If you don't show up for court (which is what usually happens), they'll get a default judgment, and with it, the legal right to raid your bank account and your paycheck. That, in turn, is an *asset* that, once again, the debt collector can sell to an even scummier bottom-feeder, pocketing a lump sum.

McKenzie doesn't know what will fix this. But #MichaelHudson, a renowned scholar of the debt practices of antiquity, has some ideas.

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They are almost certain to lie to you and violate your rights, and a written record will help you prove it later. What's more, debt collection agencies just don't have the capacity or competence to engage in written correspondence. Tell them to put it in writing and there's a good chance they'll just give up and move on, hunting softer targets.

One other thing debt collectors due is robo-sue their targets, bulk-filing boilerplate suits against debtors, real and imaginary.

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Any agreement on your part to get on a payment plan transforms the old, low-value debt you incurred with your credit card into a *brand new*, *high value* debt that you owe to the bill collector. There's a good chance they'll sell this debt to another collector and take the lump sum - and then the new collector will commence a fresh round of harassment.

McKenzie says you should *never* talk to a debt collector. Make them put *everything* in writing.

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If you consent to a "payment plan," they will use your account and routing info to start whacking your bank account, and your bank will let you do it, because the one part of your conversation they reliably record is this payment plan rigamarole. Sending a check won't help - they'll use the account info on the front of your check to undertake "demand debits" from your account, and backstop it with that recorded call.

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These dialing systems are far better organized than any of the company's record keeping about what you owe. A company may sell your debt on and fail to keep track of it, with the effect that multiple collectors will call you about the same debt, and even paying off one of them will not stop the other.

Talking to these people is a bad idea, because the one area where collectors get sophisticated training is in emptying your bank account.

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The one area debt collectors invest heavily in is the automation that allows them to engage in high-intensity harassment. They use "predictive dialers" to make multiple calls at once, only connecting the collector to the calls that pick up. They will call you repeatedly. They'll call your family, something they're legally prohibited from doing except to get your contact info, but they'll do it anyway, betting that you'll scrape up $250 to keep them from harassing your mother.

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A statement like "if you don’t pay me I will sue you and then Immigration will take notice of that and yank your green card" makes the requisite three violations: a false threat of legal action, a false statement of affiliation with a federal agency, and "a false alleged consequence for debt nonpayment not provided for in law."

If you know this, you can likely end the process right there. If you don't, buckle in.

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They aren't "large, nationally scaled, hypercompetent operators" - they're shoestring operations that can *only* be viable if they hire unskilled workers and fail to train them.

They are subject to automatic damages for illegal behavior, but they still break the law *all the time*. As McKenzie writes, a debt collector will "commit three federal torts in a few minutes of talking to a debtor then follow up with a confirmation of the same in writing."

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Their own IT systems are baling-wire-and-spit Rube Goldberg machines that glue together the wheezing computers of all the companies they've bought over the last 25 years. Retrieving your paperwork is a nontrivial task, and the lender doesn't have any reason to perform it.

Debt collectors are bottom feeders. They are buying delinquent debts at 5 cents on the dollar and hoping to recover 8 percent of them; at 7 percent, they're losing money.

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The FDPCA gives you rights: for example, you have the right to verify the debt and see the contract you signed when you took it on. The debt collector who calls you almost certainly does not have that contract and can't get it. Your original lender might, but they stopped caring about your debt the minute they sold it to a debt-collector.

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To improve the yield on this awful process, debt collection companies start by purging these spreadsheets of likely duds: dead people, people with very low credit-scores, and people who appear on a list of debtors who know their rights and are likely to stand on them (that's right, merely insisting on your rights can ensure that the entire debt-collection *industry* leaves you alone, *forever*).

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It is packaged in part of a large spreadsheet - a CSV file - and likely sold to one of 10 large firms that control 75% of the industry.

The "mom and pops" who have the other quarter of the industry might also get your debt, but it's more likely that they'll buy it as a kind of tailings from one of the big guys, who package up the debts they couldn't collect on and sell them at even deeper discounts.

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This means the people best able to defend themselves against illegal shakedowns are less likely to be targeted. Instead, collectors husband their resources so they can use them "to do abusive and frequently illegal shakedowns of the people the legislation was meant to benefit."

Here's how the market works. If you become delinquent in meeting your credit card payments ("delinquent" has a flexible meaning, varying with each issuer), then your debt will be sold to a collector.

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But while learning FDCPA rules isn't overly difficult, it's also beyond the wherewithal of the most distressed debtors (and people falsely accused of being debtors). McKenzie recounts that many of the people he helped were living under chaotic circumstances that put seemingly simple things "like writing letters and counting to 30 days" beyond their needs.

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The debt collector who receives these letters will have bought your debt at five cents on the dollar, and will simply write it off.

By contrast, the *mere act of paying anything* marks you out as substantially more likely to pay than nearly everyone else on their hit-list. Paying *anything* doesn't trigger forbearance, it invites a *flood* of harassing calls and letters, because you've demonstrated that you can be coerced into paying.

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The credit card companies are fully aware of this, and bank (literally) on the fact that "the vast majority of consumers, including those with the socioeconomic wherewithal to walk away from their debts, feel themselves morally bound and pay as agreed."

If you find yourself on the business end of a debt collector's harassment campaign, you can generally make it end simply by "carefully sending a series of letters invoking [your] rights under the FDCPA."

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McKenzie's conclusion is that "paying consumer debts is basically optional in the United States." If you stand on your rights (which requires that you know your rights), then you will quickly discover that debt collectors don't have - and can't get - the documentation needed to collect on whatever debts they think you owe (even if you really owe them).

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No one breaks down the internal operations of the finance sector like McKenzie. His latest edition, "Credit card debt collection," is a fantastic read:

https://www.bitsaboutmoney.com/archive/the-waste-stream-of-consumer-finance/

McKenzie describes how a debt collector who mistook him for a different PJ McKenzie and tried to shake him down for a couple hundred bucks, and how this launched him into a life as a volunteer advocate for debtors who were less equipped to defend themselves from collectors than he was.

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The people they collected the debts from are likewise in the dark. The only specialized expertise debt-collection firms concern themselves with are a series of gotcha tricks and semi-automated legal shenanigans that let them take money they don't deserve from people who can't afford to pay it.

There's no better person to explain this dynamic than #PatrickMcKenzie, a finance and technology expert whose #BitsAboutMoney newsletter is absolutely essential reading.

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America has fairly robust laws to protect debtors from sleazy debt-collection practices, notable the #FairDebtCollectionPracticesAct (#FDCPA), which has been on the books since 1978. The FDCPA puts strict limits on the conduct of debt collectors, and offers real remedies to debtors when they are abused.

But for FDPCA provisions to be honored, they must be understood. The people who collect these debts are almost entirely untrained.

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