S03.E14: Debt Buying Industry

[Athena]

The show is off until June 5. Please check for web exclusives for May 29.

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Segments: Legal affairs of Donald Trump, Trump University, Main segement: debt buying industry

 

[revbfc]

When this show hits the mark, it is so satisfying.  I'd be really happy to know that the giant debt giveaway was not only very real, but the biggest in tv history.

[jenrising]

6 hours ago, revbfc said:

When this show hits the mark, it is so satisfying.  I'd be really happy to know that the giant debt giveaway was not only very real, but the biggest in tv history.

It is real https://www.ripmedicaldebt.org/the-miracle-of-debt-forgiveness-on-hbos-last-week-tonight-with-john-oliver/

[attica]

I'm a little bit confused. Didn't John say the debt he purchased was out of statute? If so, why is forgiving it a big deal? Couldn't the debtors just say 'screw you' and move on with their lives? Or is that not how it works? Or did I misunderstand?

I once had a bill collector send me a notice for money I had no recollection of owing. I wrote them a registered letter demanding backup verification/documentation of the debt and they vanished. (My state is fairly good on that kind of thing, I think.) I mean it's all very well and good for the banks to say they have the right to sell your debt, but if the buyer can't back up with documentation? They really do depend upon the fear and ignorance of the public. 

[zxy556575]

John did say the debt is out of statute, so the purchase would only provide relief from the hounding (although does anyone trust those companies to keep accurate records of debt they no longer own?).

The lawsuits are particularly egregious since if any of the debtors did respond, they'd have to pay for an attorney and who has money for that?

I was poking around the RIP Medical Debit site -- it's interesting that the founders are former collections industry executives.

I'm on Medicare and am now liable for much greater percentage of my medical costs than when I had private insurance through my job, so I have sympathy for others. An accident or serious illness can wipe out a good portion of anyone's retirement savings.

I hope the show results in a significant increase in donations to RIP. It's nice that a small amount can have a big impact due to the sale for pennies on the dollar. Their site states that $50 can buy as much as $5,000 in medical debt.

Edited June 6, 2016 by lordonia

[MrWhyt]

10 hours ago, attica said:

I'm a little bit confused. Didn't John say the debt he purchased was out of statute? If so, why is forgiving it a big deal? Couldn't the debtors just say 'screw you' and move on with their lives? Or is that not how it works? Or did I misunderstand?

out of statute means that the debtor can no longer be brought to court for the debt. They still owe the debt and as such can be pursued by debt owners/collectors, and i suspect the debt still shows up on their credit rating.

Edited June 7, 2016 by MrWhyt

[GaT]

I don't know why, but this show ran over by about 5 minutes & my DVR didn't get any of the giveaway stuff. Luckily Xfinity has the last 5 minutes on their homepage, or I wouldn't have even known about it never mind see it. 

[ganesh]

I figured the main thing was that the debt dings their credit ratings. Although because the credit bureaus are akin to organized crime, that still stays on the credit reports for 5-7 years anyway. Of course, they don't have that hanging over their heads. It's very true that these leeches rely on people just being scared. 

I still thought it was good of JO to do it though.

[Sharpie66]

GaT , me, too! I'm going to rewatch the entire segment on YouTube when I get home from work.

[Jamoche]

11 hours ago, jenrising said:

It is real https://www.ripmedicaldebt.org/the-miracle-of-debt-forgiveness-on-hbos-last-week-tonight-with-john-oliver/

Their website is down; in the old days we'd call that slashdotted. Consumerist has an article on it: https://consumerist.com/2016/06/06/john-oliver-buys-15m-in-medical-debt-then-forgives-it/ and a quote from their blog:

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In a blog post on the RIP website, the organization says that because of Sunday’s show, “there are a lot more of us now privy to this collection industry practice and the debt treadmill it creates. In a painfully hilarious (debt as funny? Somehow, yes) piece, John Oliver triumphantly Out-Oprah’s Oprah in giving away valuable gifts.”

Edited June 6, 2016 by Jamoche

[trow125]

Here's a different perspective on the episode, from Debtcollective.org:

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Eight months ago, Charles Wilson, a researcher from John Oliver's HBO show, Last Week Tonight, contacted us to ask about our project of buying and cancelling debt... At the last minute Wilson told us LWT did not want to associate themselves with the work of the Rolling Jubilee due to its roots in Occupy Wall Street. Instead John Oliver framed the debt buy as his idea: a giveaway to compete with Oprah. The lead researcher who worked on this segment invoked the cover of journalism to justify distancing themselves from our project.

[peeayebee]

Aside from the informative, interesting, and, yes, entertaining debt segment, I absolutely loved the Trump stuff. I loved when John listed all the legal TV shows that the number of Trump lawsuits can match in episodes. (I don't know if I worded that correctly.) That is pretty amazing. Then the part on Trump University was fantastic as well. I'd already heard about the playbook and some of the things from it (like the bit about getting single mothers to put the course on their credit cards.), but I was glad to hear the real story behind the "98%" excellent report cards from the people who took the course.

[ganesh]

It's funny, or maybe ironic, or maybe sad, that the 'news comedy' shows like this one have actually covered this Trump University scam more thoroughly than the 'media'.

[retrograde]

I dunno what media you're watching/listening to/reading, but I would say many outlets are covering it pretty heavily. Oliver's own segment used clips from CNN and Fox News reports, and quoted NYT, Washington Post, and USA Today articles.

[Spikey]

21 hours ago, lordonia said:

John did say the debt is out of statute, so the purchase would only provide relief from the hounding (although does anyone trust those companies to keep accurate records of debt they no longer own?).

The lawsuits are particularly egregious since if any of the debtors did respond, they'd have to pay for an attorney and who has money for that?

There are quiet a few debt collectors that will sue on out of statute debts anyway since if the debtor doesn't respond to the lawsuit they will still get a default judgement. In every state that I'm aware of, it's the defendants responsibility to cite the statue of limitations as an affirmative defense to the lawsuit. It also doesn't help matters that some less scrupulous debt collectors will use shady tactics to reset the statute of limitations. The other issue is that a forgiven debt has tax implications as it's considered income by the IRS. It's become more common in the last few years for debt collectors to issue 1099C forms and report the forgiven debts to the government.

You don't have to have an attorney to respond to a law suit but the court system is very difficult to navigate for a layperson. It doesn't help matters that judges will give members of the bar preferential treatment. If a lawyer is late to a hearing a judge will typically hold up the hearing. If a layperson, who is self defending is late, they will likely just award a default to the lawyer. It's incredibly unfair. 

 

19 hours ago, MrWhyt said:

out of statute means that the debtor can no longer be brought to court for the debt. They still owe the debt and as such can be pursued by debt owners/collectors, and i suspect the debt still shows up on their credit rating.

Typically the statute of limitations is shorter than the credit reporting period of 7.5 years from the date of default. 

Edited June 7, 2016 by Spikey

[peeayebee]

I forgot to comment on the clip of Nic Cage screaming, "OPEN IT! OPEN IT! OPEN IT! OPEN IT! OPEN IT! OPEN IT!" I was laughing so hard.

[dusang]

33 minutes ago, peeayebee said:

I forgot to comment on the clip of Nic Cage screaming, "OPEN IT! OPEN IT! OPEN IT! OPEN IT! OPEN IT! OPEN IT!" I was laughing so hard.

"I don't know--if I was in 70 films over 30 years, and spent each one talking at random volumes, I might accidentally win an Oscar." - Shirley

I enjoyed the episode but, I'm sorry John, you just don't speak to Oprah like that.

[fastiller]

38 minutes ago, dusang said:

I enjoyed the episode but, I'm sorry John, you just don't speak to Oprah like that.

I'm not an Oprah fan at all (I think there's a bit too much 'cult of personality' going on with her), but I can imagine something similar to SNL's The Beygency if you dare slight Oprah.

[ganesh]

7 hours ago, retrograde said:

I dunno what media you're watching/listening to/reading, but I would say many outlets are covering it pretty heavily. Oliver's own segment used clips from CNN and Fox News reports, and quoted NYT, Washington Post, and USA Today articles.

Yes, now, suddenly. Trump has gotten a huge pass over the course of the campaign. 

[iMonrey]

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Aside from the informative, interesting, and, yes, entertaining debt segment, I absolutely loved the Trump stuff. I loved when John listed all the legal TV shows that the number of Trump lawsuits can match in episodes. (I don't know if I worded that correctly.) That is pretty amazing. Then the part on Trump University was fantastic as well. I'd already heard about the playbook and some of the things from it (like the bit about getting single mothers to put the course on their credit cards.), but I was glad to hear the real story behind the "98%" excellent report cards from the people who took the course.

I was much more interested in this piece than in the debt piece, frankly. The summation was the best part - like his "university," Trump's presidential campaign has been about selling feelings.

[attica]

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I can imagine something similar to SNL's The Beygency if you dare slight Oprah.

Heh. We all remember what happened to Jonathan Franzen, after all.

[OneWhoLurks]

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RIPMedicaldebt.org, a nonprofit that raises money to buy debt and forgive the bills owed by people who can least afford to pay them, welcomed the attention.

“It’s absolutely fabulous,” said Craig Antico, CEO of RIPMedicaldebt.org. “It puts a light on a problem that few people know exists.”

Antico’s organization was already seeing a boost in donations Monday. RIPMedicaldebt.org has been concentrating lately on buying debt owed by U.S. military veterans.

[...]

Within a few hours of Oliver’s show airing, people were writing to Antico’s blog to see if their debt was included in what Oliver purchased. “Last Week Tonight” is working with RIPMedicaldebt.org to notify people that their debt has been wiped out, and those affected will be getting letters from the organization within the next few weeks, he said.

 

TV Host John Oliver Buys, Forgives $15 Million In Texas Medical Debt

ETA:
 

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SACRAMENTO, Calif. – While DBA International disagrees with certain broad characterizations of the debt buying industry contained in the June 5th episode of “Last Week Tonight with John Oliver,” we wholeheartedly agree with the premise of the show that unscrupulous activity within the industry harms consumers.

[...]

The segment highlighted well-publicized problems from the past instead of discussing industry regulations and reform, benefits to consumers, and contributions to the economy. John Oliver’s producers contacted DBA International and we participated in a lengthy interview in the days before it aired providing extensive background on the industry and the certification program. This information was not incorporated into the show.

It’s important to note that the debt buying industry is one of the most comprehensively regulated financial services industries in the country, both at the federal and state level. The questionable debt collection practices highlighted in John Oliver’s program are not collection tactics – they are prohibited illegal actions.

 

DBA International Responds to “Last Week Tonight with John Oliver” Segment on the Debt Buying Industry

ETA2:

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It’s impossible to say what impact this kind of debt forgiveness would have on an individual consumer’s score — scores are calculated using multiple personal factors. But generally we know that when a debt is marked as settled, or anything other than paid in full, that’s very bad for a score. The negative impact shrinks over time, but it can last seven years. According to this chart from FICO, a settled debt can cause up to a 100-point credit score drop.

We know that the debt Oliver purchased was described on the show as “out-of-state medical debt from Texas,” meaning it was older than that state’s statute of limitations for collection — which in Texas is four years. In that case, the impact from the four-year-old-plus debts may be low, but in many cases, it will still hurt those consumers, even after their debt was “forgiven.”

There’s another silver lining about the debt Oliver purchased: Newer formulas used for credit scores, including FICO 9 and VantageScore 3.0, treat medical debts differently, so that should help some of these consumers, too. Those formulas are slowly making their way through the credit industry.

[...]

Generally, when a debtor forgives a consumers’ debt — say, through debt settlement — the amount of forgiveness is considered income by the IRS. It’s a real kick in the teeth to consumers, who obviously are in no position to pay income tax on the amount they couldn’t pay to a debt collector. But for now, this is the law.

This is sometimes referred to as the 1099-C problem. Financial institutions must issue 1099-C forms to consumers any time they agree to accept at least $600 less than they are owed, and consumers must “claim” that amount on their tax returns.

When Rainbow Jubilee began its debt purchases, the organization said it had consulted with the IRS and was told there was no 1099-C problem. At the time, not everyone agreed. Writing on the blog NakedCapitalism.com, Yves Smith argued that many complex tax issues aren’t settled with the IRS until it makes a formal ruling, and any issues with this kind of novel debt forgiveness were unclear.

 

 

Want to Buy & Forgive Debt Like John Oliver? Not So Fast

Edited June 8, 2016 by OneWhoLurks

[theatremouse]

That's amusing that they'd describe themselves as "comprehensively regulated". If it were as easy as the show implied for to create a debt-buying company, I am doubtful as to this claim. Although I suppose "regulated" and "complicated" need not necessarily go hand in hand...and it is possible Oliver made it seem simpler than it is...but...I remain skeptical.

[OneWhoLurks]

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Let’s go back to Company X, and the 50 folks who never paid. Ten years have passed since those debts were incurred, and those 50 folks are no longer legally lawsuit targets in any state.

At this point, we might effectively term the debt “dead,” and it kind of is. Except Collections Company P, down at the bottom of a long, long chain of resold debts, has just acquired that list of names — and really wants to make a buck.

[...]

One day “Jane Doe” gets a call telling her she owes a wad of cash. She feels particularly conscientious, and sends $50. Or maybe she doesn’t send anything, but says, “Oh! Of course I’ll pay what I owe!”

That action resets the statute of limitations. Because she promised to pay, the debt is now reborn, fresh. No longer dead, but a brand-new debt all over again, kicking off the whole process once more. And let’s remember that this debt can be continually resold: every single time a new company gets its hands on it, they can start demanding payment all over again.

In short, at this point it will continue to shamble along perhaps indefinitely, slowly but surely, maybe muttering “braaaaaaains” from time to time for maximum effect.

 

What Is Zombie Debt, And Why Won’t It Just Stay Dead?

[purist]

OK, so now I'm confused. Did Ollie do a good thing, or did he not?

[Jamoche]

15 hours ago, purist said:

OK, so now I'm confused. Did Ollie do a good thing, or did he not?

He got their debt forgiven in a way that won't have a tax hit, so even if their credit rating isn't as good as it would be if they'd never had the debt, it's still going to age off of that eventually, and they won't be hassled by shady debt collectors. So it could be better, sure, but it looks good from here.

[peeayebee]

Plus, he brought this whole thing to light.

[zxy556575]

A relative of mine is the president of one of the largest debt collection companies and was all bent out of shape about this piece. I understand his side of the story and yes, it's a legitimate/necessary industry and yes, the majority of companies probably do operate ethically, but that just means they need to (1) police themselves better and (2) lobby for more stringent laws to reduce the abuses. If certain companies are giving the entire industry a black eye, address that instead of shooting the messenger.

[attica]

38 minutes ago, lordonia said:

it's a legitimate/necessary industry

Legitimate, I can agree. Necessary? No, I don't think so. If the original lenders have written off the money (and gotten tax benefits for having done so), there isn't really a necessity to keep the cycle going. Sure, picking up a few cents on the dollar soothes a loss, but it's like selling your old couch vs. leaving on the curb for refuse pickup (or somebody to re-home). The extra money is nice, but the point is to get rid of it.

[ganesh]

What industry has policed itself better ever?

Edited June 9, 2016 by ganesh

[Hanahope]

52 minutes ago, ganesh said:

What industry has policed itself better ever?

And this is why we need government regulations.  Because they don't.

[zxy556575]

16 hours ago, attica said:

Legitimate, I can agree. Necessary? No, I don't think so. If the original lenders have written off the money (and gotten tax benefits for having done so), there isn't really a necessity to keep the cycle going. Sure, picking up a few cents on the dollar soothes a loss, but it's like selling your old couch vs. leaving on the curb for refuse pickup (or somebody to re-home). The extra money is nice, but the point is to get rid of it.

The collection industry would answer that people are obligated to pay their debts. Why should they be allowed to buy something on credit -- diapers or food or a TV or shoes or gas -- and never pay for it? That's theft. The banks may decide to focus on more profitable ways to gouge consumers and decide it's not worth their while to go after certain creditors, but that doesn't mean consumers should be allowed to commit wholesale fraud.

If the numbers are to be believed, a larger percentage of consumers have overdue debt than there are predatory or underhanded debt collection companies.

Edited June 10, 2016 by lordonia

[Jersey Guy 87]

10 hours ago, lordonia said:

The collection industry would answer that people are obligated to pay their debts. Why should they be allowed to buy something on credit -- diapers or food or a TV or shoes or gas -- and never pay for it? That's theft. The banks may decide to focus on more profitable ways to gouge consumers and decide it's not worth their while to go after certain creditors, but that doesn't mean consumers should be allowed to commit wholesale fraud.

If the numbers are to be believed, a larger percentage of consumers have overdue debt than there are predatory or underhanded debt collection companies.

Debt collection companies that go after debt that has expired and is no longer legally owed add nothing to society - they are vultures, taking advantage of people who do not know their legal rights.  They insure that people who have outstanding debts will remain in a cycle of continually owing money.  They are a net drain on our economy.

[attica]

11 hours ago, lordonia said:

That's theft.

Then punish it though criminal courts. Since when are debt-collectors, private for-profit companies, agents of the criminal courts?

Anyway, the argument could be made that unpaid debts are the bets that financial companies make in lending money. And, as with any bet, there's a non-zero chance you can lose. Criminalizing these transactions freely entered into seems a poor use of public resource. That's one of the reasons lenders charge interest -- to create hedges for the occasional loss.

There is a long tradition of viewing the owing of unpaid consumer debt as a moral transgression. And I get it, I feel it too. But isn't it funny that corporations never ever feel that way about commercial debt? There are always 'haircuts' to be administered, deals to be cut, bankruptcy to declare. And nobody'd ever consider calling them thieves.

[theatremouse]

For me, I also think there's a significant difference between unpaid debt in general and medical debt like what Oliver was really on about. I shall attempt not to go into a diatribe about US healthcare, but I think there's an important distinction between overspending one's means and racking up debt and not being held accountable for that versus having a medical crisis in which if you do not incur the expense, you're literally dead (plus having no time or opportunity to shop around or find out what it costs first). But now you owe $100,000 for one night in hospital. Not because the equipment and drugs used, and the salary of the people who assisted you, plus some reasonable profit margin add up to that amount for that one night, but because those are the types of prices set under the current system here. Drawing attention to that, and forgiving some of it, to me, is a good thing.

Edited June 10, 2016 by theatremouse

[zxy556575]

I'm not sure why I'm arguing my relative's point. I don't even like him that much. :)

But as devil's advocate:

1 hour ago, attica said:

Then punish it though criminal courts. Since when are debt-collectors, private for-profit companies, agents of the criminal courts?

Would a return to debtor's prison honestly be the best way to go? Taking someone who can't pay their bills to court seems like overkill as well as a bureaucratic nightmare to implement. Would they get the services of a public defender? If not jail time, what would be the punishment? Garnishment of wages seems justified, if they're employed. Would people be in favor of automatic garnishment implemented by the credit card companies?

2 hours ago, Jersey Guy 87 said:

Debt collection companies that go after debt that has expired and is no longer legally owed add nothing to society - they are vultures, taking advantage of people who do not know their legal rights.  They insure that people who have outstanding debts will remain in a cycle of continually owing money. They are a net drain on our economy.

Okay, but what about debts that haven't expired and are legally owed? Do those creditors simply get to stick their fingers in their ears and wait it out?

Scofflaw consumers already pay a price in terms of their credit worthiness, which seems fair.

I got no idea what the ultimate answer is, but should we simply forgive debtors with minimal consequences to them? Should there be more stringent requirements to qualify for credit in the first place? Banks currently encourage overspending in people who can't afford it. Treating medical debit separately could be part of the answer, but universal health care would be a better one. Etc.

Edited June 10, 2016 by lordonia

[ganesh]

You do take a hit on your credit rating, so I don't think consumers get off scot free. That's going to affect car loans, mortgages, even renting an apartment. Many jobs make a credit check too, so it could affect your employment. 

Just buying and transferring the debt though seems dumb. Given how criminally inept the credit bureaus are, how much of that debt is in error in the first place?

[Jersey Guy 87]

2 hours ago, lordonia said:

Okay, but what about debts that haven't expired and are legally owed? Do those creditors simply get to stick their fingers in their ears and wait it out?

Scofflaw consumers already pay a price in terms of their credit worthiness, which seems fair.

I got no idea what the ultimate answer is, but should we simply forgive debtors with minimal consequences to them? Should there be more stringent requirements to qualify for credit in the first place? Banks currently encourage overspending in people who can't afford it. Treating medical debit separately could be part of the answer, but universal health care would be a better one. Etc.

 

Nobody is saying to forgive debtors with minimal consequences or that creditors should simply wait it out.  There are 100% legitimate needs for debt collection and 100% legit debt collection companies. LWT (and others here in this thread) are not talking about those, we are talking about the companies that prey on outstanding, long written off debt via unscrupulous methods.  And it's because the debt collection industry exists (plus the ability to write off uncollectable debt) that banks, etc. make loans without really qualifying the recipients.  The housing bubble burst in part due to mortgage companies being able to put a whole bunch of risky mortgages into a bundle that somehow, magically, because a "good investment" and sell those mortgages off.  The original lender had no intent of ever collecting the debt, they made their money by packaging crap mortgages together and selling that crap sandwich off as chicken salad.  I won't touch the medical debt question but in general yeah, medical debt should be treated separately, IMO.

[OneWhoLurks]

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John Oliver wasn’t optimistic during his June 5 “Last Week Tonight” segment on debt collection. Shady brokers use aggressive, unethical, and legally problematic tactics to bully cash-strapped Americans into paying money they may not even owe anymore. As bleak as that sounds, Mr. Oliver only hinted at the even deeper trouble people could find themselves in, if brokers mishandle their sensitive information.

Debt agencies often use Microsoft Excel spreadsheets, containing a debtor’s name, Social Security number, address, and other information that could give criminals all the information they need to perpetrate identity theft, fake phone solicitation, and other types of fraud. If that sounds unbelievably sketchy, that’s because it is.

[...]

In one instance, the FTC went after a debt broker accused of publicly posting the sensitive personal information of more than 70,000 people without encryption, redaction or any other form of protection. Those spreadsheets were viewed at least 500 times, according to the FTC.

In February, a group of debt agencies settled with the FTC  over charges they misled customers about how easy it would be to get a loan, then “knowingly provided scammers” with Social Security numbers and bank account information on hundreds of thousands of people. That made it possible for scammers to steal millions of dollars from the accounts of already broke Americans, the FTC alleged. The penalty? A $4.1 million fine against one debtor and $5.7 million in suspended fines against three others.

 

Opinion: Your data needs more protection from shady debt collectors

[OneWhoLurks]

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The debt collection industry, virtually unregulated, has more problems than just Oliver. As the jobs recovery sputters along, even those who do business within the letter of the law have found it harder to get cash-strapped Americans to cough up.

Even if you’re not on the receiving end of one of those calls today, you may be tempting fate tomorrow. CardHub calculates that the average American today has about $7,879 in credit card debt, a seven-year high and only $500 away from an unsustainable level. On top of that, student debt loads have exploded – as have defaults on those loans. Add auto loans and mortgages to that mix, and you’ve got a country drowning in debt.

Looking at credit card data alone, the average American today has 52% more debt than she carried only a decade ago. Tough medical expenses, college tuition bills, rent and/or mortgage payments continue to rise, wages stay largely flat; it’s hardly surprising that debt grows everywhere from the emergency room to the movies and the grocery store.

[...]

Until now, payday lenders haven’t even had to do a basic test to gauge whether their “clients” can repay their loans. A new rule announced by the Consumer Financial Protection Bureau (CFPB) earlier this month will change that.

Lenders won’t be able to take possession of borrower’s car title, for instance, and will be limited in the number of times they can try and deduct payments from customers’ bank accounts. Fees for doing so result in an average of $185 in penalties for about half of borrowers, the CFPB found, and can lead to those borrowers losing their bank accounts. Without a bank account, life becomes even more expensive for struggling American families, who now must pay hefty fees just to cash a check or pay a bill.

[...]

Right now, the CFPB’s war is a bit akin to the war on drugs, attacking the supply side. That’s well and good, but if it doesn’t solve the demand side of the equation, there will be no long-term fix. Without a long-term fix, the predators and their products simply change their identities.

There is still demand for loans that fill the gap between what Americans earn and the cash they need. People need some kind of credit card, and don’t have a bank account or a credit rating – thus a prepaid card fits the bill. Americans don’t earn enough money to cover their costs, and must rely on debt – inevitably, someone wants to collect that debt.

 

How the war on debt collectors has begun to mirror the war on drugs

[b2H]

If the war on debt collectors is going to mirror the war on drugs.....

We're doomed.

the war on drugs has been going on since the Reagan administration.  The folks that are in debt don't have that long they can wait.

[OneWhoLurks]

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If no one collects money from people who owe it, responsible but not wealthy people will find it harder to obtain credit when they need it. Collecting past due accounts keeps interest low.

I know this because I work for a small law firm that represents one of the largest debt buyers in the country. I have worked thousands of cases on their behalf. I have spent countless hours researching the Fair Debt Collection Practices Act, Fair Credit Reporting Act, Telephone Consumer Protection Act, Truth In Lending Act, as well as state statutes, best practices ,and even court rules. I have had to study every report, suit, advisory opinion, and consent order issued by the Consumer Financial Protection Bureau, a government agency created to regulate my industry.

[...]

Oliver’s segment uses several other news reports, including one where an author states, “When I talk about debts being bought and sold, here, we’re really just talking about an Excel spreadsheet.” This is like saying “This car was free. All I had to do was sign some papers.” While the information on the accounts being sold might be summarized in a spreadsheet, there can be thousands of pages of supporting documents. I know this because these are the documents I and my support staff assemble and consult before filing a case.

[...]

When Oliver brings up filing suits, it gets personal for me. This is my job, and I work hard at doing it well and remaining compliant with the multitude of ever-changing laws and regulations. Oliver pays lip service to this, noting that regulators have taken “some action.” This is a pretty extreme understatement, as the Obama administration founded a new government agency tasked specifically with overseeing and regulating debt collectors.

Oliver mentions that debt buyers are among the heaviest users of court systems. My response is, “Well, duh.” Basically, all civil lawsuits are attempts to collect money in some form. It follows that when your business is to collect money, and you buy more debts than anyone else, you will use the legal system to do so. This is why the civil courts exist: to help people collect money from people who don’t want to pay.

Worse still is the claim that debt buyers and collectors “bank on consumers ignoring the lawsuits” in order to get default judgments. While it is true that most consumers do not appear at court, one of the main reasons collectors file suit is that consumers who won’t respond to anything else will respond when a suit is filed. Simply getting in contact with consumers is the hardest part of collections work; filing suit is one of the most potent tools available. Contrary to what the segment says, debt collectors want people to show up in court. I’d say about 1 in 5 appear, and about 1 in 10 of those contest. Blaming the debt collector for a consumer who fails to appear in court is like blaming a child for his parents failing to pick him up from school. Someone is being irresponsible, and it is not the party who showed up.

 

Does John Oliver Know Anything About Debt Collection?

ETA:
 

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Talk show host John Oliver recently made headlines for forgiving $15 million in medical debt, the largest one-time giveaway in television show history. But in an impassioned response video, Jonathan Bush, co-founder and CEO of athenahealth, said the seemingly bold move doesn't address healthcare's problem.

[...]

Mr. Bush said the majority of healthcare dollars go toward an "administrative technocracy," which affects how physicians work and, ultimately, patient care. The investments in technology have not yielded labor efficiency; in fact, it has done the opposite, according to Mr. Bush.

"Healthcare has defied every law of labor efficiency in economics that I know of. For 30 years straight, healthcare has accomplished an uninterrupted run of negative labor returns to technology investment," Mr. Bush said. "Every time you spend a dollar on technology, you get a little bit more inefficient. Yes, medical debt is massive, John, but it's a massive failure in the healthcare technology and infrastructure that is really failing us."

 

Jonathan Bush responds to John Oliver's $15M medical debt forgiveness

Edited June 14, 2016 by OneWhoLurks

[OneWhoLurks]

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Therefore, if John Oliver (or, more precisely, his corporation, Central Asset Recovery Professionals, also known as “CARP”) had simply forgiven the debt, the debtors might have been taxable on the amount forgiven.  Fortunately, that’s not what John Oliver actually did.  Instead, he donated the debt to Medical Debt Resolution, Inc., which goes by the name, “RIP Medical Debt” (“RIP”).  RIP is a Section 501(c)(3) charity whose purpose is to provide charitable aid by purchasing and forgiving the medical debt of poor people.  RIP forgave the debt as a gift to the donor out of “detached and disinterested generosity.”  And that is why the debtors were not taxable.

Section 102(a) provides that gross income does not include the value of property acquired by gift.  In other words, gifts are tax-free.  Unfortunately, there is no definition of gift in the Internal Revenue Code.  The Supreme Court in Commissioner v. Duberstein held that a gift “proceeds from a detached and disinterested generosity” and is made “out of affection, respect, admiration, charity or like impulses,” but doesn’t include a transfer that is made “from the constraining force of any moral or legal duty, or from the incentive of anticipated benefit of an economic nature.” In short, the donor has to have a pure heart for a “gift” to be a gift for tax purposes.

 

Tax Consequences of John Oliver’s $15 Million Medical Debt Forgiveness

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Misinformation and harassing tactics are two of the biggest complaints levied by consumers against third-party debt-collection agencies. The Federal Trade Commission receives more complaints about debt collection — more than 140,000 a year — than any other industry.

So who is protecting Americans against these unfair and illegal practices? The Fair Debt Collection Practices Act was originally passed in 1977, but no federal agency had the authority to regulate the debt-collection industry until 2010 with the passage of the Dodd-Frank financial reforms. Now the Consumer Financial Protection Bureau (CFPB) is in the process of writing the new rules, which Kuehnhoff and the National Consumer Law Center hope will include strong protections against harassing phone calls and deceptive legal practices.

 

Can You Buy Your Own Debt for Pennies on the Dollar?

Edited June 16, 2016 by OneWhoLurks

[OneWhoLurks]

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Millions of debt-laden Americans could be given some respite from debt collectors under a new set of proposals being rolled out by the Consumer Financial Protection Bureau (CFPB), a watchdog government agency established in the wake of the 2008 economic crisis.

On Thursday, the CFPB set out proposed new rules for debt collectors to make sure they are collecting “the correct debt” and not harassing consumers.

The proposal includes a cap on how many times debt collectors can contact consumers per week. The proposed cap is six times a week.

 

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The CFPB proposal would also make it easier for consumers to stop debt collectors from contacting them during certain hours or at a certain number, for example during work hours and at work.

“The CFPB is also considering proposing a 30-day waiting period after consumer has passed away during which collectors would be prohibited from communicating with certain parties, like surviving spouses,” the agency said in its press release.

The proposal would also make it easier to dispute debt. The collector would not be allowed to collect on the debt until the dispute is resolved. Collectors would also be prohibited from collecting on debt that lacks documentation.

 

Curbs on persistent debt collectors offer hope to Americans in the red

[OneWhoLurks]

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"I was on YouTube and I was watching a video on John Oliver. He had done a similar process in New York where he had raised $60,000 and relieved $6 million of medical debt," said Samir Boussarhane.

Enter the Pensacola Debt Sharks. Pensacola High International Baccalaureate student Samir Boussarhane called on classmate Falen McClellan to write their own chapter from John Oliver's success. Their service project: raise enough money to retire $1 million worth of medical debt for some local residents.

 

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Samir said they were stunned at the mail they received, "I received a notification from the charity we're working with, RIP Medical Debt, that we had an angel donator from south Florida who donated $25,000."

So much for retiring a million in medical debt. They're fundraising and asking for donations to get to three million and beyond.

 

Students helping to take a bite out of medical debt