This article in the Norfolk paper about Portfolio Recovery explains something I had only guessed at, before. Debt collectors know when your finances improve. Debt collectors pay the credit bureaus to tell them.
I’m a Virginia bankruptcy attorney, and I know people want to put off filing bankruptcy for as long as possible.
Some people come to see me when they have a good job again, after unemployment. They start to settle some of their smaller debts, and when they do, everybody jumps them. Debt collectors call from everywhere. The sheriff brings warrants-in-debt. Old judgments suddenly are trying to garnish.
“I’m trying to do the ‘right thing,'” people tell me, “But I can’t pay everybody at once! How do they know?”
Portfolio’s Recovery Associates is one of the top debt collectors in the country. They are tops as debt collectors because of their technology.
Portfolio’s president brags to the newspaper how they use computers to identify people who just now have some money.
Most people they leave alone: “Let’s face it,” says Steve Fredrickson, the company’s co-founder and CEO, “if you’re a consumer that’s in dire financial straits and you can’t pay us anything, I don’t want to talk to you, and you don’t want to talk to me.”
But when your credit report starts to improve, they pounce. When an unemployed mom gets a job or signs up for a cellphone contract, for example, her score goes up. PRA pays to access data from credit reporting agencies, among other sources of information. “When something does change, you want to be the first one to get them on the phone,” [PRA Vice President Neal] Stern says. “They probably owe five or six other people.”
What’s the lesson of this? Unless you have cash to settle with everybody, trying to settle one creditor at a time, does NOT buy you peace. (Bankruptcy does that.) Trying to settle your bad debts, sadly, just leads to headaches.
As my friends say in Southwest Virginia, they are on you like a duck on a junebug.