kid at the hospital and we had no idea what this bill was for. So, I had to send out a letter asking for 10 different things showing the original paperwork and other things and I ve never, to this day, have never heard back from anybody on that, so... you know, if you re not sure you owe the debt, then by all means, find out what your rights are and request a list of documentation, copies of the original paperwork showing your signature, copies of the contract with the original debtor showing that they actually work with the collection agency, copies of the collection agency s license to practice debt collection in your state. Ask for those things. You just give them a laundry list that they can t possibly complete, and they ll just stick you in the pile of people they re never going to back to unless it s a really big balance. Ok. And to ask this one, Why do collection representatives get so angry when a consumer starts quoting the Fair Credit Reporting Act or the FDCPA? Because on smaller balance accounts I would say in my experience, it is very difficult to be a successful collector on the small balance accounts without violating the FDCPA. If you call

17 up and have the voice and demeanor of a librarian, then people aren t really going to be intimidated into paying those balances off. If you re a debt collector and you ve been doing it for some time, if people quote the FCRA or the FDCPA, or whatever they want to quote, it s typically because they re not going to pay the bill, that they re going to get out of paying the bill, that they are the collection they owe, but very rarely is anyone going to seek an attorney unless it s a blatant violation. Most attorney s aren t even going to touch collection agency cases because a lot of them are out of state anyways and it s just not much money to be made on those. Most attorney s go for something local and something that s just a really blatant violation that they can make money off of right away in their own state. That s pretty much the jist of it. People can quote the law all the want, and there s nothing the matter with that, but I think that the collection agents just get put off because they have to sit there and listen to someone talk for 5 minutes rather than have them pay their bill. People think that the fact that they know the law is a basis for not having to pay the bill which is not the case. If the laws are violated then the collection agencies can be held responsible, but that doesn t make the debt go away unless a judge says it, that it s not going to be paid or that the client s not liable for it. I think, like you said, since they re not taking any kind of testing or licensing it probably aggravates them that the consumer might know more about it than them and they, like you said, are breaking every law in the book they don t know the difference. Yes, I mean you don t have to be highly trained as a debt collector really. Either you have to be a people person that is willing to work with people and has that type of demeanor or you just have to be a robot that goes through this script and puts in the tone and intimidates people. Really, those are the only two ways that I ve seen to collect debt. There s nothing in between. Say I was the average person, you have experience in the industry so you know what kind of letter to send in order to start negotiations with a collection agency. But, if I was just the average Joe though, and I have a copy of my credit report and I m looking at this medical collection company collecting on this medical bill for a $65 charge and it s reporting 5 different times under 5 different account numbers and I know it s really just $65, what would you suggest I do? If I m just a regular Joe, what would you suggest that I do to get those extra negative collections off of there and really get right to the heart of the matter

18 and get it settled and hopefully get this thing deleted? Say we re in the first 30 days, what can I do? The first thing I would do, especially on medical bills, in every instance I ve ever heard of unless the collection needs the outright bought, the bill, and actually owns the debt now, just call the hospital or the doctor s office where the bill originated, and 9 times out of 10 they will just call the collection agency and take the bill back and you can just work out payment plans. Every hospital in the country takes payments on bills. I think it s probably a law in some way shape or form. I can t quote you specific law, but I know that if you owe the hospital $3,000 and you want to set up monthly payment plans with them then they ll do it. I believe they are obligated to do that. How do we get those collection accounts off my credit report though? Let s say I send out a letter saying hey, here s a copy of my credit report, I only have one thing here. Can you please show me documentation for these other five accounts because I only had one that I know of and the collection agency, a couple of weeks later, although they might have dropped it since I negotiated out with them like you recommended with the hospital directly, how do I get them to remove it? The collection agency to remove it? Is there a letter or something like that? Well, if you get the debt taken back by the originating party, or the original creditor, then you just get the settlement in full letter and you use that as your proof that you paid that and you give, I believe they have 30 days to correct your credit to the collection agency or else they re in violation of the FCRA. So, you would just send a certified letter requesting that they update it immediately. If it s the case where you do all of that but it s reported five

19 times and you can t get the debt taken back by the original creditor, then the same thing, you would send a letter stating you are reporting this more than one time, you are violating my rights under the FCRA and impeding my ability to get new credit, which is the source of a lot of lawsuits. I ve seen some multi-million dollar lawsuits come up lately. I think there was one in Georgia a few months ago where they were reporting the same account three or four times for someone who had the same name but different social security number and I believe it was Equifax had to pay out like 2.1 million dollars recently. FCRA is really not a joke. People have to take that seriously because the government is really backing people s rights in terms of having fair and accurate credit information reported about them. So, FCRA I think is probably more serious for most people than the FDCPA or Fair Debt Collections Practices Act. I think people are few and far between to actually pursue litigation or file suits unless their rights were really violated and it s a very well documented case, like you have someone leaving threatening messages on your voic at work you. If I understand you correctly then, the best way to proceed would be first of all, when you send the letter to the collection agency regarding the multiple accounts or to prove this account is accurate and an actual debt or that it s your debt. You d want to send it out registered mail first of all, certified mail, to prove that they actually received it. Then, if they don t delete it or you know if they don t send you the information that you need to get it off of your credit report, then at that point you just need to get a lawyer. You don t necessarily have to get a lawyer. You can dispute it directly online with any of the credit bureaus. Now you can file disputes through your credit information, so really we just need to identify the time frame. Originally when the debt is placed with the collection agency, you have 30 days to dispute it in writing. So you would send your letter by certified mail within that time frame. They in turn, once they receive your dispute in writing have an additional 30 days to provide you all the information that you requested as long as the information s reasonable that you re requesting. Basically they have to prove that they own the debt, they can collect on the debt, and that you owe the debt. Once you re past the 30 days that you dispute and the 30 days they have to get back to you, if they don t get back to you in that 30 day period, then you can have the debt removed by law but if you just want to dispute it through your credit directly, again, we have another 30 day period where they have to prove that it s legitimate to the collector. They have to prove it directly to the credit bureaus and if they don t prove it to the credit bureaus within 30 days, then the credit bureaus will just delete it off. That used to be the best way that I would deal with it in terms of getting it deleted for people that needed a loan. I would dispute it directly with the credit

20 bureaus and the collection agencies just never seemed to get back to people in time, especially certain creditors. I remember Sears is probably the I don t think they ve ever responded to a request to update credit as far as I m aware. Well, theoretically, they re supposed to have 30 days and we both know they can take up to 45 days as need be there s really nobody enforcing that 30-day rule with them. But let s say for instance Sears doesn t get back to you in those 30 to 45 days, what s to stop them from reporting it again the next month? Well, at that point, if it s been removed by the credit bureaus, credit bureaus shouldn t let them report it. At that point I really would advice that someone get an attorney because that would be an instance of just a blatant violation of FCRA. If you have a well documented case where you disputed it with them or through the credit bureaus and it s been removed and then it becomes reported again, then yes, you re probably just best off to get an attorney and you re probably going to file the type of suit that has some kind of compensation for your time and trouble I would hope. I was actually reading about this the other day. If it pops back up onto your report, supposedly, by law, the credit bureaus are supposed to send you a notification within 5 days of this popping back onto your report. But the penalty is only $1,000. Ok. Well, the penalty for reporting it is only $1,000 but the penalty in terms of them impeding you from getting credit for something else. That s more or less whatever a jury sees fit to pay you. I don t think there s anything limiting how much you can receive. I mean that would be the case why the woman in Georgia received millions of dollars? So, I don t know that you probably have to be an ambulance chasing type of lawyer to try and get someone a million dollars for one credit account or whatever. But I also don t think anyone on this call has the intent to go out and make the rest of their income suing companies

21 You d be surprised, there could be a few attorneys, you never know You know if you dispute something in writing, I think 9 times out of 10 they ll just not get you accurate information to show that you owe the debt. I mean, you have these mom and pop type of private collection agencies that work out of their home for maybe they maybe deal with doctors in a certain area or something like that. People like that are very diligent and they will get the paperwork directly because they just have a few clients and they don t really do things electronically. But, when you re dealing with these huge collection agencies that are nationwide companies, there s no adequately staffed departments to get you the records, and they have to get you in touch with the people that placed the debt and those people are busy doing other things. Most colleges don t have a full time person associated with placing the debts and getting the paperwork. It s usually a secretary that does something else that looks up information when she has the time, so you re just finding an area that is understaffed across the board and you can exploit that to get things removed. I m going to ask you to do me a favor. You had mentioned that there are a dozen different things you can ask a collection agency for in order to prove that the debt is yours. For the people who are on the phone who are taking notes because I know that they probably want to implement that as quickly as possible, can you just briefly go over I m going to give you as many as I can give you off the top of my head. Here give me one second, I ve got a file on my computer I can pull up. It s actually the collection letter that I sent to the hospital for the debt that was sent to me five years after the fact. You kept it just in case?

22 Yes, I keep everything. I m someone that keeps records because I know most other people don t and in this day in age, with computers, there s really no reason you shouldn t save just about everything. I m going to have to agree with you there. I scan everything in there. While you re looking for it, let s say I have a person who has no money in their bank account, they re getting calls from the collection agents, obviously you can get them to stop calling, that s just really going to irritate them. Is there anything somebody who s broke can do? It depends on the account. Here s a little known secret in terms of student loans. That s really where I spent the majority of my time, because I was the guy that sold educated solutions and that was kind of my specialty and that s where you make the most money in collections. On student loans, if it s a secured type of student loan, either a government loan or a state issued or a state backed student loan, you can have your student loans consolidated through the government for free. And in every case that I ve ever been aware of, the issuing school that made the loan, or the issuing lender, will always take it back from the collection agency. There s a program called William D. Ford. You can pretty much, if you re broke, if you re making $100 a month, you can consolidate your loans through William D. Ford. It s not based on credit or income. They ll create a brand new account for you and they ll give you payments as little as $15 a month on your student loans until your income increases. For student loans those are really easy to situate and really easy to create good credit out of a train wreck of bad credit. On credit card accounts they ll just try and put you into payment programs and just keep increasing it over time. The only way you can use that to your benefit would be if you used it to establish as an alternative line or something for a FHA loan or something for someone who didn t have much credit. Or also you can get FHA loans for people that prove that their collections are in repayment also, so Making payments on the debt is not necessarily a bad thing if it helps your person get a loan. It just usually takes time. You usually have to show 12 months of payments is my experience. Dave, those were some golden nuggets right there.

23 I know. But, student loans especially, those are the big ones and they are government loans. If you have clients that are behind in student loans, they should always get them situated because in a lot of states, you ll lose your professional licenses if you have any but also your tax returns can be taken. Any amount of money you get from your tax return can be taken and applied to the loans too, so student loans there s really no excuse not to, not to Work out a payment plan? Yes, keep them situated. Every mortgage broker and every person who is stuck in a bad loan trying to refinance is jumping up in joy right now for that little bit of information. Yes, student loans are the good ones. Those are the best ones and usually the amounts are pretty significant, as we all know college isn t cheap. Here s my list that I used. First and foremost the thing you re going to request is copies of any original contract, any original document you have with the original party that turned the debt over to collection. Is that Ryan?

24 Yes! I ve been trying you guys didn t hear me when I clicked on earlier. Let me just finish up this little portion with Dave and then I m going to pick your brain because I know you have an entirely different perspective on these things. Yes, I m actually interested to see what may have changed in the collection world in the last 7 or 8 years. I m thinking not much since I still know some people that are employed You re pretty covered. You covered a lot You covered definitely a lot and I don t think too much changed You know, the bottom line is, from a business perspective, they make money by collecting on debts. Until they realize that proving that people owe debts will get them more money or until they find a cost effective way to deliver the information, I don t see that changing. I had a few questions on, actually I wanted to interact with a few of your questions before Ryan. But let s finish up with those questions to ask a collection agency ok? Ok, so here s my list. Copies of any original documentation and signatures, contracts, etc. that you have with the original creditor. Second thing you would have is copies of the contract that has assigned the debt to the collection agency. The third thing you would request is a copy of the licensing proving that they have a right to collect the debt in your state. The forth thing that you would ask for is copies of every single letter that s ever been

25 sent to you, stating that you owe the debt from both the original party and the collection agency. Very rarely will they respond with that information. Right, if I was asked that, I would just You d set it down in a pile that you might get to some day, but probably not And the thing is, there s so especially now there s so much bad debt to be dealt with out there that the collection agencies just want to get the freshest stuff possible and work the heck out of it in that first 60 to 90 day window. They do not want to spend time paying money to photocopy and mail out four dollars worth of postage on a stack of documentation. Right, and collectors don t have the patience for that. And the collector s usually don t even have access to that information anyways. They ve got to fill out some type of request to the one person out of a hundred that has access to get the information. That s why, if you request these things, this laundry list of information, just very rarely will it ever go any further. Unless it s a significant balance and then you know they have every reason to pursue it. Or, you know, the worst case scenario is the debt goes back to the original party, like in the case of Citibank when I worked with them at the time. If you owed them more than, you know, 8 or 9 thousand bucks, they would just get a judgment against you in small claims court or whatever and just file a judgment and try and collect it that way. Or, you know, wait until you go to buy a house. We all know how that goes and then it s time to pay up or settle again. Unless you, of course, tell them you re buying a house and then they re going to tell you to pay up the whole thing or get lost. So yeah, that s pretty much my list of things that I request. You had talked earlier

26 On what topic You had said something earlier Dave about deleting accounts, that a collection agency cannot delete an account when reported to the bureau They cannot I think the only time frame that I m aware of is that first 30 to 45 days before they do the initial reporting. If you disputed it or paid it then I think they ll just delete it like it never happened, or they won t report it in that initial batch. But, as far as I know, if it s a legitimate collection, and you pay it in full, I ve never heard of anybody being able to legitimately just make it disappear. Under Fair Credit Reporting Act it seems like it would be illegal. Now maybe you can get someone to do it, and I don t think there s going to be anybody that prosecutes, but again, Fair Credit Reporting requires that you report both the good and the bad credit accurately. Ok, they do But that s the thing. In some cases if we re collecting, if we re buying bank debt obviously they re going to be listed on the credit bureau as owning like say Bank of America. They, now all of a sudden, the collection agency owns the debt and now it s listed as owing the collection agency. That type of debt cannot really be deleted by a collection agency because it s still going to show that original creditor. Oh, the original account? Yes.

27 The collection agency, when they don t own the debt, they are just servicing it and collecting on it the first time or maybe the second placement, possibly then, no they don t have any access to like say Citibank or Capital One s original credit data not at all. Right, but when we re collecting for a client like a phone company or a gym for example and they place an account here and we do credit reporting for them. We have an option on the software where we re able to delete the account if they pay it. Ok but So it can be deleted, Brian Ok, but again, that would be outside the FCRA obviously. That would just be trying the off the cuff way to get rid of them. Nobody s going to get mad at them. Yes, I don t think there s going to be anybody that s going to report them for not reporting a bad debt, only if they report a bad debt that s not accurate. I m just saying there is an option to delete it just by a click of a button on the collection agency s software.

28 Ryan, from your perspective would you allow one of your collection agents to negotiate say a 100 percent settlement for a letter stating that they would delete the collection off the collection report or would you have to make that call? We wouldn t negotiate it that way. We would do it based upon just to do it because obviously with the economy we re in good credit is important, so we do it let s say out of the kindness of our hearts, we ll delete it. Ok. For clarification, you wouldn t necessarily send someone a letter in writing stating that if they settle it in full you ll delete it, you would just delete it? Yes. More or less yes, yes Yeah, I believe it would be more on the lines of just doing it because yes, nothing would be in writing. It would just be more verbal. Yep.

29 I m not too familiar with the laws of that but I believe if there are mistakes made too Sure. The individual could have had the intention to pay, there could have been a bounced check, he had full intention to pay, whatever the case is so and we went ahead and reported it and if the individual lived at a different address, he didn t get the notice, so there are certain circumstances we would delete the account. There s no sense in keeping a bad mark on his credit if he had the full intention to pay from the beginning. Yes, definitely. As the owner of a collection agency, is there anything that obviously when you get that letter in the mail asking for all that information, you find that to be something you re not going to be too anxious to move forward on. Is there anything else that you would have the same effect? Is there anything that I could do if I was calling up, if your company was calling me, is there anything that I could do in order to get that collection deleted or settle? Do I speak with that first person that calls or do I ask to speak with a supervisor? I would suggest that you speak to a supervisor, someone that has access to that. That has access to deleting the account, that has access to work with you on a higher level and that has the authorization. In your company, how many different levels are there? Three.

30 Three levels. And Dave, in your company how many different levels were there? A lot. I don t know. My group was pretty intensive in terms of the student loans or whatever. The collection agency I worked for was the biggest one in the country at the time and it was international, going international in the years that I worked at it. So, I mean, we never responded to written requests for info unless it came from an attorney, you know? Right. Ok so that s an interesting point then. So you re saying that it probably would be up to someone, if they received a notice from a collection agency, to find out exactly where that collection agency is located and maybe how big they are because that will actually help you to negotiate. I know if I m dealing with a smaller company who s really more dependant on the amount that they can collect, that might give me a little more negotiating power to say Look, I can cut you a check but can you work with me on this, that, and the other thing that a larger company wouldn t be able to do because they have that Oh yes, absolutely. The collection agency that I worked for under no circumstances did the people at the lower level have any interaction with credit reporting data. I can t think of any instance where you would be able to have something deleted with them because the credit reporting was so isolated from the day-to-day operations and collecting. So yes, smaller companies definitely, you have a much better chance with that. I think the employees at smaller companies probably wear more hats and do more duties than the ones in the big agencies that just plug into an auto dialer for 8 hours at a time. Ryan, at your company how do you guys go about collecting? Do you have a set system or are you sending out a letter on the first day and the tenth day and in between you have an auto dialer their pounding the phones all day long? How does your process work?