These are the best of times, and the worst of times, for America's debt collectors.
The prolonged economic turmoil has created more opportunity than ever for the profession, even while making it harder than ever to get folks to pay up.
A gathering of debt collectors in Atlantic City this week found many willing to work out payment plans with debtors in which payments of as little as $5 or $10 a month are acceptable.
"It's harder to collect than ever because people are in genuine hardship," said Harry Strausser III, president of the Mid-Atlantic Collectors Association, who has his own collection agency in Bloomsburg, Pa. "With unemployment the way it is and the terrible foreclosures, people are having a harder time making ends meet. There's more potential business, and we're having a tougher time trying to collect it."
Also growing is the number of consumer complaints about debt collectors. The Federal Trade Commission says it receives more complaints from consumers about debt collectors than any other industry. Last year, it received 140,036 such complaints, up from 119,609 in 2009.
"They called me three or four times a day, every day, asking all kinds of personal questions, like am I married, do I have custody of my kids, can my kids pay this bill?" Scott Tillman III, a 53-year-old musician from Oroville, Calif., told The Associated Press in a telephone interview. He said he was harassed over an auto lease for a vehicle he returned to a dealership 15 years ago.
Businesses nationwide placed $150 billion worth of debt with collection agencies last year, Strausser said. Of that total, agencies were able to collect about $40 billion, a figure that has held roughly steady for the past three years.
There are 4,100 debt collection agencies in the United States, employing nearly 450,000 people, and the industry expects to grow by as much as 26 percent over the next three years.
The industry averages about 20 percent recovery on delinquent debt, Strausser said. Several decades ago, it averaged 30 percent.
Sometimes that amount is shared on a contingency basis with the business to which a consumer owes money. Other times, a debt collection agency will buy debt from businesses at a discount and keep whatever it can pry from the debtor. That part of the industry has grown significantly in recent years, collectors said.
The most common consumer complaints against debt collectors involved three big no-nos under federal law: calling a debtor repeatedly or constantly; misrepresenting the amount or status of a debt; and failing to notify consumers of their rights in writing.
About half the complaints dealt with repeated calls from collectors. More than 20,000 people said debt collectors falsely threatened to have them arrested or seize their property, and more than 17,500 said collectors used profanity or abusive language on the phone. Nearly 4,200 consumers said a collector threatened them with violence if they did not pay up.
"The way collection agencies try to get money from people who have less of it is to get more aggressive," said Sergei Lemberg, a Connecticut attorney who represents debtors who feel harassed. "We get cases every day from people who have collection agencies calling them six, seven, 10 times a day. My own mother doesn't call me three times a day."
Tillman, one of Lemberg's clients, told the agency calling him that he did not owe the debt on the vehicle he had already returned. Under the law, when a consumer disputes a debt, the agency is supposed to investigate the situation and if the debt is not owed, halt further collection efforts.
"Then the threats started," he said. "They said, 'We're going to take it out of your Social Security.' Because I'm black, they had someone who was black call me as if they knew me, saying, 'Hey Scotty, man, when you gon' give us our money, man?' One day one of them called and said, 'We're coming down there and we're going to put your ass in jail and take you for everything you've got."
Kevin McNeill, 26, of Modesto, Calif., also got threatening calls for a $500 debt he incurred after a divorce. He was willing to pay it in two monthly installments but said the collector insisted on everything up front.
"I get this call at work, and this guy is just going off, calling me a thief, a criminal, and saying that the sheriff's office would be there in 10 minutes to arrest me in front of my co-workers," he told the AP by telephone. "Then he threatened to call the owner of the company and say, 'Do you know you have a thief working in your finance department?'"
Collectors interviewed this week in Atlantic City said such tactics, aside from being illegal, just don't work.
"Some agencies are into the intimidating side," said Jeff Kotula, a manager with a Scranton, Pa., collection agency who trains others in acceptable techniques. "They try to scare people into paying. We don't do that. We try to explain to people we're helping them get their credit rating back."
Yet, collection agencies are quick to point out that unpaid debt is never truly written off: Someone, somewhere, has to eat it. An industry-sponsored study says debt collectors save the average U.S. household $354 a year in costs it otherwise would have been charged if businesses raised prices to cover losses instead of recovering it through a collection agency.
"Say you own a small flower shop, and someone doesn't pay a $3,000 bill," Strausser said. "That's a big hit for a small business. So next year, you charge more for deliveries or add $5 to the price of an arrangement to try to make up for that lost money."
Kotula said most collection agencies will offer a debtor the option to slowly pay off the debt— as little as $5 or $10 a month in some cases. Some agencies will also offer settlements in which some of the outstanding debt can be forgiven if the rest is paid up front.
"We have a lot of people who want to pay; they just don't know how they can do it and still be able to live their lives," said Hope Palmer, a Pennsylvania collections manager. "The most difficult situation is the person who has been unemployed for several years and can't find a job and can't pay their bills. That's most of our calls."
In those cases, she said, a collector is trained to look for alternatives: Do you have relatives who can help you pay? Do you have a 401(k) account you can tap, or stock you can sell?
"We won't turn away anything," Palmer said. "There is always a way to work something out."
Kotula said his agency never technically gives up on an unpaid debt.
"You never want to count it out," he said. "People's situations can change in three months. They may get a job and they can pay $25 a month."