[BobJS]

I wrote this article years ago. I can't believe it's on HN today. As someone who spent almost a decade trying to run as ethical an agency as possible, I realized that there's no room for people who want to operate the right way.

I could go on for days about all of the crazy stuff I saw while I was involved but leaving the debt industry was the best decision I ever made. Terrible industry, terrible people.

[philipkglass]

I'm upvoting this short comment in hopes that you'll share a somewhat longer story about what you tried to do and why it didn't work. Thanks!

[BobJS]

I can answer any specific questions anybody has but basically, I landed in the industry by chance and got good at automating the collection process. I never had the backbone to strong arm people so I played the numbers game. Technology was my advantage.

Meanwhile, all of my peers were getting rich running unlicensed agencies and lying to debtors. I was getting sued constantly for following the rules. I'd win the lawsuits but it would cost me as much as $30k to fight them.

I employed over 500 people over about 8 years, many of them stole from me, overdosed, or ended up in jail because debt collectors tend to be troubled people. I shifted my focus to building software for the debt industry and went through a startup accelerator. That's when I fell in love with software and sold my agency.

Other than that, I'll answer any specific questions.

[latchkey]

> I employed over 500 people over about 8 years, many of them stole from me, overdosed, or ended up in jail because debt collectors tend to be troubled people.

I owned a bar/night club for about 5 years. Most of the staff had (or gave me) the same problems.

[ohwellhere]

Comments below suggest buying debt to cancel it or resolve at cost (e.g. the massive discount).

Q1: As an insider, how feasible is that strategy? Q2: As the collector do you report to credit bureaus that it's cleared? does it have a meaningful impact on debtors' credit?

[BobJS]

I'm very skeptical about debt cancellation because if there was a way to make it into a business, it'd be a business. The people who talk about doing that all lose money as a charity, or they're sovereign citizens who think they found some tax loophole.

The credit bureau thing is funny because again, ethically you should but once you do you open yourself up to a LOT more liability. So most agencies won't unless it's an in-house agency for CapitalOne or something.

You as the consumer should always dispute everything on your credit report every so often.

[e63f67dd-065b]

I've always wondered why more debt collectors don't go the wage garnishment route. Are the legal fees just not worth it? I imagine that the process is only complicated the 1st time, and you can just re-use paperwork for every other case. If it were profitable more people would be doing it, so I guess what exactly makes it unprofitable?

[antisthenes]

How much does a typical collection agency buy medical debt for?

Is it 0.5x, 0.25x, what typical range are you working with?

[BobJS]

It depends on the age of the debt and how many agencies it's been through. Medical debt is also much harder to pursue legally if need be, plus everyone hates the guys who sue medical debtors. So I never worked with it.

But I'd guess that direct from the client would be 8%, 1 agency ~1 year old debt would probably cost 5%, 2 agency 2 year old debt probably about 2% and then down to 1% and 75bps after that.

A lot of times you don't turn a profit working zeros. You barely make your money back and then turn a profit reselling it. Small margins but easier to work. Happier employees.

[MichaelZuo]

Thanks for sharing. How big of an advantage did the technology end up being in percentage terms?

[BobJS]

We had low liquidation but we went through accounts fast. So clients didn't like us. Banks would rather pass off debt to an agency that will threaten people and liquidate higher. So overall, no but I had a solid run.

[lukev]

This is a question I've always had about the debt industry...

How hard would it be for consumers (or through a proxy) to seek out and buy their own debt? You mention in another comment that medical debt (for example) could go for pennies on the dollar.

If I'm hundreds of thousands of dollars in medical debt (as many people are), it seems like this would be well worth the effort. Is it possible to locate a particular debt for purchase in this way?

A second question I've always wondered about: is it feasible to start a company dedicated to buying debt and forgiving it, and taking donations to cover the costs (possibly even turning a profit)? Given the ratios involved this feels way more effective then (e.g) the GoFundMe model of financing emergency costs.

[barryp]

I thing orgs like that already exist, see: https://ripmedicaldebt.org/ and https://www.cbsnews.com/news/rip-medical-debt-forgiving-medi...

[marssaxman]

The "Rolling Jubilee" project, which grew out of the Occupy movement, does pretty much what you suggest:

https://debtcollective.org/what-we-do/debt-abolition/

[preston4tw]

I thought it was an interesting read and it would be interesting to hear a summation of why you left the industry.

It also made me consider the possibilities for a sort of vertically integrated debt collection company. Someone that's had a debt sent to collection is possibly a good candidate for financial literacy education, credit rehabilitation, debt consolidation and refinancing etc. Can debt collection serve as a sort of loss-leading subsidiary for a bigger business that provides financial literacy and services to people that need it?

[BobJS]

I left because I fell in love with building software and I hated debt collections.

The financial literacy angle is interesting but there's an even arguably more predatory industry around credit repair. People tend to stop caring about their credit until there's a life event like wanting to buy a house. Then they only care until the score hits 640.

Arguably Credit Karma uses credit scores and credit literacy as the hook which is probably a loss-leader because they need to pay for the scores.

[lbrito]

Kudos for showing up and recognizing that the industry is terrible.

The other commenters in this thread should read your post.

[bombcar]

I would highly recommend writing some articles, and going on for days. Light is a good disinfectant.

[BobJS]

This article leads a lot of people who want to break into the industry to reach out to me and I turn everyone away. Once I tell them what they can expect they're rarely still interested.