Response from a CA confused please help

[Anonymous]

Captain John - If that's how it works why don't OC's just send a settlement offer for 25% of the value in sure most would do it plus they wouldn't have to worry about it getting returned to them or anything.

[Anonymous]

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@Anonymous wrote:
Captain John - If that's how it works why don't OC's just send a settlement offer for 25% of the value in sure most would do it plus they wouldn't have to worry about it getting returned to them or anything.

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Well Matt, Let me see if answering your question by posing another question will help you work that out yourself.

 If an OC gets a reputation for settling accounts for 25% of full value, why would anyone pay full price anymore?

Now, I am just simple sailor with quite a few miles under my keel, I am not trying to offer up any business advise, accounting advise, or legal advice.  I was offering up a story based on one of the odd jobs I had round about 30 years ago.  I cant tell anyone why overhead is so high, or why OC’s hire CA’s.  I guess the world sure would be a nicer place if folks could just paid their bills, but sometimes life gets in the way of good people doing that.  And people ignore letters and phone calls from the folks they owe money too.  So once those accounts are written off, someone else is willing to pay pennies on the dollar to collect on them.  

Of course, sometimes OC’s and CA’s offer settlement amounts that are less than paid in full, and that’s between folks to agree amongst themselves.  I cant say as to why or why not folks work it out or don’t.  How about you?  Why do you think that is?

[Anonymous]

To be honest I think OC's like having a reputation of sending accounts to collections. Say you have an account with Sprint and you get together with family for the holidays you get to talking to your crazy Uncle about his life and he mentions how he's been dealing with a Sprint account that's now in collections. It would definitely make most people think twice about not paying Sprint.

I think the issue is many people feel the account won't go to collections it will simply disappear, and this may be the case for some accounts but others they end up in collections and it messes up your credit and you have to get secured credit cards and it just derails a lot of things in a person's life which is a major deterrent.

[Anonymous]

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@Anonymous wrote:

I would guess that they do not have the information you requested. 

They purchased a debt. It probably came to them in bulk with hundreds of other debts.  The information they purchased was limited, it likely did not contain the information you requested.

In order to obtain the information you requested, they would have to reach out to Sprint and engage sprint in a research effort.  This kind of research requires resources on both the CA and OC end.  At a certain $dollar point, it makes more sense for a collection company to abandon the collection than to pay someone to research validity. 

As an example; lets imagine the CA purchased your debt for $0.20 on the dollar.  They have $220.00 invested.  They had hoped to collect $1,100.00 and put $880.00 into their P&O line for the month.  Lets say the overhead (cost of collection), is running 80%  or $704.00.   That would net a profit of $176 if they collect the full amount from you.

Now, you have asked them to research a debt they are not certain is valid or accurate.  They will need to put someone on it, maybe a $20hr clerk.  Rack up 4 hours of research and response time to you.  Take another $80.00 out of cost of collection and they are left with a $96 profit.  

They will speculate that answering your questions will not be the end, they will expect more requests, responses and maybe a negotiation for reduction. 

And all that IF the debt is legitimately $1,100

At some cost/break point, they have determined it is better to get their investment of $220.00 back from sprint than invest in the unknown chance of collecting from you.

Of course, all these numbers are hypothetical, but years ago I spent a few months as a collector.   This isn’t far-fetched for the outfit I was with.

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The telcomms do not generally sell their accounts until they get VERY stale. Instead, they tend "farm them out" to various CA's. OC's are simply not in the business of "buying back" their sold off debts, and a debt buyer cannot force them to take back an account. They WILL take back debts farmed out to a collector, and send it off to another collector, which is most likely what has occurred in this case.

[Anonymous]

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@Anonymous wrote:
Interesting (and that's a high overhead) I hope it does get removed then I'll only have 1 open collections on EQ and 2 on TU and EX.

This would definitely be an early Christmas present for me.

I wonder why most collections companies don't just offer a PFD from day 1 for 50% off then they'd net 30% but I guess there's overhead and this and that.

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You should contact Sprint and see if you can settle the debt directly with them before they send it to another collector.

[Anonymous]

Norman - I contacted them before and they referred me to the collections agency. Also, I don't find the amount of the debt to be accurate $1,100 is insane even 50% of that is crazy for an individual phone bill I might be okay to settle for 15% as another poster did here but I'm pretty sure Sprint won't settle for 15%.

[Anonymous]

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@Anonymous wrote:
Norman - I contacted them before and they referred me to the collections agency. Also, I don't find the amount of the debt to be accurate $1,100 is insane even 50% of that is crazy for an individual phone bill I might be okay to settle for 15% as another poster did here but I'm pretty sure Sprint won't settle for 15%.

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Yes, that is common, if they have sent it to a collector, then they will refer you to them. However if its between collectors they *may* deal with you directly. If they have already sent it to a new collector you have an excellent chance to settle it with them before they report it and it will be gone.