Debt be not loud: the collector's gentle art

No one need remind Brian Harris that America is awash in debt: At the moment he is trying to persuade a Maryland retiree to pay at least part of an overdue credit-card bill that has run into the thousands of dollars.

Mr. Harris, in his late 20s, spends his days talking to debtors from his office at IntelliRisk Management Co. The Columbus, Ohio, financial-services firm is one of about 6,200 companies nationwide that labor to collect $135 billion of delinquent debts that consumers rack up on everything from cellular-phone contracts to credit cards.

"The industry is booming," says Harry Strausser, president of collection agency Remit Corp., of Bloomsburg, Pa. "We're all just very busy because there's just so much debt out there."

We all know that Americans like to spend a lot and save a little. At companies like IntelliRisk, those mutually exclusive behaviors put to work hundreds of thousands of people who try to convince people they have to pay for what they've bought.

Some retail companies handle debt collections in-house. Others will turn it over to third-party collectors, such as IntelliRisk, either immediately or after the account "ages" a certain time without an adequate resolution. Regardless of who's calling, every collector has to abide by state and federal laws that govern what they can say and even when they can call. (See below.)

Though the bad old days of collectors trying to bully people into submitting payment are pretty well gone, that doesn't mean collectors are pushovers. They'll sometimes suggest that a debtor try to borrow money from someone in order to pay off a bill. Rob White, a co-worker of Harris, called a man in Texas every day for six weeks trying to get some money.

"I'm not here to make it any more difficult for them than it already is," Mr. White says of his nonconfrontational style. Instead, he'll sometimes wade in with occasional financial advice, suggesting to one man in California that he use a balance transfer with two credit cards to get a temporary reprieve from the card with the highest balance and longest delinquency.

As their computers dial up a debtor's number, collectors are familiarizing themselves with a surprisingly large amount of that person's financial information, which pops up on their computer screens.

They typically know how much the debtor owes, not just on credit cards but on homes, cars, and other purchases, and whether they've made any payments on those bills lately. They'll know whether a bankruptcy has been filed - or they'll ask if one is contemplated. And the Internet has provided them with valuable tools to "skip trace," or look for people who have left town or a job with no forwarding address.

At age 20, Zach Woodard is one of the younger collectors at IntelliRisk. He says people occasionally hang up on him - often, he says, because they seem to think he's a telemarketer.

Like White, Mr. Woodard has been in constant conversation with a different man in California about his bill.

"He's not frustrated, he's not mad," says Woodard. He just doesn't have the money, although Woodard thinks his steady communications with the debtor will result in a payoff when the man sells his small business.

Collectors say theirs is like any other business - they're just trying to make money. Toward that end, the people at IntelliRisk, at least, avoid badgering clients.

Rather than play hardball with his client in Maryland, Harris spent 25 minutes on the telephone with him, chatting about the man's many financial problems and finally getting him to pledge a payment that was three times higher than what the man had originally agreed to pay.

Collection-agency managers often listen in on the calls that their collectors make to check up on them. And they'll expect the collectors to make a certain number of calls, and produce a certain amount of income. If they don't, the company loses the business and the collector can lose his job.

"It's a quota system," says Scott Cytron, managing editor of Recovery Adviser magazine. Such a work environment leads to stress, high employee turnover, and constant woes for the industry.

Tough telephone calls, especially in these rough economic times, can take their toll, too.

"As a collector, a lot of negative communication comes back your way" from clients, says Mr. Strausser. That can create high stress levels among collectors, and while industry trade group ACA International pegs job turnover at 10 percent industrywide, some agencies report much higher ratios.

Strausser uses motivational programs, bonuses, and competitions among workplace teams to keep up the camaraderie.

In Rock Hill, S.C., collection agency owner Gary Williams says he even has asked his head trainer to double as corporate chaplain.

Strausser says people pop up on his telephone lists because they've fallen into one of two categories of debtors - circumstantial or intellectual. A job loss, divorce, medical bills, or other sudden or unexpected event create a circumstantial debtor, while poor money management skills puts them in the intellectual pool.

"They don't know how to budget," he says.

When you dig deeper than those two causes, however, you find special circumstances in almost every instance.

"They're all different types of people," says Woodard. "You deal with them on an account-by-account basis."

The federal Fair Debt Collection Practices Act governs what debt collectors can and cannot say and do in their efforts to collect on personal, family, and household debts. For example, collectors cannot:

• Call you at "inconvenient times or places." Generally, collectors must limit their calls to between 8 a.m. and 9 p.m. local time.

• Contact you after you have written them demanding that they stop collection efforts (though this does not get you off the hook in terms of the debt).

• Call you if you are represented by an attorney, unless the attorney does not respond to them.

• Use threats of harm, violence, or obscene language.

• Use a false name.

• Use the word "debt" or "collector" on the outside of any envelope.

• Send you anything that mimics an official government document.

• Tell you they will sue, unless they intend to do so.