That debt collection exists is an odd thing.
Say you sign a credit card contract. This contract, either explicitly or implicitly, allows the bank on the other side of you to sell its half of the contract to someone else.
Now say you fall behind on your credit card bill. After six months of no payments, the bank is required by law to "charge off" the debt-- that is, move your outstanding debt from the "assets" column to the "liabilities" column. Banks consider these charge-offs a cost of business, they sell the remaining balance for pennies on the dollar, they deduct the difference from their taxes, and they move on.
This is where collectors come in. Debt collectors buy unpaid debts from banks in groups with combined balances of millions and sometimes billions, collect what they can, and sell the rest to a fiercer, slightly more desperate crowd of collectors. This group collects what they can and then sells again, and so on, and so on.
How does this process work? What happens to debts at the bottom of the barrel? At some point, many debts get stolen or double-sold by unscrupulous brokers-- how does this happen? Who are these collectors?
These are the questions Jake Halpern sets out to answer in "Bad Paper," a short but excellent peek behind the curtain of debt collection. The book follows two collectors, a good-cop-bad-cop duo named Aaron Siegel, a silver-spooned Wall Street dropout looking to hit it big in the consumer debt ("paper") market, and Brandon Wilson, a tough-talking ex-con with a drinking problem, gambling addiction, and strict code of honor. Aaron is the money, Brandon the muscle. Aaron the silver-tounged but avoidant Butch Cassidy, Brandon the no-nonsense, action-oriented Sundance. Halpern, with these two as the lens, follows debt, as the book's subtitle promises, "from Wall Street to the Underworld."
The book provides an excellent overview of the debt industry for those without any previous insight into it; for those who have, a lot will be known already, but there is still value to the read: do you know the particulars about how debt is priced, re-sold, vetted, how debtors are labelled internally, what collectors are looking for? If not, read.
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