That’s one way to describe the business of debt collection in Maine, which has risen precipitously over the last few years and jumped even more since the recession began last December.
“In debt collections, things are real good when times are bad,” said Dave Dodd, president of Credit Service Agency of Maine, which has offices in Morrill and the Bangor area.
Dodd said he works telephones, writes letters and even rings doorbells to collect on debts owed to his clients. But although the demand for debt collection has grown, it doesn’t mean that even the most persistent collectors can show their clients the money if it’s just not there.
“You have to be a real, real good collector when times are bad so that you can do your clients justice,” Dodd said.
And in 2008, times are bad enough to be good for debt collectors.
According to the Maine Bureau of Consumer Credit Protection, there are 809 licensed debt collectors this year. There were 477 licensed collectors in 2003, and the number has gone up each year since.
Those collectors pay the state $400 for a two-year license to try to recover consumer debt, with credit card debt and medical debt leading the way, said William Lund, superintendent of the Bureau of Consumer Credit Protection. Most are “third-party” debt collectors, who work for the original creditor and tend to get paid a percentage of the money they recover. But a growing percentage of collectors are debt buyers, who purchase old debt for pennies on the dollar.
Debt collection is big business.
Vaughn Clark, president of the Portland-based Thomas Agency, deals mostly in health care debt collection. With 40 employees, the company is “very small,” he said.
“We will process about $110 million in bad debt this year, and we are a very, very small player in this business,” Clark said.
The climb in bad debt — and debt collectors — reflects the current state of the economy, Lund said.
“Credit is down, and collection applications are up. This is clearly a sign of the economic times,” Lund said. “Bad news for creditors does equate to increased business opportunities for debt collectors.”
The bureau was established in 1975 to enforce consumer protection laws, including the Fair Debt Collection Practice Act and the Consumer Credit Code. It also is responsible for licensing those who want to become debt collectors in Maine and making sure they adhere to the law when collecting.
According to Lund, in recent years the state has granted an average of 10 new licenses each month. That is changing. In June, his office issued 30 licenses, in August it granted 25, and 29 licenses were approved in October.
Clark has seen a 25 percent increase in business from 2007 to 2008. He has even increased his staff by 20 percent.
“Part of it is the economy, for sure,” he said. “People are losing their jobs and losing their insurance. … When the economy is bad, collection agencies typically see an increase in their sales.”
But it’s not all good news for those who deal in bad debt.
Offsetting the fact that “we’re not recessionproof is the reality that consumers have a limited amount of money to pay their past-due bills,” Clark said.
A tough job
Even in good years, debt collection is difficult.
Brian Donohue, president of Bangor’s Affiliated Collections Inc., said his employees pore over the newspaper obituaries each morning so they won’t make an ill-timed call to a debtor who just lost a spouse or to a mourning family.
And then there’s the low rate of debt collection.
“In a good year, we’re collecting one out of four accounts, which means that three out of four people are telling you where to go and how to get there,” Donohue said. “You have to be a certain type of person who can deal with rejection on a regular basis.”
Sometimes the rejection can feel pretty personal. Dodd remembers the time when he should have been eligible for combat pay.
“I’ve only been hit one time in 41 years,” he said. “An old lady hit me, struck me upside the head. The funny thing was, I wasn’t looking for her. I was looking for her son.”
Another memorable experience came when he doggedly pursued an elusive creditor to his doorstep.
“This is a guy that’d been dodging me for a long, long time. It took me forever to find out where he lived. I finally found out, by asking for his name up and down the street,” Dodd said.
The tracked-down debtor hemmed and hawed, telling Dodd that he didn’t have $600 to pay off the debt.
“His girlfriend came out the door and said, ‘What’s the story?’”
She wrote Dodd a check on the spot.
“I’m one of the few collection agencies that I know of that will actually go out and see people face to face,” he said. “It’s very effective.”
Although debt collection horror stories abound, Clark, Dodd and Donohue all said that treating people with respect is a key part of their success.
“You get more flies with honey than vinegar. That’s the approach we’ve taken,” said Donohue.
Dodd said the “most important trait” in a good debt collector is the ability to be a good listener.
“You have to try to have two-way communication,” he said. “Then you can come up with a solution that will help everybody.”
‘A perfect storm’
In Maine, the majority of companies licensed to collect consumer debt are from out of state, and sometimes even out of the country, in places such as India and the Philippines.
But no matter where the calls and letters originate, they still need to follow Maine and federal debt collection guidelines.
Debt collectors are prohibited from calling at “unusual” hours, such as before 8 a.m. or after 9 p.m., and cannot make empty threats of legal action against a debtor. They are forbidden to call neighbors to discuss the debt, although they are allowed to call once to inquire about the debtor’s whereabouts.
Maine officials take debt collection laws seriously.
That’s a good thing, because something else on the rise is the intensity of consumer complaints about bill collectors.
“It is a very scary time,” Lund said. “To some extent, there is a perfect storm of events coming together. We see this in our dealings with consumers every day.”
He said the complaints he hears follow a sad pattern.
“The consumer says things are going along fine. We had a mortgage, we had car payments, and then fill in the blank: ‘My husband got sick. I lost my job,’” Lund said.
Lots of people could benefit by others’ experiences, he said.
“Should every Mainer be concerned? Absolutely,” Lund said. “Ask what if your employment was interrupted for one month or two months. What would happen? When you’re at the edge, that’s when problems arise.”
All those sad stories can take a toll on staffers at the Maine Bureau of Consumer Credit Protection, who are affected by something akin to post-traumatic stress disorder, Lund said.
“We do what we can,” he said. “If you deal with 10 consumers in a row for a couple of hours, each has different stories.”
He and his staff can inform callers of their rights and refer them to credit counseling services. But Lund, a lawyer who was appointed to his position in 1987 by Gov. John McKernan, would like to minimize the number of people struggling with credit problems in the first place.
“I take offense sometimes when I hear of financial literacy programs,” Lund said. “If creditors had anything to do with the writing of these educational programs, it always has to do with the ‘wise use of credit.’ As opposed to what I think should be the first chapter, which is that you can save money and pay in cash.”