Tap Dancing on a Debt Collector?s Grave

In a business column dated January 20, Baltimore Sun writer Jay Hancock takes the unusual step of reveling in the bankruptcy of a prominent accounts receivable management firm in the midst of an unemployment-driven recession. He may have even called for violence against debt collectors.

Hancock begins his piece, “If anybody was to have made a killing in the economic crisis, it should have been debt collectors. With consumers going bust at the worst rate in decades, who likelier than the debt hounds to score a big recession payday?” (“Debt hounds wind up chasing their own tails,” Baltimore Sun).

A sound premise to those who know little about the business. But for those of us steeped in the minutiae of ARM governance, a laughably absurd notion.

The ARM industry, like any other, depends on the financial stability of consumers. Yes, debt collectors get much more work when consumer credit defaults surge. And yes, consumer credit defaults surge in times of economic crisis. But ultimately, consumers need to have cash to pay off the accounts the “debt hounds” are calling on.

In the last recession – what we now know as a “mini” recession in the early 2000s – consumers had vast balances of home equity to tap. And tap it they did. Every collector in the country was given a talkoff that included at least a suggestion of a home equity loan to free up some cash. But that all went away in a hurry. Now with no equity and in many cases no income, how are consumers to pay their debts? It makes sense that the ARM industry is struggling like any other.

But a discard of solid economic fundamentals is not the major sin of this piece.

Later in the article, when discussing the bankruptcy of debt collection law firm Mann Bracken, Hancock seems to suggest that violence against debt collectors might be an acceptable path to justice.

Mann Bracken, based in Rockville, Md., was last week forced by the state to cease debt collection activities while it, and its parent company, wind down operations in bankruptcy (“State Issues Suspension Order to Debt Collector Mann Bracken,” Jan. 15). As a result, thousands of cases filed by the firm against consumers will be tossed out.

A most welcomed result for Hancock. In fact, so welcomed that he said, “A firebomb tossed into the company’s offices could not have been as effective.”

Now, I’m no dummy. Being in the publishing business, I know that populism always sells (even in an insular industry such as ARM). But to suggest that violence – or at the very least, extreme property damage – could actually achieve a desired effect is insanity.

People take their interactions with collectors very personally. Some handle it well, some do not. But I cannot believe that there are droves of consumers out there wishing physical harm to debt collectors and their offices. But maybe I’m wrong and Hancock is right: we’re at a stage where people are simply hungry for blood.