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Bad Paper: Chasing Debt from Wall Street to the Underworld
The Federal Trade Commission receives more complaints about rogue debt collecting than about any activity besides identity theft. Dramatically and entertainingly, Bad Paper reveals why. It tells the story of Aaron Siegel, a former banking executive, and Brandon Wilson, a former armed robber, who become partners and go in quest of "paper"—the uncollected debts that are sold off by banks for pennies on the dollar. As Aaron and Brandon learn, the world of consumer debt collection is an unregulated shadowland where operators often make unwarranted threats and even collect debts that are not theirs.
Introducing an unforgettable cast of strivers and rogues, Jake Halpern chronicles their lives as they manage high-pressure call centers, hunt for paper in Las Vegas casinos, and meet in parked cars to sell the social security numbers and account information of unsuspecting consumers. He also tracks a "package" of debt that is stolen by unscrupulous collectors, leading to a dramatic showdown with guns in a Buffalo corner store. Along the way, he reveals the human cost of a system that compounds the troubles of hardworking Americans and permits banks to ignore their former customers. The result is a vital exposé that is also a bravura feat of storytelling.
Introducing an unforgettable cast of strivers and rogues, Jake Halpern chronicles their lives as they manage high-pressure call centers, hunt for paper in Las Vegas casinos, and meet in parked cars to sell the social security numbers and account information of unsuspecting consumers. He also tracks a "package" of debt that is stolen by unscrupulous collectors, leading to a dramatic showdown with guns in a Buffalo corner store. Along the way, he reveals the human cost of a system that compounds the troubles of hardworking Americans and permits banks to ignore their former customers. The result is a vital exposé that is also a bravura feat of storytelling.
240 pages, Hardcover
First published October 14, 2014
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Displaying 1 - 30 of 136 reviews
August 19, 2016
“I’d be a bum on the street with a tin cup if the markets were efficient.”
― Jake Halpern, Bad Paper: Chasing Debt from Wall Street to the Underworld
New New Journalism about the financial/debt markets is "So HOT right now".
I went into this book thinking it was going to be a bad copy of a Michael Lewis book. Anyway, a friend of mine recommended this highly. She also has a great book out about debt and the poor (How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy), so I overcame my reluctance and read 'Bad Paper'. IT stunned me. A lot of the basics I understood before, but Halpern was able to add detail and texture to the industry and the players. It reads like Dante's Inferno. First Circle (Banks?), Second Circle (Hedge Funds/Debt Buyers?), Third Circle (Fresh Debt Brokers?), Fourth Circle (Large, more reputable Debt Collectors?), Fifth Circle (Mom & Pop Debt Collectors?), 6th Circle (Older/Crap/Bad Paper Brokers?), 7th Circle (White Dope Peddlers?), 8th Circle (Thieves?), Lawyers (9th Circle). I guess it holds up.
Anyway, the book was tighter than I imagined it was going to be. It was measured, well-documented, and its methodology was documented and obvious. Jake Halpern wasn't venturing too far out with his recommendation or his observations. He played a very close narrative game, and it worked well of this book. Sometimes, you don't have to cook the story too much, the story is already there -- waiting to be eaten. Jake Halern did a good balance of being in the story and getting the hell out of the way.
So, next on my list (after I recover from the emotional toil of this book) is Mehrsa Baradaran's book (How the Other Half Banks) and Jayne Meyer's Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right.
― Jake Halpern, Bad Paper: Chasing Debt from Wall Street to the Underworld
New New Journalism about the financial/debt markets is "So HOT right now".
I went into this book thinking it was going to be a bad copy of a Michael Lewis book. Anyway, a friend of mine recommended this highly. She also has a great book out about debt and the poor (How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy), so I overcame my reluctance and read 'Bad Paper'. IT stunned me. A lot of the basics I understood before, but Halpern was able to add detail and texture to the industry and the players. It reads like Dante's Inferno. First Circle (Banks?), Second Circle (Hedge Funds/Debt Buyers?), Third Circle (Fresh Debt Brokers?), Fourth Circle (Large, more reputable Debt Collectors?), Fifth Circle (Mom & Pop Debt Collectors?), 6th Circle (Older/Crap/Bad Paper Brokers?), 7th Circle (White Dope Peddlers?), 8th Circle (Thieves?), Lawyers (9th Circle). I guess it holds up.
Anyway, the book was tighter than I imagined it was going to be. It was measured, well-documented, and its methodology was documented and obvious. Jake Halpern wasn't venturing too far out with his recommendation or his observations. He played a very close narrative game, and it worked well of this book. Sometimes, you don't have to cook the story too much, the story is already there -- waiting to be eaten. Jake Halern did a good balance of being in the story and getting the hell out of the way.
So, next on my list (after I recover from the emotional toil of this book) is Mehrsa Baradaran's book (How the Other Half Banks) and Jayne Meyer's Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right.
November 11, 2014
Over the last 15 years of my legal career, I have handled a lot of bankruptcy and collection matters and the collection agents have always been this sort of faceless, nameless adversary. It has been a true love/hate relationship running the complete spectrum. For a period of time I had developed a good working relationship with a collections attorney where my truly destitute clients could get a fair shake. On the other end of the spectrum was the day I had had enough, and after telling the collection agent the current address of his basement operation, offered to catch a plane out to California and come visit him personally to discuss his repeated abuse of my staff. But none of these experiences gave me the behind the scenes view of the collection industry that Halpern has achieved with "Bad Paper".
Halpern appears to have wrangled a level of access and trust from the insiders that seems unthinkable as the federal government threatens to expand the institutional creep of the CFPB. His unblinking portrayal of some of the individuals that have been on the other side of the table is unvarnished yet still surprising in some regards. In some instances, Halpern almost makes these human stories come alive with an unwelcome sympathy.
Sometimes redundant, often a tad disorganized, Bad Paper may not be destined to become a lasting portrait of the Great Recession. At the risk of revealing my own bias, Halpern missed the opportunity to really plumb the plight of those who are hounded by the industry. It is however, a revealing and surprisingly interesting read. For those of us in the trenches, it is a fascinating journey into enemy territory.
Halpern appears to have wrangled a level of access and trust from the insiders that seems unthinkable as the federal government threatens to expand the institutional creep of the CFPB. His unblinking portrayal of some of the individuals that have been on the other side of the table is unvarnished yet still surprising in some regards. In some instances, Halpern almost makes these human stories come alive with an unwelcome sympathy.
Sometimes redundant, often a tad disorganized, Bad Paper may not be destined to become a lasting portrait of the Great Recession. At the risk of revealing my own bias, Halpern missed the opportunity to really plumb the plight of those who are hounded by the industry. It is however, a revealing and surprisingly interesting read. For those of us in the trenches, it is a fascinating journey into enemy territory.
June 24, 2016
This is the story of how consumer debt gets sold and collected. The author spends time with some of the shadiest companies that collect and how they do it. This system is brutal and exploitative and totally legal. The victims are poor and the perpetrators are just trying to make a buck from a bad system--they are mostly ex-cons. This book is essential reading.
February 19, 2022
"Bad Paper" is about the consumer debt that banks and large companies have failed to collect. After a few months, they sell the debt to large debt collectors. The accounts that the large collectors fail to collect, they sell to smaller collectors. In this bottom feeding underworld, populated by toughs and ex-cons, what's being bought and sold is data: spreadsheets of borrowers' names, addresses, phone numbers, Social Security numbers. It keeps being repackaged and resold, for pennies on the dollar or a fraction of a penny on the dollar. Some of it is decades old. Sometimes spreadsheets are stolen, so two different entities might be trying to collect from the same debtors. Sometimes, through negligence or fraud, debtors who have paid off their debt don't actually have it cancelled, so their data remains on the spreadsheets for other bottom feeders to try to collect.
Debt that is years or decades old often has no "chain of title" - no documentation of the original loan: who supplied the loan, for what, when, the borrower's signature. Of course this doesn't stop collectors at all levels from attempting to collect, but if you're ever taken to court over a debt, you should insist that the plaintiff produce the chain of title and prove their case. Chances are, they won't be able to and the judge will dismiss the case.
Unfortunately, the chapter discussing this was the only interesting chapter. In the other nine chapters the author was too captivated by what he obviously saw as the colorful characters of the rough and dirty debt underworld, alpha male collectors who drift in and out of prison, always in search of paper, their palaver peppered with "fucks" and n-words.
October 19, 2015
3.5 stars rounded up to 4.
Well written, interesting, sometimes rollicking, sometimes depressing view into the world of unsecured debts written off by credit card companies, payday lenders, cell phone providers, and the like, and how those debts are ultimately collected. (The reference to “the underworld” in the subtitle doesn’t relate to the mafia. It’s referring to the sub-legal businesses that attempt to collect these debts.)
The author tracks down this paper from the sellers all the way to some of the debtors to provide a complete picture of the players and the processes. A few interesting people are profiled in depth and lots of others in the system are introduced as well.
It’s a very good bridge book to fill the space when you’re not sure what you want to read next and you need something quick and different.
Well written, interesting, sometimes rollicking, sometimes depressing view into the world of unsecured debts written off by credit card companies, payday lenders, cell phone providers, and the like, and how those debts are ultimately collected. (The reference to “the underworld” in the subtitle doesn’t relate to the mafia. It’s referring to the sub-legal businesses that attempt to collect these debts.)
The author tracks down this paper from the sellers all the way to some of the debtors to provide a complete picture of the players and the processes. A few interesting people are profiled in depth and lots of others in the system are introduced as well.
It’s a very good bridge book to fill the space when you’re not sure what you want to read next and you need something quick and different.
October 10, 2015
I had been listening to This American Life recently, and the name of the show was "Magic Words". The theme of the show was how sometimes there are certain words that are said or mentioned that have unintended consequences. Jake Halpern was interviewed during the show; he told his story of interviewing a couple when they were in small claims court in Georgia (which is discussed in the final chapter of his book). It was fascinating to listen to him tell this story, as he essentially asked the owner of a small debt to "prove it"... prove that what these people owe is actually what they owe. The lawyer in turn puffed out his chest and acted sporadic, but when they went in front of the judge, the lawyer backed down.. because Halpern essentially said "the magic words" (which is the phrase he uses in the book as well.
In college, I was a little reckless with my personal finances, got in a little trouble, and found myself on the receiving end of collection calls. It was, unsurprisingly, an unpleasant experience. I think that's why hearing Halpern on the radio show was so invigorating. "Yes!", I screamed to myself, "Give it to the bad guy!"
Ironically, the lawyer is far from the "bad guy" in this book, which helps explain why this book was so interesting. The first half of the book is dedicated to discussing 2 main characters, an owner of debt (Aaron), and the gentleman he purchases this debt off of (Brandon). You see why they got into the business of purchasing paper (debt), how it can be so profitable, and how it can be such a disaster.
As the book moves on, you start to read interviews with other debtor's, debtee's, and collectors, and see how crazy the industry is. It's scary to know that if you default on a loan, who has access to your private information and how hard it can be to truly rectify a debt.
And so "who" is the bad guy in all of this? It depends on the viewpoint, but it's hard to argue it's not the financier's of this whole industry. Halpern paints a pretty strong picture that some in the world worship at the altar of money, and have no problems (even find some joy) in padding their pocketbooks with the debt's and hardships of others.
It's an interesting read, and an easy one at that.
In college, I was a little reckless with my personal finances, got in a little trouble, and found myself on the receiving end of collection calls. It was, unsurprisingly, an unpleasant experience. I think that's why hearing Halpern on the radio show was so invigorating. "Yes!", I screamed to myself, "Give it to the bad guy!"
Ironically, the lawyer is far from the "bad guy" in this book, which helps explain why this book was so interesting. The first half of the book is dedicated to discussing 2 main characters, an owner of debt (Aaron), and the gentleman he purchases this debt off of (Brandon). You see why they got into the business of purchasing paper (debt), how it can be so profitable, and how it can be such a disaster.
As the book moves on, you start to read interviews with other debtor's, debtee's, and collectors, and see how crazy the industry is. It's scary to know that if you default on a loan, who has access to your private information and how hard it can be to truly rectify a debt.
And so "who" is the bad guy in all of this? It depends on the viewpoint, but it's hard to argue it's not the financier's of this whole industry. Halpern paints a pretty strong picture that some in the world worship at the altar of money, and have no problems (even find some joy) in padding their pocketbooks with the debt's and hardships of others.
It's an interesting read, and an easy one at that.
February 11, 2020
Quick and frightening read about the underbelly of debt in America.
August 23, 2016
It stands to reason that, in a nation with more than 25 Trillion in debt, collecting the debt that goes bad, or is in arrears, would be big business. Collecting "bad paper" is not only big business but often shady business that lives in the shadows and casts a long, dark pall on American culture.
Americans, its people, businesses, and governments, are addicted to debt and have been since the founding of the nation. Remember the Revolutionary War and the Erie Canal? Not possible without borrowing. Debt has built roads, schools, hospitals, highways, airports and railroads. Companies would not be able to build infrastructure that allow them to operate or pay their bills each day without the ability to borrow. But it hasn't been until the 20th century, in particular the late 20th century, that debt permitted most people to enjoy a lifestyle with cars, boats, houses, and toys that sometime make America seem like a steroid induced fantasy.
Jake Halpern chooses Buffalo as the locale of his study of debt and debt collection, and it is a city that could not better illustrate the pain brought on by indebtedness that people cannot repay. The book does not preach or proselytize but illustrates the precarious position of those people who must borrow to eat, pay medical bills, or even look for another job if they are out of work. But Bad Paper is also the story of those who collect the bad debt and the truly bad debt, an industry populated by a criminal lot who have found a legal way to make a living using many of the same cunning that often landed them in jail.
A large part of this book is about how collectible debt is identified, found, bought and sold, and, in fact, so much of debt collection is based on playing the percentages of being able to collect only a small portion of the debt but buying it at a price that reaps large, potential profits.
Reading the book reinforces the wise insights of Elizabeth Warren and the need to rein in debt predators. It also opens up the possibility, I think, of something the author doesn't address, namely that the buying and selling of uncollectible debt is ripe for auction exchange type transactions (much like the stock markets) where price transparency becomes a reality and securities-like regulation a possibility as well as a necessity in a debt burdened world.
Americans, its people, businesses, and governments, are addicted to debt and have been since the founding of the nation. Remember the Revolutionary War and the Erie Canal? Not possible without borrowing. Debt has built roads, schools, hospitals, highways, airports and railroads. Companies would not be able to build infrastructure that allow them to operate or pay their bills each day without the ability to borrow. But it hasn't been until the 20th century, in particular the late 20th century, that debt permitted most people to enjoy a lifestyle with cars, boats, houses, and toys that sometime make America seem like a steroid induced fantasy.
Jake Halpern chooses Buffalo as the locale of his study of debt and debt collection, and it is a city that could not better illustrate the pain brought on by indebtedness that people cannot repay. The book does not preach or proselytize but illustrates the precarious position of those people who must borrow to eat, pay medical bills, or even look for another job if they are out of work. But Bad Paper is also the story of those who collect the bad debt and the truly bad debt, an industry populated by a criminal lot who have found a legal way to make a living using many of the same cunning that often landed them in jail.
A large part of this book is about how collectible debt is identified, found, bought and sold, and, in fact, so much of debt collection is based on playing the percentages of being able to collect only a small portion of the debt but buying it at a price that reaps large, potential profits.
Reading the book reinforces the wise insights of Elizabeth Warren and the need to rein in debt predators. It also opens up the possibility, I think, of something the author doesn't address, namely that the buying and selling of uncollectible debt is ripe for auction exchange type transactions (much like the stock markets) where price transparency becomes a reality and securities-like regulation a possibility as well as a necessity in a debt burdened world.
January 6, 2018
Full disclosure: I actually work in the debt buying and servicing industry, so as a participant of the "Secret World" that Halpern mentions in the title, I'm not exactly a disinterested observer here. Nevertheless, Halpern's book is one that I frequently recommend to new employees at my company for a good overview of the industry and--key here--the way that it USED to be. Since the establishment of the CFPB in 2011, so much of the slimy behavior that Halpern highlights in this book has been cleaned up and the bad actors are few and far between these days.
Halpern's style is engaging and the work reads more like a novel than a nonfiction account (in a good way).
Even so, I would caution readers to carefully discern the author's own prejudice as you read. Calling up people to ask them to pay a debt that they committed to pay isn't an unethical act: it's a critical part of the credit lifecycle in our economy. Credit would be a lot more expensive for everyone if the debt buying/selling market disappeared tomorrow and creditors had absolutely no means to recoup any of the money they lost. There are a lot of hard-working individuals that are a part of this industry who are trying to do their jobs as professionally and kindly as possible. And there are a lot more of those people than the bad actors that Halpern highlights in the book.
Halpern's style is engaging and the work reads more like a novel than a nonfiction account (in a good way).
Even so, I would caution readers to carefully discern the author's own prejudice as you read. Calling up people to ask them to pay a debt that they committed to pay isn't an unethical act: it's a critical part of the credit lifecycle in our economy. Credit would be a lot more expensive for everyone if the debt buying/selling market disappeared tomorrow and creditors had absolutely no means to recoup any of the money they lost. There are a lot of hard-working individuals that are a part of this industry who are trying to do their jobs as professionally and kindly as possible. And there are a lot more of those people than the bad actors that Halpern highlights in the book.
December 30, 2014
I'm not sure how widespread the interest is in the workings of the underbelly of our credit dominated society but if you have an interest, this is a good guide. Some interesting personalities, interesting situations, and a tale broadly told of debt being chased then sold and re-sold from the perspective of regulators, collection agencies - fair and foul - and from the people trapped in the world of payday loans, credit cards accruing huge penalties and punitive interest rates who were crushed in the recent recession. Despite the deceitful tactics of some collectors who threaten legal action (especially on bad paper past the statute of limitation) only attorneys can threaten and follow through with legal action. One interesting tactic that got many cases thrown out and dismissed? Show up and ask for proof. Often they don't have it, but if the debtor does not show up they may find their wages and bank accounts garnished even on debts that have long been paid off or written off. Lot of hard work and research by the author but easy to read. Three and half stars!
February 2, 2016
Think of this as a more lightweight, exploitative complement to the excellent recent Pro Publica series on debt in the black community.
Rather than focus on the companies that prey on people who can't really afford to buy big ticket items, or the desperate people who take out shitty loans and run up huge credit card deals, this focuses on the bill collectors who hassle people over the phone trying to get them to fork over at least a few dollars of what they owe, like wringing blood from a stone.
Come to find out this is a huge—and hugely profitable—business. The people running it are all pieces of shit: shady lawyers, ex-cons, tweakers, etc.., many of whom are quoted here tossing around the dreaded n-word around all willy nilly while describing some of the terrible things they do to get people to pay their bills.
If there was more of a story to this, it might be a classic.
Rather than focus on the companies that prey on people who can't really afford to buy big ticket items, or the desperate people who take out shitty loans and run up huge credit card deals, this focuses on the bill collectors who hassle people over the phone trying to get them to fork over at least a few dollars of what they owe, like wringing blood from a stone.
Come to find out this is a huge—and hugely profitable—business. The people running it are all pieces of shit: shady lawyers, ex-cons, tweakers, etc.., many of whom are quoted here tossing around the dreaded n-word around all willy nilly while describing some of the terrible things they do to get people to pay their bills.
If there was more of a story to this, it might be a classic.
February 1, 2018
A compelling story. I learned about the debt collection industry, and exactly how shady it is-that you could be paying your debt to someone who doesn't own it. Equally shocking was when I learned that if one is sued and taken to court to fight your debt, the best thing to do (Which 90% don't do), is ask the plaintiff to "prove your case", which often times they can't. A lot of touching stories.
My only qualm was the quality of the writing-I think it could have been better. I learned that Buffalo is the capital of debt collection? Why? The author didn't get into that. Plus, when introducing a new person, the author would interject with "Whom I will call by his middle name, Steve". It would have been less distracting if the author wrote in the prologue that some of the names have been changed.
Overall, a good read, however.
My only qualm was the quality of the writing-I think it could have been better. I learned that Buffalo is the capital of debt collection? Why? The author didn't get into that. Plus, when introducing a new person, the author would interject with "Whom I will call by his middle name, Steve". It would have been less distracting if the author wrote in the prologue that some of the names have been changed.
Overall, a good read, however.
July 18, 2016
Amazing expose' detailing the dark world of debt collection. Legislation has helped alleviate some abuses, but additional scrutiny and protections are needed! I still do not understand how debt that is written off by lenders (reducing their taxable income) can sell the discounted debt (for points on the dollar) to others who can then try to collect the full amount plus penalties and interest! The purchasers of this debit work the accounts, sometimes even after the statute of limitations has run out! Quite a shady business at best, on par with drug dealing at worst.
October 28, 2016
If you're looking for an energetic, modestly entertaining character-driven pseudo-crime thriller, this is an excellent choice. If you, as I was, are looking for a gut-wrenching, seismic look at how the poor are being chewed up by a merciless inequitable economic system (in the style, perhaps, of Matthew Desmond's "Evicted"), you'll be disappointed. Halpern is far more focused on the colorful figures who make up the debt collection business, paying only cursory attention to those it affects.
November 10, 2014
I wasn't sure how a book about debt would be compelling, but it was! The circumstances of those collecting on "bad paper" as well as the circumstances of those who are being called, are fascinating and human. Halpern writes about real people with journalistic distance, but also with humanity. Enlightening and informative.
January 31, 2018
I knew that the debt collection world was shady, but I never would have imagined this Bizarro universe that Jake Halpern reveals featuring fly-by-night collections offices staffed by career criminals and people on the streets of Buffalo dealing flash drives containing debtor information instead of drugs! Definitely worth a read if you want some insight into how debt impacts us all.
March 6, 2015
If you want to gain an insight in to how the debt collection world works, read this book. I had no idea how scummy and weird the whole mess really was until I listened to this audiobook. Absolutely fascinating.
November 8, 2014
Fascinating but also slightly depressing book. Made me wonder if sometimes we treat debtors in this country worse than criminals. Also made me wish we spent more in school teaching budgeting and basic finance to keep people from making mistakes that can haunt them for a long time.
May 27, 2015
A look at the US debt collection industry, by looking at the careers of several players. Interesting, a lot of stuff I didn't know. A scummy industry, but the people involved are characters. The book is a fast read, and fascinating.
June 20, 2016
kind of lame for several slate authors to pimp this book in their columns, and then you find out in the Acks that the author's tight with emily bazelon. a quick, light read on the plane -- nothing particularly unexpected or deep here, though.
December 18, 2015
I absolutely loved this book. It's short and very entertaining, but from that 240+ pages you will know a lot about people behind that collection calls and victims they are chasing.
July 12, 2016
Paul S. says, "A gritty look into the world of buying and selling debt."
August 25, 2022
Interesting look inside the world of debt collection but hard to follow with too many insider terms and bouncing timeline.
April 15, 2025
Nothing earthshaking, more of a timid look into the problem of debt collection in the States. Not a major literary achievement, either, so three stars it is.
December 2, 2014
Makes you really wonder about the purpose of even having debt collection.
First, a disclaimer. The organization of this book is a bit odd. It seems to start with a premise about tracking what's going to happen with a specific story and one character, but then ends up being a bit all over the place. This gives the book an odd feel like it needed some reorganization or tweaks or something. That said, it's short so not a deal breaker.
Debt collection work is an ugly business. It's about getting people to pay money on obligations they took out and never fulfilled. But what really makes it worse is that usually by the time it gets to a debt collector the person who originally extended the credit has taken a loss on it and forgotten all about the debts. They've sold it for pennies on the dollar and walked away. Now that person is going after borrowers to basically see whatever they can get from it, knowing that essentially anything they take in will be straight profit.
The locus of a lot of this activity is apparently Buffalo. So the book really effectively charts how companies go about trying to get people to pay. This includes a lot of tactics that really don't seem great, and doing things like taking settlement offers on the debt.
Not surprisingly, a lot of this work also leads to questionable behavior. People will steal names and information from other collectors so debtors get hounded twice with payments made to one party not necessarily ever showing up. The quality of paperwork is really poor, meaning someone may not even actually be on the hook for the amount shown. And some even do some awful things like pursue debts that are past their statute of limitations for collection, knowing if the borrower pays anything on that debt it can reset that whole clock. It's like an exploitation of people's basic desire to not be deadbeats with really troubling results.
What's perhaps the most ire inducing though is the court element of this. If a collection agency figures out that the borrower does have some assets to be seized or a steady paycheck, it can take the debtor to court and ask for wage garnishment. It's actually hard from a legal standpoint to win these cases, but collectors almost always come out victorious. That's because borrowers rarely show up to defend themselves. And when they do they get pressured into admitting the debt is theirs, which makes them culpable. This gives a lot of collectors an easy out in situations where they may not actually have clear chain of title to prove that the borrower actually does owe that debt. It also produces an amazing story about one debtor who actually shows up and just asks to know more about the debt, causing the lawyer to drop the case right away since they can't even handle that basic issue.
All of this circles back around to the bigger question--what's the point of even bothering to collect at this point? Sure, it seems like it's worth an effort to pursue debt when it at first goes delinquent. But something that's been bad for years really seems like it's more ripe for abuse in its pursuit than effective resolutions. And the whole exercise also ignores the fact that the lender on the front end made a conscious choice to extend the credit. It presumably altered the interest rates and terms to reflect perceived risk so it was a good bet for them. And when it turned out not to be and they wrote it off, what's the point in continuing? The seemingly endless pursuit of this seems like a better way to just keep some jobs going in Buffalo (in an industry that doesn't even seem all that profitable) with who knows what consequences for lower-income people. It will be interesting to see what the CFPB does over time to clean this up.
First, a disclaimer. The organization of this book is a bit odd. It seems to start with a premise about tracking what's going to happen with a specific story and one character, but then ends up being a bit all over the place. This gives the book an odd feel like it needed some reorganization or tweaks or something. That said, it's short so not a deal breaker.
Debt collection work is an ugly business. It's about getting people to pay money on obligations they took out and never fulfilled. But what really makes it worse is that usually by the time it gets to a debt collector the person who originally extended the credit has taken a loss on it and forgotten all about the debts. They've sold it for pennies on the dollar and walked away. Now that person is going after borrowers to basically see whatever they can get from it, knowing that essentially anything they take in will be straight profit.
The locus of a lot of this activity is apparently Buffalo. So the book really effectively charts how companies go about trying to get people to pay. This includes a lot of tactics that really don't seem great, and doing things like taking settlement offers on the debt.
Not surprisingly, a lot of this work also leads to questionable behavior. People will steal names and information from other collectors so debtors get hounded twice with payments made to one party not necessarily ever showing up. The quality of paperwork is really poor, meaning someone may not even actually be on the hook for the amount shown. And some even do some awful things like pursue debts that are past their statute of limitations for collection, knowing if the borrower pays anything on that debt it can reset that whole clock. It's like an exploitation of people's basic desire to not be deadbeats with really troubling results.
What's perhaps the most ire inducing though is the court element of this. If a collection agency figures out that the borrower does have some assets to be seized or a steady paycheck, it can take the debtor to court and ask for wage garnishment. It's actually hard from a legal standpoint to win these cases, but collectors almost always come out victorious. That's because borrowers rarely show up to defend themselves. And when they do they get pressured into admitting the debt is theirs, which makes them culpable. This gives a lot of collectors an easy out in situations where they may not actually have clear chain of title to prove that the borrower actually does owe that debt. It also produces an amazing story about one debtor who actually shows up and just asks to know more about the debt, causing the lawyer to drop the case right away since they can't even handle that basic issue.
All of this circles back around to the bigger question--what's the point of even bothering to collect at this point? Sure, it seems like it's worth an effort to pursue debt when it at first goes delinquent. But something that's been bad for years really seems like it's more ripe for abuse in its pursuit than effective resolutions. And the whole exercise also ignores the fact that the lender on the front end made a conscious choice to extend the credit. It presumably altered the interest rates and terms to reflect perceived risk so it was a good bet for them. And when it turned out not to be and they wrote it off, what's the point in continuing? The seemingly endless pursuit of this seems like a better way to just keep some jobs going in Buffalo (in an industry that doesn't even seem all that profitable) with who knows what consequences for lower-income people. It will be interesting to see what the CFPB does over time to clean this up.
January 11, 2020
I thoroughly enjoyed this book. It was very eye-opening, thorough, and educational. Mr. Halpern is apparently a reporter, so he did an excellent job of talking to everyone involved in this business. Well, almost everyone.
Bad Paper is almost like two books. It starts out with a Wall Street banker who decides to make his own way in the world via the debt collection business. What makes it further interesting is the various ex-cons who surface. Mr. Halpern does a great job writing biographical info in these characters.
But halfway through the book the fireworks are mostly done and he gets down to the serious task of learning the debt collection industry from the inside out. That was fascinating to me because I'm personally interested in mortgage notes, a related field. I feel that the ins-and-outs of the unsecured consumer debt world were quite relevant. But those just looking for an interesting story may find this part dry.
Mr. Halpern does a great job exposing the dark underside of this business, which at bottom preys on the unsophisticated, working poor. For myself, I learned if I ever get sued by a debt collector - and I've had reason to be called by a few such people - to show up in court(!), because the reality is that these debt collectors are unlikely to be able to prove the debt is legitimate.
Ultimately I'm extremely disappointed though that Mr. Halpern takes the easy way out and concludes that the solution to the problems in this industry will be solved by expanded government control such as represented by the hyperactive Elizabeth Warren. This is the glaring failure in Mr. Halpern's research: he talked to people in every area of this industry EXCEPT THE BIG BANKS THEMSELVES. Duh! He made no attempt to figure why the big banks would issue unsecured debt to people who were so unlikely to pay! Thus his solution fails since it doesn't address the root of the problem.
It's quite obvious that there is money to be made in debt collections. When you can buy these notes for FRACTIONS of a penny to the dollar, there is a huge potential windfall. But why, exactly, would a bank give Joe Sixpack 1000 smacks when it certainly knows the likelihood of repayment is less than 100%?
I think there are two reasons: 1) banks are able to borrow money from the Fed at below-market rates. They expect to make enough on the interest they charge Joe to cover their uncollectable notes and pay back the Fed. And 2) when the economy tanks, as it always does sooner or later, and Joe is unemployed and unable to repay, the banks get bailed out. They don't mind dumping notes for 1/10th of a penny on the dollar(!!) because they need to clean up their balance sheets and collect their government checks. Just like Joe on unemployment(!!!).
This abomination of a system is what has helped create the debt collection business. I don't personally view debt collections as evil - it has apparently given a lot of down-on-their-luck people a chance at wealth and respectability. But if banks had to pay market rates for money, and if they didn't get bailed out for their bad loans - there would be way less consumer debt out there. Guaranteed. No need for holier-than-thou politicians to hypocritically claim power on the backs of poor debtors (in which sense they are no different than the debt collectors).
Thus the low rating on a book I enjoyed reading. That and the fact that no one reads reviews with 3 stars.
Bad Paper is almost like two books. It starts out with a Wall Street banker who decides to make his own way in the world via the debt collection business. What makes it further interesting is the various ex-cons who surface. Mr. Halpern does a great job writing biographical info in these characters.
But halfway through the book the fireworks are mostly done and he gets down to the serious task of learning the debt collection industry from the inside out. That was fascinating to me because I'm personally interested in mortgage notes, a related field. I feel that the ins-and-outs of the unsecured consumer debt world were quite relevant. But those just looking for an interesting story may find this part dry.
Mr. Halpern does a great job exposing the dark underside of this business, which at bottom preys on the unsophisticated, working poor. For myself, I learned if I ever get sued by a debt collector - and I've had reason to be called by a few such people - to show up in court(!), because the reality is that these debt collectors are unlikely to be able to prove the debt is legitimate.
Ultimately I'm extremely disappointed though that Mr. Halpern takes the easy way out and concludes that the solution to the problems in this industry will be solved by expanded government control such as represented by the hyperactive Elizabeth Warren. This is the glaring failure in Mr. Halpern's research: he talked to people in every area of this industry EXCEPT THE BIG BANKS THEMSELVES. Duh! He made no attempt to figure why the big banks would issue unsecured debt to people who were so unlikely to pay! Thus his solution fails since it doesn't address the root of the problem.
It's quite obvious that there is money to be made in debt collections. When you can buy these notes for FRACTIONS of a penny to the dollar, there is a huge potential windfall. But why, exactly, would a bank give Joe Sixpack 1000 smacks when it certainly knows the likelihood of repayment is less than 100%?
I think there are two reasons: 1) banks are able to borrow money from the Fed at below-market rates. They expect to make enough on the interest they charge Joe to cover their uncollectable notes and pay back the Fed. And 2) when the economy tanks, as it always does sooner or later, and Joe is unemployed and unable to repay, the banks get bailed out. They don't mind dumping notes for 1/10th of a penny on the dollar(!!) because they need to clean up their balance sheets and collect their government checks. Just like Joe on unemployment(!!!).
This abomination of a system is what has helped create the debt collection business. I don't personally view debt collections as evil - it has apparently given a lot of down-on-their-luck people a chance at wealth and respectability. But if banks had to pay market rates for money, and if they didn't get bailed out for their bad loans - there would be way less consumer debt out there. Guaranteed. No need for holier-than-thou politicians to hypocritically claim power on the backs of poor debtors (in which sense they are no different than the debt collectors).
Thus the low rating on a book I enjoyed reading. That and the fact that no one reads reviews with 3 stars.
June 29, 2016
Interesting look into the world of debt. I picked this up after seeing John Oliver's segment on how he bought some medical debt and then forgave it. The author centers it around a couple of interesting people to give it some life, otherwise it would have been fairly dry. I would recommend reading it. It's a complicated issue. Debt collectors rank up (or down) there with tax collectors. Some of the practices to collect on it are problematic. I don't think it's an issue that will be addressed though. It's too much of a grey area for the public. Most people look down on those who get into this kind of trouble, therefore they get what they deserve. On the other hand, some people do get in this hole and do try to dig themselves out, but the way it's setup you have to be fairly savvy to get out of it.
Lessons I learned from the book: don't go into debt so far that you can't make payments, regardless of whether it's credit cards, medical bills, or mortgages. Second lesson, if you do get this far and the bank turns it over to a collection agency and you do pay it off, make sure you know who you are dealing with and to get everything documented. Many of these collection agencies are ran by people that are ethically challenged, to say the least. The debt gets sold and bought over and over again, so multiple collection agencies may have the same debt and each will try to collect on it. Third lesson, challenge it in court. Many collection agencies do not have the paper work and cannot prove you owe them anything. If you go to court, they will typically fold. If you do not go to court, they win automatically and can garnish your wages and pull money out of your bank accounts to repay the debt. Last lesson, know your rights. Because many collections agencies are ethically challenged, they will use illegal means to collect. They will threaten the individual with arrest, jail time, contact friends and family, all of which they are not allowed to do.
One topic the author did not cover was what happens to this debt if a person declares bankruptcy. Some of the individuals in the book who were deep in debt were still attempting to repay the debt and therefore being targeted by the collections agency. Their credit was already ruined, so what would happen if they declared bankruptcy and tried to move on?
Lessons I learned from the book: don't go into debt so far that you can't make payments, regardless of whether it's credit cards, medical bills, or mortgages. Second lesson, if you do get this far and the bank turns it over to a collection agency and you do pay it off, make sure you know who you are dealing with and to get everything documented. Many of these collection agencies are ran by people that are ethically challenged, to say the least. The debt gets sold and bought over and over again, so multiple collection agencies may have the same debt and each will try to collect on it. Third lesson, challenge it in court. Many collection agencies do not have the paper work and cannot prove you owe them anything. If you go to court, they will typically fold. If you do not go to court, they win automatically and can garnish your wages and pull money out of your bank accounts to repay the debt. Last lesson, know your rights. Because many collections agencies are ethically challenged, they will use illegal means to collect. They will threaten the individual with arrest, jail time, contact friends and family, all of which they are not allowed to do.
One topic the author did not cover was what happens to this debt if a person declares bankruptcy. Some of the individuals in the book who were deep in debt were still attempting to repay the debt and therefore being targeted by the collections agency. Their credit was already ruined, so what would happen if they declared bankruptcy and tried to move on?
November 2, 2017
Full credit to Jake Halpern, he’s managed to write a page-turner on the rather dry topic of private debt collection in twenty-first century America. The action mainly takes place in Buffalo, NY (with the odd trip to Bangor and Vegas) and there’s lots of it, too.
This is not an economics thesis or a sociology project, it’s a fast-paced survey of the field through the eyes of
• the kind of people who invest in the debt collection business (represented here by the rather patrician Aaron Siegel and his backers),
• the characters who do the collecting (they come in a wide spectrum and are represented here by reformed felon Brandon Wilson and his family who work the phones for him, the barely-subsisting Jimmy who cannot afford to ask if the paper he’s buying is good, the totally unscrupulous Bill who will happily chase after debt that’s already been resolved, and many more!)
• the bottom-of-the-barrel lawyers, such as Sherwin P. Robin of Savannah, GA, who successfully collect amounts in the low thousands from the destitute on behalf of corporates, mainly because the law by default sides with the creditor, thereby actually indenturing them to their creditors, sometimes for decades, and
• the fodder of the system, represented here by former marine Theresa and domestic abuse victim Joanna, both of whom fell on hard times and were easy candidates to be conned, first by predatory lenders and then by unscrupulous collection agencies
The author introduces you to all these characters, their back story, how they ended up in debt / in the business of collecting the debt and by the time you’ve finished reading the book you have a very good idea of how it’s all stitched together.
Will spare you the suspense, the answer is “very poorly,” on Microsoft Excel spreadsheets of names and amounts that banks, credit card issuers, car loan companies, phone companies etc. sell with zero strings attached to the highest bidder, who will hassle the delinquent borrowers for all they’re worth and, more often than not, will trade the spreadsheets on, sometimes even at a profit!
The author does not trade in outrage, he leaves that to the reader. He actually empathizes with the members of this peculiar fauna of traders, hustlers and hasslers, but equally he recognizes and insists that we have a duty as a society to do better.
I read Bad Paper in one sitting!
This is not an economics thesis or a sociology project, it’s a fast-paced survey of the field through the eyes of
• the kind of people who invest in the debt collection business (represented here by the rather patrician Aaron Siegel and his backers),
• the characters who do the collecting (they come in a wide spectrum and are represented here by reformed felon Brandon Wilson and his family who work the phones for him, the barely-subsisting Jimmy who cannot afford to ask if the paper he’s buying is good, the totally unscrupulous Bill who will happily chase after debt that’s already been resolved, and many more!)
• the bottom-of-the-barrel lawyers, such as Sherwin P. Robin of Savannah, GA, who successfully collect amounts in the low thousands from the destitute on behalf of corporates, mainly because the law by default sides with the creditor, thereby actually indenturing them to their creditors, sometimes for decades, and
• the fodder of the system, represented here by former marine Theresa and domestic abuse victim Joanna, both of whom fell on hard times and were easy candidates to be conned, first by predatory lenders and then by unscrupulous collection agencies
The author introduces you to all these characters, their back story, how they ended up in debt / in the business of collecting the debt and by the time you’ve finished reading the book you have a very good idea of how it’s all stitched together.
Will spare you the suspense, the answer is “very poorly,” on Microsoft Excel spreadsheets of names and amounts that banks, credit card issuers, car loan companies, phone companies etc. sell with zero strings attached to the highest bidder, who will hassle the delinquent borrowers for all they’re worth and, more often than not, will trade the spreadsheets on, sometimes even at a profit!
The author does not trade in outrage, he leaves that to the reader. He actually empathizes with the members of this peculiar fauna of traders, hustlers and hasslers, but equally he recognizes and insists that we have a duty as a society to do better.
I read Bad Paper in one sitting!
May 11, 2019
Hard book to rate.
"Bad Paper" centers around debt collectors in Buffalo, and gives insight into what they do and their status vis-a-vis other debt collectors, including those higher up and lower down the food chain. It gets into personal debt stories, and at one point the author attempts to collect a debt - himself - from a debtor. That said, it is mostly limited in its scope to the people he contacts, and there are many anecdotal stories about the Buffalo contacts and people in their employ. That was less than compelling for me personally.
But the point is made at the end, after the Epilogue, that debt collectors are difficult to get to open up. They generally refuse to say anything on the record. It is a reviled profession, by and large, and even the modest insights from the Buffalo operation represent, for me personally, more information than I have ever come across on the subject. So positive points for giving an insight into an area where basically little or nothing was known by me.
It is an interesting subject, and I was curious how these places operated, and there was somewhat of an explanation. But how do the big shops operate? How do the small shops operate? Are extreme tactics employed? Some are alluded to, e.g. collectors getting fired because they threatened bodily harm, for example, but there were some holes when all was said and done. And honestly, all the personal information about the Buffalo contacts - of which there is a lot - did nothing for me.
The book touched on several varied areas and really did not have a central thrust. At times it simply lacked in narrative quality. But the insights provided on how and why the debt collection system works as it does are admirable - given that collectors don't want to talk to reporters.
So all in all, a mixed review from me - if you are interested in learning some of the basics of debt collection and know very little, you will find some enlightening information in this book, and for that I would strongly recommend it. If you want a detailed explanation of the nuances of debt collection, or if you want a tight narrative, this is probably not the right book for you.
"Bad Paper" centers around debt collectors in Buffalo, and gives insight into what they do and their status vis-a-vis other debt collectors, including those higher up and lower down the food chain. It gets into personal debt stories, and at one point the author attempts to collect a debt - himself - from a debtor. That said, it is mostly limited in its scope to the people he contacts, and there are many anecdotal stories about the Buffalo contacts and people in their employ. That was less than compelling for me personally.
But the point is made at the end, after the Epilogue, that debt collectors are difficult to get to open up. They generally refuse to say anything on the record. It is a reviled profession, by and large, and even the modest insights from the Buffalo operation represent, for me personally, more information than I have ever come across on the subject. So positive points for giving an insight into an area where basically little or nothing was known by me.
It is an interesting subject, and I was curious how these places operated, and there was somewhat of an explanation. But how do the big shops operate? How do the small shops operate? Are extreme tactics employed? Some are alluded to, e.g. collectors getting fired because they threatened bodily harm, for example, but there were some holes when all was said and done. And honestly, all the personal information about the Buffalo contacts - of which there is a lot - did nothing for me.
The book touched on several varied areas and really did not have a central thrust. At times it simply lacked in narrative quality. But the insights provided on how and why the debt collection system works as it does are admirable - given that collectors don't want to talk to reporters.
So all in all, a mixed review from me - if you are interested in learning some of the basics of debt collection and know very little, you will find some enlightening information in this book, and for that I would strongly recommend it. If you want a detailed explanation of the nuances of debt collection, or if you want a tight narrative, this is probably not the right book for you.
Read
August 14, 2015For those of you still paying off your holiday shopping, Jake Halpern has written a book about the state of debt collecting in the United States. It will make you never want to carry a credit card balance. Americans owe $411.28 trillion. $831 billion is delinquent or unpaid. 30 million consumers owe an average of $1,458.
Banks, credit card companies and other debt holders bundle and sell off these IOU's they can't collect on. Companies then buy this debt for pennies on the dollar usually, try to collect on it and then keep what they collect. It can be very lucrative. Once they think they can't collect any more, they in turn sell it again - and so on down the line. Outside of the biggest debt collection companies, the business is a seedy one and is largely unregulated. The Consumer Financial Protection Bureau focuses on the largest 175 collection companies while thousands of smaller ones go unregulated.
This book is the story of Aaron Siegel who left his Wall Street job in 2005 to move back to Buffalo, NY. He took a job in private wealth management but since there is little private wealth in Buffalo (the debt collection capital of the U.S.) he was bored and decided to switch careers again. Using $125,000 of his own money he bought some "paper" and started trying to collect on it. He hired some veteran collectors to help him. Some of them were of an unsavory sort - ex-cons, drug addicts, con-men - so he hired a floor manager to deal with them. Aaron was making tons of money with 199% returns, 264% returns, 20% returns and on. When Aaron was done with the paper he sold it to Brandon, an ex-con with a decidedly ungentle approach to collecting on the debts.
This book deals with the seedy side of debt collections, not the debtors. It is full of characters, most of them people you hope you never meet, let alone have to do business with. I found this an interesting book about a subject I knew nothing about.
- Liz
Banks, credit card companies and other debt holders bundle and sell off these IOU's they can't collect on. Companies then buy this debt for pennies on the dollar usually, try to collect on it and then keep what they collect. It can be very lucrative. Once they think they can't collect any more, they in turn sell it again - and so on down the line. Outside of the biggest debt collection companies, the business is a seedy one and is largely unregulated. The Consumer Financial Protection Bureau focuses on the largest 175 collection companies while thousands of smaller ones go unregulated.
This book is the story of Aaron Siegel who left his Wall Street job in 2005 to move back to Buffalo, NY. He took a job in private wealth management but since there is little private wealth in Buffalo (the debt collection capital of the U.S.) he was bored and decided to switch careers again. Using $125,000 of his own money he bought some "paper" and started trying to collect on it. He hired some veteran collectors to help him. Some of them were of an unsavory sort - ex-cons, drug addicts, con-men - so he hired a floor manager to deal with them. Aaron was making tons of money with 199% returns, 264% returns, 20% returns and on. When Aaron was done with the paper he sold it to Brandon, an ex-con with a decidedly ungentle approach to collecting on the debts.
This book deals with the seedy side of debt collections, not the debtors. It is full of characters, most of them people you hope you never meet, let alone have to do business with. I found this an interesting book about a subject I knew nothing about.
- Liz
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