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Publicly Humiliate Non-Paying Debtors!User Forum Topic
Submitted by michael on October 11, 2008 - 5:28pm
Wall Street Journal Spain's Showy Debt Collectors Wear a Tux, Collect the Bucks By THOMAS CATAN El Cobrador del Frac, it says on the side of his case, in large capital letters: "The Debt Collector in Top Hat and Tails." The neighbors need no explanation. Mr. Llan is making his latest call on Spain's legion of delinquent debtors. "There's been a huge growth in this business," Mr. Llan, a former taxi driver, says as he demonstrates the approach he takes on house visits. "People just can't pay their debts." As Spain's once-thriving economy slides toward recession, debt collectors say they are doing a roaring trade. The country's creaking legal system is overwhelmed with cases, so many companies say the only way to get people to pay is to shame them in front of the neighbors. Humiliation is a powerful motivator in a country where people's honor and public image are paramount concerns. El Cobrador del Frac claims a success rate of more than 60%. "The idea is to make the delinquency public," says Juan Carlos Granda, a director at El Cobrador del Frac, which has been in business for two decades. "We have our professional uniform like anyone else," he adds. Other companies in the fast-growing field include The Scottish Collector, which threatens to send a bagpipe player in highland dress to debtors' homes, and the Monastery of Collection, whose employees arrive decked out as Franciscan friars. Others dress as bullfighters, Zorro or the Pink Panther. "In times of crisis, companies like ours sprout like mushrooms after the rain," Mr. Granda says. Not all cases call for costume. Sometimes, instead, the collector simply phones the neighbors. "I want the people around you to say: 'The debt collector came looking for you.' It hurts your public image," Mr. Granda says. Until it soured this year, Spain's economy was on a 14-year tear -- the single largest generator of jobs among the 15 countries that use the euro as currency. House prices tripled in a decade as Spaniards binged on the wave of easy borrowing that followed the country's adoption of the euro in 2002. After amassing a mountain of debt, Spaniards now find themselves squeezed by rising inflation and mortgage rates. Bank-loan defaults jumped by a third in the month of July, hitting a 10-year high. Unemployment is at 11.3%, the highest in the European Union. El Cobrador del Frac says its business has risen by a third this year and that it is hiring 150 new collectors in its 10 offices in Spain and Portugal. Hidden away in a rundown corner of Madrid's financial district, its head office is a hive of activity. Banks of telephone operators take calls from clients. The decor includes hunting trophies hanging on the walls -- stuffed heads of antelopes, lions and grimacing hyenas. "Bad debtors," Mr. Granda jokes. He recounts one of his proudest successes. El Frac, as the company is known, was pursuing a wealthy Madrid couple who hadn't paid the bill for a lavish wedding reception attended by hundreds. So one of Mr. Granda's men obtained the guest list. "We called two or three people on the list and said: 'We're charging you €500 for the chicken you ate, for your part of the wedding cake,' " Mr. Granda recalls. The debtors paid up, he says. Spanish debt collectors insist they provide a vital service for small businesses, given that it can take years for a claim to wind its way through the courts. Not everyone is convinced. One group of former El Frac employees has set up a firm, The Debtor's Defender, in opposition to the collectors. The collectors are bullies, says Pablo Camacho, its manager. "They overstep the line, and that's where we come in." He says his group has been able to win several court judgments against collection agencies, including €6,000 several years ago against El Cobrador del Frac after it was deemed to have harassed a restaurateur who owed money, shadowing him in costume as far as his son's school. (Privacy laws protect the identity of the restaurateur.) "They invaded the son's right to privacy and humiliated him in front of his professors and colleagues," Mr. Camacho says. Mr. Granda of El Frac says he doesn't recall the case. He is, however, familiar with Mr. Camacho. "We fired him," Mr. Granda says. Mr. Camacho says he wasn't fired, but quit. Spain's Association of Collection Agencies doesn't admit the shaming debt collectors into its ranks, according to José María Torres, the association's general secretary. "They are not viewed positively," he says. U.S. law prohibits harassing alleged debtors with tactics such as telling friends or neighbors about their bad debts. Similarly, in the U.K., publicly humiliating debtors until they pay up would be considered unfair practice. There are worse tactics out there, says a spokesman for Citizens Advice Bureau, a U.K. consumer-advocacy group. "We've also heard of debt collectors using live bears in Russia," she says. Mr. Llan says his method basically amounts to reminding people politely that it's time to cough up the cash. Their response isn't always equally polite. "Yes, I have been threatened," he says. "You know, 'Get out of here or I'll break your face,' that kind of thing." —Dionne Searcey contributed to this article
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Shaming people for not paying back their debt. That's so.... un-American.
Well, it beats the old school cure of selling the defaulting debtor into slavery.
The US better wake up to the fact that we have a default crisis that's causing a credit crisis.
Maybe we can get all the CEO's from the I-banks in front of them. Oh, wait, they just did this in congress last week. And we got to hear about the $100M bonuses they got while they stiffed everyone. Now that's American!!
Just wait until they are in camps and the Hannity, Limbaugh, O'Reily crowd is cheering it on. It's coming. You should expect to see a surge in right wing media about how the poor people who can't pay there debts need to be 'rehabilitated' as things get worse and people are looking for scapegoats.
We can put them in a ring and have them fight to death, put it on cable. The public will eat it up. Huge profits for the corp-gov-owned media.
We've had a certain kind of economy in this country since WW2. If we've become a country where repaying debt is considered equivalent to enslavement, or only really obligatory if the debt was used to purchase assets, and only if the assets have risen in value, then we will have a different kind of economy in the future.
People elsewhere have been lending us lots of their money. Would you lend your retirement savings to the neighbor who says he might pay you back if the bets at the races all go his way?
"Maybe we can get all the CEO's from the I-banks in front of them. Oh, wait, they just did this in congress last week. And we got to hear about the $100M bonuses they got while they stiffed everyone. Now that's American!!"
Yeah, it was those bad CEOs that went into the kitchen tables of all those debtors and forced them to refinance their homes to buy the Mercedes and take the exotic vacation. Yeah, they're the bad guys.
Get real. You borrow money, pay it back.
the u.s. is gonna default in the next 12 months. get real. we wont pay it back...unless we get good terms...
I can't say that I can differentiate between the home debtor that refied out all their equity and spent it on toys and the I-bank chief that head every chance to sell assets to stay afloat, but ended up in BK instead. They both deserve to be followed by annoying people in Pink Panther suits, as I see it.
The US can't really default since we borrow in dollars. We can just print more.
US Govt should be suing all those SOB's for shareholder fraud. Not the least of which is that POS Raines!
HereWeGo, I agree with you. But do you think that people who wrote a check for $700,000 for an ordinary middle-class home are not also fully responsible?
I think there was a very widespread readiness to borrow, with almost no commitment to repaying, unless repaying was painless because the house price went up. House prices were in Monopoly Money. Everything else was in real money. I knew many people who thought nothing of adding another few hundred thousand dollars to their house price budget, and then would buy cheaper ice cream to save $0.75. That's because they never planned to repay the loan from their income. I think our problem isn't fixed until that mindset changes. Many economists, regulators, politicians, and ordinary people still haven't come to terms with the fundamental, painful, truth: House prices aren't right-sized until almost all buyers can actually pay off the loan out of their income.
all those debtors and forced them to refinance their homes to buy the Mercedes and take the exotic vacation. Yeah, they're the bad guys.
See, Michael is going to lead the way for the enslavement. Maybe they will let you have a cattle prod? Would that make you feel good?
Regarding that stereo typical description. What percent of the people walking away do you think that actually is. Some people realized they made a bad deal and are walking away out of a personal responsibility to their own finances. I encourage people to walk away all the time. So maybe I am the bad guy. That description is propagated to give you a distraction. To feel better than somebody and not feel stupid how we were all just fleeced by our wonderful leaders.
Heck, they were all cheering it on. Greenspan in 04. Bush said it was his tax cuts. Economist was running covers.
But Michael thinks that kind of predation is good. To take advantage of people like that and if they couldn't figure out it was a scam then they must pay.
Maybe people that have been in banking since forever know EXACTLY what is going to happen you offer free money and infinite wealth to the masses.
You see Michael, those people are as easy to trick as you are. You just did not get tricked by the housing scam. Good job, you get a gold star feel the superiority. Yeah a few poor people that were irresponsible took down the whole western worlds banking system. Get a grip man.
I agree with you as well, patient. Defaulters are defaulters, perhaps with the exception of those who are driven to BK by medical bills or the like.
Too many Americans are defaulting on student loans, credit cards, auto loans, and of course mortgages. Perhaps they think they're sticking it to "the man." I wonder if they'll still think that once their standard of living crashes.
The thing that's really unfortunate is that everyone is being dragged down into the profligates' abyss.
Too many Americans are defaulting on student loans, credit cards, auto loans, and of course mortgages. Perhaps they think they're sticking it to "the man." I wonder if they'll still think that once their standard of living crashes.
The thing that's really unfortunate is that everyone is being dragged down into the profligates' abyss.
We'll drink to that, HWG.
arraya, thanks for the Gold Star - much appreciated. I give you a platinum star. I'm afraid that based on your comments, you feel the sense of superiority.
I believe people are capable of making their own decisions. You see people as being easily tricked - nice way of saying people are stupid and you're the smart one.
I think all people are plenty capable and I don't feel any superiority. I've made mistakes, sure. I paid the price, absolutely. Why wouldn't I expect the same of others.
Enslavement is a powerful word. I'm fairly certain that some would object to the comparison of those who owe money to the hardship experienced by actual slaves.
student loans. I've almost paid mine off after 15 painful years. but today, people are graduating med school, law school with 200-250k plus in loans. it's tough to make a go of it for some. it could turn out to be a bad bet. what if tuition kept going up as everything deflated? What if people got out of school routinely with a million in debt? at some point, wouldn't it just be rational to say fine, I'll get the degree, society tells me i need it to get ahead, i know i'll never be able to pay off the loan,I'll default, then you can garnish my salary. there's only so much they can take, 25% or so. if your monthly payment is $5,000 a month and you take home $5,000 a month, it's not possible you can pay your loan. yeah, you took the debt on willingly, but doesn't society have some obligation to have tuition vaguely match up with the economic value of the degree? or at least be forbidden from putting out any propaganda that the degree is worth something and is not a liability? should there be a disclaimer or warning on your tuition statement, something like "WARNING: this debt you are incurring is toxic. it is unlikely you will ever be able to pay it back based on current salaries." Maybe this is where it's all gone to. the debts become crazy, speculative, bear no relation to reality...and that makes people say what the heck, why not...
I realize irony is your intention, arraya, but the unfortunate truth is that your statement is correct, with the substitution of "many" for "a few". All of the trillions being lost are indeed due to non-repayment by Joe Homeowner of the loan he chose to take. Add it up over tens of millions of borrowers, and you've got the entire financial world and economy in a tailspin.
Was Joe an idiot to take a loan he didn't intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely. Do we move to a system where people who do idiotic things with vast amounts of money evade taking full responsibility for their actions? Our economy will suffer terribly in the long run if we allow that to happen.
scaredycat, home prices went up much faster than incomes because of easier and easier lending that ended up being based on non-repayment from income. The easier money didn't help, because it just led to higher prices. What you're saying is that the same thing is happening with student loans. The obvious solution is to make student loans harder to get. If people had to have realistic limits on their student loans, then higher education costs would stop escalating, just as home prices stop escalating when easy money stops flowing. Price always follows demand. Unlimited money = unlimited inflation.
I agree that people should be educated about repayment of their student loan before they are allowed to take it. Maybe they should be shown a schedule that shows what a level 15-year repayment of their projected end-of-education loans would look like, and what income they would need in order to have that amount to less than 10% of their income. Then ask them to research careers that they can get with their planned education and the incomes to go with them. If they come back with a career plan that makes sense, make the loan. Otherwise, no loan.
Was Joe an idiot to take a loan he didn't intend to repay out of his income? Absolutely. Was Mr Banker / Investor an idiot to make the loan? Absolutely.
Actually, you are dead wrong. The home "buyers" who made out best over the last 8 years were those who didn't put anything down and got either an Interest-Only mortgage or a Pay Option mortgage. Because mortgages are non-recourse, not putting anything down and paying only the interest (or less) allows the "buyer" to take any appreciation upside while sticking any depreciation downside to the bank (by defaulting). Home buyers who got screwed the worst over the last 8 years were those who made down payments as that down payment has now evaporated with home price depreciation.
Likewise, once bankers were able to sell mortgages instead of keeping them on their books, they only focussed on the up-front fee associated with making the mortgage and didn't worry about the quality of the mortgage as it didn't affect them in the slightest.
So unfortunately, bankers and buyers were mostly behaving rationally in the environment that existed over the past 8 years. It'll be up to Obama to change the effed-up incentives that George Bush put in place over the last 8 years.
I think the breeze got it right: If banks/lender/brokers qualified buyers of homes and were willing to lend money accordingly than that in fact means the buyers were qualified. If there was a default to occur, the bank/lender can hardly be blameless since they were willing to provide the purchase money.
Thus, if am the banker and have money that I am lending I would be far more careful in making sure I get the money paid back than the borrower, who can simply walk from the home.
However, what skewed this arrangement was that the banker could easily resell the loan to the financial wizards of Wall Street. Thus, there were enormous incentives for the bankers to sell or refi loans with little consequence they were playing with their own money or be stuck with the bad loans and would lose since they could repackage the loans to other buyers.
If it's acceptable for the state to publicly humiliate people why shouldn't private companies be able to do the same...
http://www.10news.com/news/14571887/deta...
SAN DIEGO -- The California Franchise Tax Board hopes to humiliate debtors into coughing up large amounts of unpaid tax dollars, it was reported Monday.
The board publishes an annual list of the top 250 taxpayers with liened income tax debts that exceed $100,000, including individuals and companies, according to The San Diego Union-Tribune. The list went online last month and included San Diegans among those at the top.
Tax collectors have tried different tactics, from sending letters to garnishing wages and seizing vehicles, stocks, bonds, bank accounts and even safe deposit boxes.
These tactics typically net a tiny fraction of what is owed -- $10.8 million this year out of the total $249 million as of October -- so state lawmakers decided public humiliation might work.
TheBreeze wrote: "The home "buyers" who made out best over the last 8 years were those who didn't put anything down and got either an Interest-Only mortgage or a Pay Option mortgage. Because mortgages are non-recourse, not putting anything down and paying only the interest (or less) allows the "buyer" to take any appreciation upside while sticking any depreciation downside to the bank (by defaulting). Home buyers who got screwed the worst over the last 8 years were those who made down payments as that down payment has now evaporated with home price depreciation."
You are correct. It was smart of the no-downpayment buyers to take advantage of cheap call options on home prices being offered by lenders. It was idiotic of the taxpayers and lenders to permit this to happen. Financial losses now are providing an effective incentive for private investors to require 20% or higher downpayments in the future. But govt schemes are still allowing homes to be bought with less than 20% of the buyer's personal savings at risk. And Barney Frank and Chris Dodd are the prime movers behind this part of the screwed-up system. They won't let go of this lunacy until Democrats like you call them on it.
I'm registered as a nonpartisan. I plan to vote against incumbent Representative Democrat Susan A. Davis since she voted for the bailout. If I could legally vote against Frank and Dodd I would.
I do plan to vote for Obama as I feel he is very intelligent and is a better choice than McCain (McCain being the originator of the brilliant idea to buy every mortgage on an underwater home and reset the principal to the current market price of the home).
I'd like to see the government get out of mortgages and home ownership completely. Just think how cheap house prices would be if FHA, Fannie Mae, and Freddie Mac were eliminated and the Fed mandated that homeowners had to put 20% down. That would be an ideal world for responsible people.
What is interesting about student loans is that they did to the price of education what free money did to the price of housing.
TheBreeze, I'd vote for Obama if I could. (I am not a US citizen.) I am hoping he pursues a Clinton-style fiscal policy, without the Greenspan bubbles. McCain doesn't seem able to understand economics well enough to say no to someone like a Bernanke. Both appear very weak to me, to be honest, since they are still mostly talking about how much more they want to spend, and what they want to do to reward those who were irresponsible.
So it turns out we are not very far apart on key issues. Getting govt out of housing entirely would be the best thing for the economy in 30 years. I could take almost anything in return for that.
So it turns out we are not very far apart on key issues. Getting govt out of housing entirely would be the best thing for the economy in 30 years. I could take almost anything in return for that.
Well I don't think anyone would accuse me of blindly agreeing with TheBreeze (which, by the way, sounds a euphemism for farting) but he is dead on here.
You bemoan, PR, that we are considering stepping into moral hazard land by comparing borrowers to gambling addicts. However, our entire economy is riddled with institutional backstops to personal ruin (eg: bankruptcy, welfare). These are not there because of some sense of American Noblesse Oblige. These exist because they fit well with the goal of sustainable economic advancement. If mass amounts of ruined borrowers are in jail or in bread lines or beholden to creditors, then it is much harder to expand national wealth. Further it is almost impossible to get re-elected.
If the goals of an elected official are a) govern well and b)get re-elected, then moral consequence are not even in the first tier of considerations.
Good post breeze.
Back in May this year, This American Life did a great radio broadcast on how the whole mortgage loan industry spun up and crashed. Fairly balanced account, includes stories of minimum wage workers buying $450k houses on no-proof applications, to the brokers and intermediaries and the banks and all points in between pushing to fill the pipeline with more loans to keep the secondary markets flowing... Really great account of how the mess started and played out. Worth $.95 to download.
Yeah I streamed it while driving to Northern California with wife and critter. Something about Ira Glass's voice just puts babies down.
http://www.thislife.org/Radio_Episode.as...
Its free if you stream it.
Incredibly good and understandable coverage.
This is likely a very effective way to get paid. I loaned a friend a large sum of money and she was supposed to pay me back 31 May. She did not do so, ignored my phone calls, voice mails, and emails. This went on for several months.
When I received an automated "out of the office" response to an email, I decided to call her mother. (She is 35 years old, but that was the only way I could think of contacting her, and her parents know me) That worked, partially, anyway. Three days later and she posted some of the money to paypal. All her correspondence since then, she states "do not call my parents. They do not want anything to do with this."
She still owes me money, but she is no longer blowing me off completely. I still get a bunch of "check is in the mail" stories, so I may have to call her mother again.