Re: just a differing view on lawsuits
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Posted by Paul
(207.44.154.35) on March 07, 2004 at 19:59:30:
In Reply to: just a differing view on lawsuits posted by catballou on March 07, 2004 at 16:53:40:
Cat, I like your perspectives, but please let me explain why they DON”T sue in the hopes that you may come into some money someday. Any collection agency that sues hoping you’ll have some money someday will itself be bankrupt long before you ever come into money. I will use one example, Asset Acceptance because their income statement is listed in their SEC filing. They have purchased 15 million accounts over the years. Filing fees on a lawsuit are $100 at least in most states, and the lawyer’s fee even in batches would be at least $100 a piece to file suit. That’s a minimum of $200 per lawsuit. If they sued on all 15 million of their accounts, then they would have to come up with $3 Billion just for lawyers and filing fees. They don’t have that kind of loose change sitting in their vaults. In fact, Assets entire annual collections are only $100 million dollars. So they would have to come up with 30 years worth of annual revenues to pay the filing and attorney’s fees on all their accounts. Since 1990, they’ve only paid $242 million for their entire portfolio of $13 Billion worth of bad debt. Asset lists their total assets at $170 million. Asset Acceptance buys accounts for less than 2 cents on the dollar. So if they DID have $3 Billion sitting someplace, then they could go out and buy $150 Billion worth of new 2 cent on the dollar accounts and start working those on the phones right away rather than spending the $3 Billion on legal fees hoping to collect in the year 2010. This is pretty simple economics. They spend their money where it is most likely to give them the greatest return on investment quickest, and that would be purchasing NEW charge offs, not suing on the old ones. Not to mention the fact that they DON’T have that kind of money laying around to spend on filing and attorney’s fees. According to Asset, they only have $7 million in cash on hand, a far cry from the $3 billion they would need to file all those lawsuits. A shotgun approach to lawsuits will bankrupt any collection agency. My sympathy to anyone ever sued by Asset, but for 15 million accounts, most people are never are sued. You can look over Asset’s income statement online. It’s typical for any debt buying collection agency.
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