Inside the Dark, Lucrative World of Consumer Debt Collection

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Inside the Dark, Lucrative World of Consumer Debt Collection

Inside the Dark, Lucrative World of Consumer Debt Collection

NYT-

One afternoon in October 2009, a former banking executive named Aaron Siegel waited impatiently in the master bedroom of a house in Buffalo that served as his office. As he stared at the room’s old fireplace and then out the window to the quiet street beyond, he tried not to think about his investors and the $14 million they had entrusted to him. Siegel was no stranger to money. He grew up in one of the city’s wealthiest and most prominent families. His father, Herb Siegel, was a legendary playboy and the majority owner of a hugely profitable personal-injury law firm. During his late teenage years, Aaron lived essentially unchaperoned in a sprawling, 100-year-old mansion. His sister, Shana, recalls the parties she hosted — lavish affairs with plenty of Champagne — and how their private-school classmates would often spend the night, as if the place were a clubhouse for the young and privileged.

So how, Siegel wondered, had he gotten into his current predicament? His career started with such promise. He earned his M.B.A. from the highly regarded Simon Business School at the University of Rochester. He took a job at HSBC and completed the bank’s executive training course in London. By all indications, he was well on his way to a very respectable future in the financial world. Siegel was smart, hardworking and ambitious. All he had to do was keep moving up the corporate ladder.

Instead, he decided to take a gamble. Siegel struck out on his own, investing in distressed consumer debt — basically buying up the right to collect unpaid credit-card bills. When debtors stop paying those bills, the banks regard the balances as assets for 180 days. After that, they are of questionable worth. So banks “charge off” the accounts, taking a loss, and other creditors act similarly. These huge, routine sell-offs have created a vast market for unpaid debts — not just credit-card debts but also auto loans, medical loans, gym fees, payday loans, overdue cellphone tabs, old utility bills, delinquent book-club accounts. The scale is breathtaking. From 2006 to 2009, for example, the nation’s top nine debt buyers purchased almost 90 million consumer accounts with more than $140 billion in “face value.” And they bought at a steep discount. On average, they paid just 4.5 cents on the dollar. These debt buyers collect what they can and then sell the remaining accounts to other buyers, and so on. Those who trade in such debt call it “paper.” That was Aaron Siegel’s business.

[NEW YORK TIMES]

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One Response to “Inside the Dark, Lucrative World of Consumer Debt Collection”

  1. levi says:

    I just helped a friend do a pro-se defense of this type of scam. There were no witnesses for the case and it was a sham just like the debt claim. The banks and the book-keeping entry form of economics is the biggest of all scams. It will take down this nation and world economic system. National debts are just a larger scam of this same criminal activity. Paper as currency and book-keeping entries are for the sole purpose of hypothecation. Usury is the death sentence in the Bible and for good reason as it will totally corrupt and destroy a society if practiced as the monetary system. We are living in the last few years of a great nation that has been gutted and reduced to third world conditions with only pockets of civilization left. This was and is only possible by using the monetary system to take over everything else, especially the political arena and then media and education. We are now so totally removed from just weights and measures as the basis for a medium of exchange this complete breakdown of law and order is now upon us. The biggest third party debt collection scam going on is the I.R.S.. They are a agency for the I.M.F. and the U.N.. We are a nation in national captivity and have been enslaved and are under military occupation-local barracks of standing armies called”police”-and cannot recognize a conquered nation when we are living in the midst of such an existence. Neither you nor your “property” have any safety when the occupying authorities want to confiscate it. They trot out their militarized local barracks members and if it is to “collect” on third party debt scams with a summary judgment farce from the local rubber stamp facade of a “court” to taking your home you will submit or die. And the idiots we are we will go back out into the world looking to acquire more worthless paper and get back “good credit” and fill up the numbers on a worthless statement from the local branch of a central banking system and again tell our fool selves we are “rich”. A people in this condition cannot be saved and so the nation has only a limited time left till we see the total collapse of society.

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