Scavenger Debt Collectors pt 2
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Posted by A Tutorial
(68.106.16.82) on July 06, 2003 at 02:23:20:
When a bank charges off your debt, they deduct the amount charged off on their corporate income taxes. Since banks routinely have very high levels of profits, they pay the maximum income tax rate. They receive around 35 cents corporate tax savings for every dollar of loss from a charge off. Therefore, they will never offer you a settlement of less than 35 cents on the dollar even from bankruptcy court; that would cost them money because they would forego the tax deduction by issuing a 1099-C forgiveness of debt to you. The tax codes mean that they really would rather get nothing from you than accept 25 cents on the dollar, even if this were all you had to make a legitimate settlement. They’d rather you go bankrupt. In days of old, Original Creditors were content to charge off your debt, collect their tax benefits, befoul your credit report, attempt sporadic collections and bury the note in their vaults. It is rather a recent phenomenon that scavengers have come on the scene raising enough capital to actually “purchase” the debt. Scavengers noted that banks had billions of dollars of charged off debts buried in their vaults and targeted them. The banks decided to take the quick cash, even at only 2 to 10 cents on the dollar, since it was virtually worthless to them anyway. Now, this would be fair if the OC offered to you, at the same terms as they do to the scavengers, your charged off debt. But the game is rigged, and they don’t; you have no moral obligation to pay a scavenger full price for your debt which the bank sold to them (but would not to you) for pennies on the dollar. When your OC unfairly sells to a scavenger your debt for a price less than you were ever offered, you are released of any moral obligation to pay this debt. The scavengers are effectively subsidized by the bank’s tax deduction. Banks won’t sell the debt to you for the same pennies on the dollar because they would lose the tax deduction in issuing you a 1099-C. They can keep the charge off deduction minus the 2-10 cents on the dollar received by selling to scavengers. This unethical conspiracy between banks and scavengers to abuse our nation’s tax laws doesn’t make for a compelling moral argument for your paying anyone at this point. Suffice it to say that the scavenger debt collection industry exists simply to feed the scavenger debt collection industry. Don’t let anyone ever tell you that banks need to sell the debts to recover their losses. The average 2 to 10 cents on the dollar that the bank gets are peanuts compared to the amount the scavenger agencies suck out of society. Scavengers perpetrate a monstrous tax subsidized welfare fraud diverting your dollars to feed them while producing no net gain for society, yet imposing enormous negative externalities. Practically all the money they collect simply goes to pay their commissions, rent, phone bills and profits of their business. The pennies the banks get are irrelevant to their balance sheets. Scavengers would not exist were it not for the tax deduction. People could then negotiate their own settlements directly with the banks. Who wouldn’t pay 10 cents on the dollar to clear his/her debt? For a related story, read about Bill Bartmann, a “pioneer” in this industry. This effusively sycophantic article was written a few years back before his scavenger company CFS went bankrupt due to financial irregularities, and before he was formally placed under federal indictment and arrested for mail and wire fraud. The hoods in this racket are all from the same get-rich quick ilk, and lawbreaker is synonymous with scavenger debt collector http://www.inc.com/articles/start_biz/1316.html Bill Bartmann link to Inc. Magazine Use any method possible not to feed the scavengers.
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