Debt collection is a huge industry these days with 30 million Americans having an average of $1500 in collections. Payday loan collectors have become part of the debt collection industry that spends countless hours making phone calls, sending emails, mailing letters and searching for debtors on the Internet and social media sites.
When a debtor goes into default with their payday loan, payday lenders attempt to collect on that debt the same way a credit card auto loan collector would. First they call or send a letter, then when you don't respond they continue to call. If they can't reach you they may call your employer or references listed on your loan application. If they still can't find you they may look at your Facebook or Twitter to find out if you have changed jobs or moved. They will go to great lengths to get you to pay. Not only because the lender wants their money, but because that is how the collector makes their money.
But what is it really like for debt collectors and agencies trying to get people to "pay up"? There's a lot more to payday loan debt collectors and all other collectors that we don't know about.
1. They keep the country's cash flow going- With more than 10,000 debt collection agencies collecting over $8 million per year; our economy would be hit pretty hard if that money wasn't recuperated.
2. The more you pay, the more they make- Debt collectors make bonuses based on what they can get you to pay. Top performers can make over 10K per month. Some may be pushy while others are very nice. Whatever their strategy, they benefit from you paying up!
3. They hold the power! - In most cases, accounts that have gone to collections have a pre-approved settlement rate of about 15%-35% of the total debt. That means a payday loan collector has the ability to settle with you at a lower amount. This holds true for credit cards and other debts.
4. They make take a low-ball offer- Many collections agencies buy debt from creditors for pennies on the dollar which means if you, the debtor, low-ball a settlement offer they may just take it. Try starting at 25 cents for every dollar you owe.
5. They play "good cop, bad cop"- When they have you on the phone they may say they have to get the manager involved to put pressure on you to pay. Don't assume it's because they are going to forgive the debt or make it any easier for you.
6. There is a statute of limitations on debt- There are statute of limitations on collectors filing lawsuits and reporting to credit bureaus (varies from state to state) so check to see if your debt is passed that time and closed. Be aware: if you don't make a payment, no matter how big or small, or even acknowledge the debt, that opens it up again.
7. They love to call you at work- If you are considering taking out a payday loan and aren't sure if you can pay it back, be prepared for a collector to call you at work. This puts extra pressure on you when they call your place of employment. If you tell them not to call you at work anymore, by law they must stop.
8. They are bound by laws- It is illegal for a payday loan or any other debt collector to call you before 8 a.m. or after 9 p.m. They are not allowed to threaten you with arrest either. If you experience this, report them to your state attorney general's office as well as the Federal Trade Commission.