Hardship

One of Provanta’s settlement negotiators received a call on a client’s behalf from a collection agency. This was on an account with an original balance of $1,406 in May of 2007 ( a year ago, as of this posting), and this balance — or, really: claim — has since grown to $2,050, an increase of 46%. The agency is now the successor in interest, i.e., they purchased the debt — likely for only a few cents on the dollar based on the 1400-figure.

Our negotiator informed the collector that another collection agency had already and recently accepted a settlement offer on another of the client’s accounts, and that no funds are currently available. This debt buyer adversary was none too please at receiving this information, and thereupon demanded that our client begin making minimum monthly payments. This is something we hear from collectors and creditors on a daily basis, of course. Our task, then, is to get them to understand that all of Provanta’s clients are in our program due to financial hardship and cannot commit to minimum monthly payments — promises they can’t keep — on all their obligations; i.e., settlement is the option they’ve chosen, and typically so over a quick and easy full discharge of all unsecured debt through bankruptcy proceedings.

Our negotiator then explained the client’s hardship to the collector, which is one of a common and typical nature for many of our clients. Many of our clients begin their financial decline through divorce, one or the other typically becoming responsible through court order for debt incurred within the marriage. This particular client owns no real estate, has no liquid assets, and owes in excess of $50,000 in delinquent, unsecured debt.

After the collector ran through the usual gamut of scare tactics, including commencing litigation (cheap threat: equivalent to a debtor threatening bankruptcy right out of the gate), our negotiator calmly explained that it’s going to cost her company far more in time and money to take a single mother of two to court than they will ever get back on a $2K account.

We’ll look to settle this account in the future, once sufficient funds have accumulated to make a non-insulting settlement offer.

(Ref. 1502)

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