Chapter #1 out of #12
My story in the debt-collection industry began when I contacted a supposed trustworthy, well-liked debt buyer (we’ll call him “Big Showboat Mike”). I had a portfolio brokered directly from a lender in which I was searching for a joint venture partnership to invest. The broker, Steve, was selling a Casino NSF (or “bad check”) portfolio of large size with some aging (debts were several years old), but the copies of the bad checks to support the portfolio were available. In many situations, the documentation behind many debts (particularly which have been re-traded multiple times) is minimal, so I believed it was a good opportunity. I placed a bid on the paper which was tentatively accepted.
I reached out to several of my contacts to see who had worked similar paper before, and Big Showboat Mike had been recommended to me. Mike and I had some successful dealings and transactions previously, so I entered into this relationship with some proven trust with Mike. In debt collections, quite a few bad businesspeople, get-rich-quick scam artists, and plain crooks exist – but there are plenty of trustworthy people within the business. I thought Big Showboat Mike was one of them.
I presented the details and portfolio information to Mike, and he showed plenty of interest. We discussed a plan which would have his agency attempting collections on the portfolio for 6-12 months, upon which I would have another agency work on it afterward.
It was not long before Mike stopped returning my phone calls. I was trying to see what his opinion of the portfolio was, and I could not get in touch with him. Not long after, I was contacted by the seller stating they had received another bid competitive with mine, and they were going extend time to allow the new bidder to perform their due diligence on the portfolio.
I became suspicious because I had shown the paper to 3 other small groups and I knew there were no other interested buyers. I started calling around, and eventually found out through the seller about Mike’s actions and we resolved the situation – I purchased the portfolio and cut off Mike from servicing it – and it proved to be profitable.
The debt purchasing industry is like few others. It has an easy entry at all levels, rewards success and punishes failure. While there are many – too many – unethical collectors and buyers in the market, many will fail within a few years because unethical business in collections does not pay off in the long run. From my experience with Mike and similar situations, I learned that anyone in debt collections who does not hold to their word in one point will not work in others and that I cannot afford or allow someone multiple opportunities to damage my business or reputation.
Chapter 1 Conclusion: It's not just about getting the money, it's also about making sure that you're working with a reputable company. We never want to be in this situation again and we hope that by sharing our story, others will avoid being cheated as well. Debt Buyers do have rights too! In order to ensure your portfolio is legitimate and free of bad debt buyers like Mike who are only out for themselves (rather than helping us both).