Monday, October 8, 2012

Collections Scam


Many people don’t really know how corporations deal with their noncollectable consumer debt, and I believe if they did, many of those same people would not be very happy about it. I, personally, didn’t know until I went to Business College. There’s no reason to know if you wander through life believing that what you get in the mail is gospel truth. Those of us who have had a run of bad luck know what I’m talking about when I mention letters from collection agencies. Before I even start, I’m not proposing that anyone, in any way, cheat the system. But some of us, out of necessity, have had to use a great deal of credit to get the things that were necessary for an improved lifestyle. Mine was college, and it paid off. I got a really good job after college and had plenty of money to pay down my debt. And then it all fell apart when I lost that job and had to settle for something around half the money. I could barely keep a roof over me and my son’s head, and feed us. There wasn’t anything left to pay off the massive debt, so everything went into collections. This is where the corporate sham begins.
What do they do with their noncollectable consumer debt? Debt that has shown little or no activity for a year or two? They write it off for tax purposes and then sell it for pennies on the dollar to the highest bidder. Yes, your debt is considered noncollectable by the corporation; it is thrown away, so-to-speak.  Say a corporation had 5 million in profits the past quarter. As the tax law is written, they would pay 175,000 in taxes. But they do everything possible to reduce that amount of tax paid, one of them being the sale of your credit. This is the sneaky part.
Instead of carrying the debt as they should or take a total loss, they will sell it for pennies on the dollar and write it off. Say they have a half a million in noncollectable debt. They sell it for $50,000, and write off a loss of the half million, bringing their total profit down to 4.5 million and bringing their taxes down to $166,250. That’s a savings of over 8700 dollars. They took what was considered worthless and made $58,700 approximately. Pretty neat, huh?
What happens to the debt? It ends up in some collector’s office, or lawyer’s office, who have no real relationship with the corporation. They don’t work for them; they are not collecting the debt on the corporation’s behalf. The debt doesn’t exist to the corporation anymore. Instead, we get hounded by debt collectors, some of us end up in court, having to pay the entire amount, plus interest, which we don’t have or we would have paid the debt in the first place. So some of us end up garnished, and still don’t have the money to pay it, so it takes food off of the table. And, lengthens the time we need to get back on our feet. If we are really lucky, at least that’s what they’ll want you to believe, the collector’s will settle for half of the original debt. That’s why you get those offers in the mail. It’s just another example of how the people with money work the system. They are saving tax dollars while we can’t afford to feed our families and have to take one or two more jobs just to get by. That’s certainly not the American dream.
So, let’s work this out. These corporations, who probably pay people much less than they are worth to begin with, probably not enough for many of their employees to make ends meet. They do everything they can not to pay taxes - this, by the way is why some of those accounting firms got in big trouble in the recent past. Sometimes, their creative accounting is against the law. I think this should be, too. And, they pay their top VP’s and CEO’s millions of dollars. There is such a disparity in wages across this country that I won’t even get into that. But, the point is, they sell your debt to collection agencies, then write it off for tax purposes. Reducing their taxes, increasing their bottom line. 
These collection hounds are not working for the corporation that originally held your debt. As I’ve said many times already, the debt doesn’t exist to the original lender anymore, because they wrote it off. The collection agencies re only working for themselves, to fatten their wallets. And, they can also take you to court. Why is this legal in the first place? Why didn’t the corporation take you to court? Because it costs money. Lawyers are expensive. It would cost more to collect the debt than the original debt, which is why they write it off. Do you understand yet what is really irritating me here? The debt is written off! Why are other people allowed to collect it? Because we are basically defenseless.  
The only reason this continues to be in place is because of those dreaded special interest groups. Big corporations save a lot of money in taxes and other corporations make a lot of money off their debt. Some of these other corporations are indirectly owned by the first corporation. Some of us even work for corporations that make money off of us, sell us out, pay us bare minimum, and indirectly profit from us two or three times. Make them pay their fair share and let me get back on my feet and start paying my debt again as I intended to do in the first place. I don’t want a free ride. I just want to stop the corporations from getting so many free rides. 
So, this seems like a good time, economically, to make this case to our government. Will you help me? There needs to be more safeguards for people who experience devastating losses like mine. There needs to be more stringent laws for credit approval. Corporations should have to hold onto their debt or dismiss it as worthless. It shouldn’t be allowed to belong to any other entity, unless that corporation is bought by another. The government itself doesn’t have that luxury. They don’t write off debt. You owe the government, you owe it forever. It’s all about taxes, profit, bottom-line, greed, to these corporations.
Please don’t get me wrong. I want to pay off my loans and other debt. I just want to pay it to the corporation that gave it to me in the first place. I don’t want to pay it to someone else after the corporation made it worthless. This shouldn’t be allowed. Either the corporation directly hire a debt collector to collect their debt, continue to try and collect it their selves or write it off and forget about it. I truly believe what they do now is unfair.

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