How do collection agencies work?

[Rael]

I'm a good bill payer, but have recently been annoyingly entertained for the past few months getting called by a third party collection agency when my payment isn't in their hands by their due date (let's just say the first of the month).

Their policy is if the payment isn't there by two days after, they start to call to ask why it is late and ask if I'd like to pay it over the phone (to which I always answer no). As a customer, I am not charged a late fee until the 15th. So, their definition of late and mine are two different things.

There's this gap of 12 days every month between the third and fifteenth where the collection agency calls several times a day (I've spoken to them three times today already). There HAS to be a significant cost to these calls, which I propose they just change my due date to the fifteenth every month and be done with the calls. But that would cost me $10 to do.

Let's say an account collector makes approximately $13.00/hr (I did some minor Google research). They call me three times a day for ten days every month on a ten minute call (I explain the situation to them every call. Believe me, it takes at least ten minutes (when I'm here to answer)...also, I get calls at work and sometimes have time to keep them on the phone). So I'm using ten minutes as a base reference time, even if it is not entirely accurate.

10 minutes x 6 calls = $13.00/hr. (minus employee time away from the desk)
6 calls @ 10 minutes = 1 hour of labor @ $13.00/hr.
Every month = 12 days = 36 calls = 6 x $13.00 = $78.00 to call only me.
$78.00/month x 12 months = $936/year (not to mention their phone bill)

How many people (other than me) in the entire U.S. are in the situation that they want to delay payment to a date after their due date but prior to getting a penalty fee?

100? = $936 x 100 = $93,600/year
1000? = $936 x 1000 = 936,000/year
5000? = $936 x 5000 = $4,680.000/year
25000? = $936 x 25000 = $23,400,000/year

Not an economics expert at all, but it bothers me that these companies can't see the opportunities to save money by just switching a due date to align better with debtor requests to pay them. I pay them before it's late every month, and pay them multiples of their minimum every month.

Just a thought. Am I off here?

 

[czygvtwkr]

Interesting, I missed a credit card payment one month cause i laid the bill down in my garage and forgot about it and didnt realize it till the bill the next month came.

 

[BS Gal]

My credit card company let me pick the day to pay it. I pay it on line that day. The company that holds my car loan, however, will let me pay on line for a mere service charge of $15....I don't THINK so. I have to mail them a check every month. It's the only bill I pay with a check. I don't understand their thinking.

 

[JEB]

Rael--Are you sure they're legit?
Sounds kind of like the pop-ups that claim your computer has a virus, 'Buy our virus cleaner.'
I would hang up on them and see if the calls drop off.

 

[Rael]

My credit card company let me pick the day to pay it. I pay it on line that day. The company that holds my car loan, however, will let me pay on line for a mere service charge of $15....I don't THINK so. I have to mail them a check every month. It's the only bill I pay with a check. I don't understand their thinking.

This is exactly what I'm asking them to do. Every month. I'm going to write a letter to their account management to formally request it with two conditions...1. no charge for the switch, and 2. stop the damn calls.

Rael--Are you sure they're legit?
Sounds kind of like the pop-ups that claim your computer has a virus, 'Buy our virus cleaner.'
I would hang up on them and see if the calls drop off.

Oh yes, they're legit. I know when the payment is due, and acknowledge it being past their due date. I just never let it go past the date when I get a late fee, which is 14 days after it is due. Not answering the calls doesn't work, they keep calling back at all times during the day sometimes up until around 7:00 p.m.

 

[vince77]

$10 to stop these calls?........sounds like money well spent to me....why spend all that time on the phone. Is your time worth so little?

 

[jsouthan]

I'm a good bill payer, but have recently been annoyingly entertained for the past few months getting called by a third party collection agency when my payment isn't in their hands by their due date (let's just say the first of the month).

Their policy is if the payment isn't there by two days after, they start to call to ask why it is late and ask if I'd like to pay it over the phone (to which I always answer no). As a customer, I am not charged a late fee until the 15th. So, their definition of late and mine are two different things.


Just a thought. Am I off here?

I understand your thinking in regards to the late fee, however you might want to make sure that this is not being reported to the credit agencies as a late payment every month. If it is past the due date on the account, then you are paying late every month, even if you are not being assessed a late fee until 15 days later. I do get your point, I'm just saying that you might want to make sure that your credit is not taking a hit just to hold onto your money another 2 weeks.

 

[dawn]

I'm a good bill payer, but have recently been annoyingly entertained for the past few months getting called by a third party collection agency when my payment isn't in their hands by their due date (let's just say the first of the month).

Their policy is if the payment isn't there by two days after, they start to call to ask why it is late and ask if I'd like to pay it over the phone (to which I always answer no). As a customer, I am not charged a late fee until the 15th. So, their definition of late and mine are two different things.

There's this gap of 12 days every month between the third and fifteenth where the collection agency calls several times a day (I've spoken to them three times today already). There HAS to be a significant cost to these calls, which I propose they just change my due date to the fifteenth every month and be done with the calls. But that would cost me $10 to do.

Let's say an account collector makes approximately $13.00/hr (I did some minor Google research). They call me three times a day for ten days every month on a ten minute call (I explain the situation to them every call. Believe me, it takes at least ten minutes (when I'm here to answer)...also, I get calls at work and sometimes have time to keep them on the phone). So I'm using ten minutes as a base reference time, even if it is not entirely accurate.

10 minutes x 6 calls = $13.00/hr. (minus employee time away from the desk)
6 calls @ 10 minutes = 1 hour of labor @ $13.00/hr.
Every month = 12 days = 36 calls = 6 x $13.00 = $78.00 to call only me.
$78.00/month x 12 months = $936/year (not to mention their phone bill)

How many people (other than me) in the entire U.S. are in the situation that they want to delay payment to a date after their due date but prior to getting a penalty fee?

100? = $936 x 100 = $93,600/year
1000? = $936 x 1000 = 936,000/year
5000? = $936 x 5000 = $4,680.000/year
25000? = $936 x 25000 = $23,400,000/year

Not an economics expert at all, but it bothers me that these companies can't see the opportunities to save money by just switching a due date to align better with debtor requests to pay them. I pay them before it's late every month, and pay them multiples of their minimum every month.

Just a thought. Am I off here?

Interesting, I missed a credit card payment one month cause i laid the bill down in my garage and forgot about it and didnt realize it till the bill the next month came.

Rael--Are you sure they're legit?
Sounds kind of like the pop-ups that claim your computer has a virus, 'Buy our virus cleaner.'
I would hang up on them and see if the calls drop off.

HSBC is famous for that! I have several credit cards through them and for some unknowing reason I always tend to forget my Davids Bridal and my Amercian Express payments with them. I also will get a call within 5 days past the due date and as always they agree to waive the late fee if I pay by phone. I have never had any other credit card do this (call so soon after missing the payment), but HSBC, oh yeah!

 

[Gwydion]

My new apartment complex requires payment on the first of the month. If it is the second, they force you to pay with a money payment (is that what its called?) If its past the fifth, then they take you to court and kick you out.

The problem is, in addition to your rent, they also require the water/sewage/electricity bill to be paid in the same exact manner....which doesn't get delivered to the apartment until the week before its due.

 

[itsbob]

I understand your thinking in regards to the late fee, however you might want to make sure that this is not being reported to the credit agencies as a late payment every month. If it is past the due date on the account, then you are paying late every month, even if you are not being assessed a late fee until 15 days later. I do get your point, I'm just saying that you might want to make sure that your credit is not taking a hit just to hold onto your money another 2 weeks.

If you look at your credit report, under late payments it lists.. or has a box/ legend for more than 30, more than 60 and more than 90 days late. I don't think there is any box for 3 days late.

Granted it's been awhile since I've seen my credit report, but I do think this is the case.

 

[GWguy]

The issue is that for each day your payment isn't in their hands, they are losing money. Not just the dollar amount you owe, but also for the accounts that make money off your account. In today's economy where every dollar lost means even worse margins, dropping stock values and missed projections, you can be sure that they will call and pester you. It may not be reportable as "overdue" to the credit companies, but they are losing money just the same.

I've found that if it's a once in a blue moon thing, nothing is said. If you are just 1 day late consistently, red flags are raised all over the place. Happens with my satellite bill. For some reason, it's due on a different day than other bills, so it gets misplaced often. If it's 3 days overdue, I get emails and phone calls.

 

[Chasey_Lane]

I've found that if it's a once in a blue moon thing, nothing is said. If you are just 1 day late consistently, red flags are raised all over the place. Happens with my satellite bill. For some reason, it's due on a different day than other bills, so it gets misplaced often. If it's 3 days overdue, I get emails and phone calls.

How do you pay bills? I use BOA Bill Pay. It's easy and convenient, plus it saves me from writing a check.

 

[GWguy]

How do you pay bills? I use BOA Bill Pay. It's easy and convenient, plus it saves me from writing a check.

Depends on the bill. Mortgage and insurance are auto-deducted, credit cards I pay on-line, the balance I still like to see the invoice before I write the check. Just never looked into the bill pay services. Kinda prefer to do that myself, I guess for my own peace of mind.

 

[sockgirl77]

My new apartment complex requires payment on the first of the month. If it is the second, they force you to pay with a money payment (is that what its called?) If its past the fifth, then they take you to court and kick you out.

You have to have 3 judgements against a tennant before you can evict them.

 

[Chasey_Lane]

You have to have 3 judgements against a tennant before you can evict them.

THREE judgements? Is that like three months of non-payment?

 

[sockgirl77]

THREE judgements? Is that like three months of non-payment?

3 judgements in one year, not necessarily in a row. Oh and yes, that means months of non-payment. I used to do this crap for a living.

 

[Chasey_Lane]

3 judgements in one year, not necessarily in a row. Oh and yes, that means months of non-payment. I used to do this crap for a living.

Screw that! You should be able to evict someone after they become 30 days late.

 

[sockgirl77]

Screw that! You should be able to evict someone after they become 30 days late.

Actually, I think after 30 days you may be able to boot them out if there is no payment. But now I can't remember. I was speaking if you get the judgement against them and they pay it. Let try to find the link I used back then for the laws.

Now, in Florida if you are 5 days late you can be evicted within 24 hours. I remember seeing my neighbor fractic every other month.

 

[Tilted]

THREE judgements? Is that like three months of non-payment?

If someone doesn't pay their rent by the time it is due you can go to the courthouse and fill out the paperwork to get a judgement of non-payment. Usually the next week you get a court date to actually get that judgement from the court. A week after getting that judgement you can begin the eviction process which might take a couple days or a couple weeks depending on the availability of the deputy whose in charge of overseeing evictions.

I think what sockgirl77 is referring to, is that you can't go through with the eviction if they pay the amount due before you finish the process (that means all of their possessions out of the premises). If, however, you go through the process and get three judgments against them within a year, you can choose not to accept their payment and evict them anyway the third time around.

In theory you can have someone evicted within 3 weeks if the timing falls just right.

Atleast, that is how it used to work in Maryland. If it has changed in the last 10 years I could be completely wrong.

 

[Rael]

I understand your thinking in regards to the late fee, however you might want to make sure that this is not being reported to the credit agencies as a late payment every month. If it is past the due date on the account, then you are paying late every month, even if you are not being assessed a late fee until 15 days later. I do get your point, I'm just saying that you might want to make sure that your credit is not taking a hit just to hold onto your money another 2 weeks.

If you look at your credit report, under late payments it lists.. or has a box/ legend for more than 30, more than 60 and more than 90 days late. I don't think there is any box for 3 days late.

Granted it's been awhile since I've seen my credit report, but I do think this is the case.

Nah, I'm not worried about the credit report. I always pay bills in the month due. And I understand the more than 30-60, etc metric. I just wish they'd realize how much they probably spend following up on reliable customers.

GWGuy, I read what you said and understand, just didn't quote you.