Have you read the book Bad Paper, by Jake Halpern?
For a relatively short book, it provides quite a few interesting insights into the debt collection industry. In a series of blog posts, I thought I’d share a few of my favorite parts of the book, and strongly encourage you to read it for yourself.
The title of the book refers to uncollected debt accounts that original creditors (like banks) sell to people in the debt collection industry for pennies on the dollar. “Paper” of any kind in the debt collection industry seems to be any uncollected debt account that the original creditor wants off their books.
The author chronicles the story of a wealthy former banker, Aaron, and Aaron’s partner, a convicted felon by the name of Brandon, as they seek to turn a large profit by purchasing debt accounts from large creditors and collecting the debt themselves (with the help of a group of debt collection agencies).
While I thought Aaron and Brandon’s tale was the appropriate vehicle for the author to tell all of the other smaller stories about the debt collection industry, the most compelling parts for me were the stories about the individual debtors whose lives were turned upside down because of clerical mistakes or bureaucratic indifference.
Here’s a quote from the book to show you what I mean:
“It wasn’t an accident that Theresa’s and Joanna’s debts ended up in the hands of thieves. When the original creditor, Washington Mutual, sold their debts it stopped caring about what Theresa and Joanna owed, how they were treated, or the fate of their personal information. The banks’ contracts testify to this indifference. For example, in a series of transactions in 2009 and 2010, Bank of America sold millions of dollars of charged-off debt to a company in Denver called CACH LLC. In the sales agreement, Bank of America said that it would not make ‘any representations, warranties, promises, covenants, agreements, or guaranties of any kind or character whatsoever’ about the accuracy of the accounts it was selling….In other words, there might be problems with the debts, but they were simply being sold on as is.” Bad Paper, p. 57.
Some may argue that this is just common sense cover-your-butt liability protection for the banks, but then who is responsible for the mistakes when individual consumers find out about them? And can’t seem to get them fixed?
I thought I’d share a few other parts of the book that were interesting to me in separate blog posts. If you’ve read Bad Paper, what did you think – thumbs up or thumbs down for a good read?