I've posted a number of articles on debts being bought up for micropennies on the dollar on this site already. As well, the Budd Hibbs' site has a wealth of info on it. So do all the collections industry trade magazines, some of which have keynote articles available online. The industry has really exploded. Here's a list of the Debt Buyers of America from 2001; imagine what it's like now with our "maxed out" society:

http://we.bs/dba/whoswho.php3

Be careful with your assertions that these scavengers, when picking up old debts, that they don't bother getting any proof that goes along with the accounts, just the names.

Well, that may be true for a lot of really old stuff which may go for .05 cents on the dollar. BUT if they've bought up fresh primary paper and paid 2 to 7 cents on the dollar for it, most of these companies, I guarantee, will be sizing you up from afar by pulling your credit reports on a regular basis and doing PPSA searches on what property you've got. Firms like ARO and PMS in Kelowna, BC and London, Ont. respectively, will be sitting back and waiting for an opportune time to strike if it looks like it might be worth coming after an account.

These collection agencies are not going to pay 5 cents on the dollar for a chargeoff and just get a name from the original creditor. They're not crazy. They'll sue you if it's worthwhile doing so. That's why I tell people: if you are in this position, SAVE YOUR OLD ACCOUNT STATEMENTS. If you owe on a retail card from, say the Bay, and default on a $5,000 balance, ARO buys it up for maybe $200.00 or 4 cents on the dollar. At an annual compounded interest rate of 32.3%, that account they bought up for $200, in 3 years will be worth over $10K. You think they're not going to sue if it's worthwhile? Of course, they will. The only defence you've have if they do are your old account statements to contest their claims in court.

Other bottom feeding firms, like Natale Law Offices, since they only paid micropennies for an account, can get sufficient return for the next yacht by mailing out their fake legal notices en masse and working the numbers.

Again, DO NOT ASSUME that if you receive a notice from a debt buyer, that you out of danger, if it was, in fact, an account that you actually owed money on. .

Ray

About two years ago I sought out advice for a friend of mine whom had been hounded by an irritating collection firm. After a lot of research including calling government offices I found out plenty of info. First of all the debt buyers are not considered collection agencies even if part of their business is just that. They purchase huge written off debts from companies for pennies to the dollar. Because of this these companies do not fall under the collection agencies rules and regulations. What these companies buy are names and approximate amounts of the debtors account. They buy in bulk, meaning thousands of names. They simply go after the name. They have absolutely no proof that these are actual debts and they do not bother verifying anything. Not account numbers, not the amount, not the signatures, not anything. They also do not have the signed contracts or agreements that the debtors had originally signed. What the purchasers of these accounts do is simply go down the list one name at a time, take a chance by sending out threatening letters to the debtors with bogus amounts owing and wait for a response by the frightened debtor. Sure many pay but also there are many who insist that they need proof of the debt and amounts. If the purchasers of the bad debts actually take the debtor to court it is actually up to the purchasers to prove that the debt is actually owed by the suppossed debtor that they have taken to court. Naturally they do not have proof since all they have bought is a list. If the purchasers cannot prove anything the case is thrown out by the mediator. The secret is to stand firm against them, do not answer any questions or simply do not admit to anything. Remember, the original owners of these accounts have already written these bad debts off and have received tax credits for them. It is not the original company that is after you (the debtor). In fact they could care less who the bad debtor is.

The case for my friend was thrown out. The purchasers tried so many times to negotiate and not actually end up in court but they were not successful. They kept insisting that they would find or bring the paperwork to the next mediation if they could be given another chance. Three times they sent three different law clerks or juniors to try to collect the "debt" and three times they were shot down by the court. They had no choice but to give up. The whole scene was actually hilarious. I personally threatened to take one junior to court with a made up amount that she owed me since apparently this is permitted by the Canadian law. Anyway the point is that these people have nothing more than names. They cannot win with just a name. Even if the debt was owed , it was to the original company that the debtor had signed up with. The company may have tried to send the account to a legitimate collector but after a while they give up. That is when the scavenger purchasers swoop in and purchase on mass and try to get something by frightened people who do not have the knowledge how the system works.

Raymond,
Agreed..

Hilco Receivables et al.. are power money businesses that make money by leveraging cash flow and money.

I'm sure that these types of businesses are not sympathetic to people's feelings. They ARE sympathetic to making money!!

Nice articles.

This is a Credit and Collections World article about how Canadian lenders treat their bad debt portfolios. This should answer those who receive calls from strange companies they've never heard about like Hilco Receivables, Portfolio Management Solutions, Global Credit and Collections (Natale and Silverthorn Enterprises etc.). Whatever the fancy moniker, they're all wealthy and bloated scavengers lined up to feast on the detritus of human misfortune.
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SPECIAL REPORT

Buyers Bank on Canada's Debt

Cnada?s bad-debt market mirrors the business in the U.S., circa early 1990s. To wit: Buyers are counting on untapped sources of bad loans to make them rich. Been there. Bankers, fearing reputational damage, are skittish about selling. Done that.

Five national banks control 75% of Canada?s credit. None are selling bad debt. Not Royal Bank of Canada. Not CIBC. Not Bank of Nova Scotia. Not Bank of Montreal. Not TD Canada Trust, although it did so quietly five years ago.

Yet, even without them, the market is growing, fueled by Canadian retailers and U.S. companies with operations in Canada, says Gerry Coffin, vice president of acquisitions for Portfolio Management Canada, London, Ontario, ?Sales are steady in the past few years and there are nice opportunities out there,? he says. ?Interest in bad debt from Canada is at a high mark.?

The market grew from an estimated $100 million (Canadian) face value of bad debt sold in 2000 to between $300 million and $400 million forecasted for 2005, says Stephen J. Sheather, principal with SCORE Statistical Consulting, a Toronto-based debt broker and host of a yearly debt-buying conference. (By contrast, in the much larger U.S. credit market, debt buying after 15 years is a $75 billion business).

Companies selling Canadian debt in past years include Hudson Bay department store; Citibank Canada (a $10 million sale to Equifax); and GE Capital Canada (a $17 million sale to Portfolio Management Canada).

And, American Express sold a charged-off credit card portfolio this spring in a confidential deal. Details weren?t released by the seller or the anonymous buyer.

In general, Coffin says, Canadian companies are more often working the loan- exit strategy into their budgeting equations and quarterly projections.

Adds Sheather, ?The good news is there?s much more activity up here than there?s ever been. The bad news is banks still haven?t entered the market, and I?m not sure when they?re going to. At least not this year.?

Banks Balk

There are several reasons why Canada?s banks aren?t selling their debt, ranging from fears that they?ll be perceived poorly by the public and lose business to the current lack of need because delinquencies are low. Those reputational concerns beg the question: Why worry about losing customers who don?t pay their bills? ?Good customers can get into short-term financial messes,? says Ronald Giles, Bank of Montreal?s national director of collections. ?Those same customers could become lucrative mortgage customers one day, but not if you sold their credit card debt to a buyer you have no control over, a buyer that could prove to be shifty.?

And there?s more, he says, including privacy laws in the U.S. that are confusing and not being properly explained by prospective buyers. ?Would we have a liability surrounding what happens to our accounts if mismanaged by a U.S. debt buyer? We don?t know. We need to know,? he says. ?The Patriot Act is such a big unknown. The way I understand it, any time information is with a third-party, the government can seize it.

?If I?m a buyer, I?m working to understand these laws and I?m explaining it to us. That?s not happening.?

So while some Canadian banks eventually might be interested in selling to U.S. buyers, a potentially lucrative area given there are hundreds of possible buyers, they want better answers before they ?stick their necks out and brave the Patriot Act,? Giles says. ?U.S. privacy legislation might make it less risky for us to sell to Canadian debt buyers, but of course then you significantly reduce your pool [of potential buyers],? he says.

Another drawback for banks, at least for now, is the question of need. ?You sell debt when you need capital. We don?t need capital,? Giles says. ?We?re sitting on $1.5 billion to $2 billion in capital. Profits are nice. Our loan losses are abnormally low. We?re even considering buying back shares, the opposite of selling bad debt.?

U.S. banks of course didn?t embrace bad-debt sales until they witnessed the success of a Bank of America groundbreaking sale in the late 1980s and the later move by the Resolution Trust Corp. to sell assets from failed banks. Fast forward and the business today is a $75 billion industry.

Coffin believes it?s only a matter of time before Canadian banks start selling too. ?Everybody wants the other guy to go for it, to go first,? he says. ?It?s a matter of which one wants to start out on the ledge.?

For now, how much potential is there in a bad-debt market where the leading lenders won?t sell? Many buyers believe there?s room for at least a dozen buyers to carve a profitable niche.

David Ludwig, president of National Loan Exchange Corp., a U.S. debt broker that handled Canadian sales from Citibank, Associates, and GE Capital, cautions there are limits. The top 10 U.S. issuers, for example, each year separately write off accounts equivalent to the entire bad-debt market potential in Canada, he says. ?But that doesn?t mean there?s no place for buyers,? Ludwig says. ?Obviously there are opportunities.?

NLEX handled Toronto Dominion?s (TD Canada Trust) $25.5 million bad-loan sale to Capital One Financial Services five years ago, a deal many thought would be the touchstone to banks? selling full-time. Ludwig remembers it as a ?successful venture.? ?It priced out at a little less than what U.S. paper does,? he says. ?There was no more than a 10% reduction.?

TD Canada Trust officials wouldn?t discuss the sale. Industry rumors indicate bank officials had some concerns about later resales of the debt.

Today, price pressures in the U.S. have helped raise interest in Canada. With an estimated $350 million in new public and private equity capital parked with U.S. buyers in the past two years, says industry analyst Stephens Inc., prices are inflated for all debt classes (See CCR, April 2005).

U.S. buyers active or considering buying in Canada include NCO Group, Horsham, Pa., and Hilco Receivables, Northbrook, Ill. Neither shared information about their strategies in Canada. ?I?m not really that high on inviting competition,? says Bruce Passen, Hilco?s president and chief executive.

Genesis Financial Solutions, Beaverton, Ore., opened GFS Canada in April to pursue Canadian debt. And Cavalry Investments, Phoenix, bid on a Canadian debt portfolio but has yet to successfully buy anything, says Alfred Brothers, executive vice president. Brothers views the Canadian market as a nice secondary option.

Another Threat

Meanwhile, even as buyers wait for the banks, a lesser known threat looms ? statute of limitation laws governing how much time can pass before legal action on accounts is banned. The laws are different in the various provinces: three years in Quebec; up to five years in Alberta; and new legislation calling for as little as two years in Ontario. ?This could pose a serious problem in truly assessing what these portfolios are going to be worth. It?s certainly going to suppress the prices and if that happens you can bet that banks are going to be less enthusiastic about taking on the reputational risk,? Coffin says.

Bank of Montreal?s Giles, however, acknowledges that with delinquencies at record lows for Canada?s banks, it?s natural to assume they?ll rise ? boosting the likelihood of debt sales. ?Never say never. Debt selling is another tool in how I look at doing business,? he says. ?In two to five years, I believe the market will see Canadian banks actively selling bad debt. But there are a lot of barriers to overcome first.?

So, for now, Canada?s bad-debt market will keep relying on retailers and U.S. firms. Whether Canada?s banks one day follow their U.S. peers and make sales part of the regular financial plan will go far in determining whether the market grows steadily or blossoms into a sophisticated industry ? mirroring the U.S. model.

Ray

Wells Fargo is a huge American Bank that's creeping it's way into Canada. I've seen some branches here in Regina,

http://financial.wellsfargo.com/canada/en/index.html

If you've watched old westerns on TV, you've probably heard of Wells Fargo.

Wells Fargo bank hosts some credit cards and services in Canada.

I've dealt with Wells Fargo before. I'll have to research them a little more to see who they represent.

Wells Fargo Financial Corporation Canada operates in Quebec as Soci?t? financi?re Wells Fargo Canada.
? 2007 Wells Fargo Financial Corporation Canada. All rights reserved.
Wells Fargo Financial Corporation Canada is associated with Wells Fargo & Company, a company that is not regulated in Canada as a financial institution,
a bank holding company or an insurance holding company.

Sarah over at
http://www.discovervancouver.com/forum/topic.asp?TOPIC_ID=141099

talks about Hilco Receivables!!

Hilco Receivables
http://www.google.com/search?hl=en&q=Hilco+Receivables+Canada&btnG=Google+Search

http://www.hilcoreceivables.com/
http://www.hilcoreceivables.com/signup/

Hilco Receivables
Sarah over at DiscoverVancouver.com
http://www.google.com/search?hl=en&q=Hilco+Receivables+Canada&btnG=Google+Search

I got a letter on Friday from this "Law Office" saying that I owe "Hilco Receivables Canada" $1324.80, and that they bought this debt from Wells Fargo?? I have never even heard of any of these companies, let alone owe any of them money. I have never had a Wells Fargo bill/account/invoice and I don't know what Hilco is either?

I did some Google searching, and Better Business Bureau searching, and it seems a whole lot of people are dealing with this same SCAM and problem!! I don't like being threatened to pay something I don't owe. Also they are calling my house with an automated message. The name is my maiden name, which means it is over 3 years old..or they would have my updated info?? I called Phone Busters and reported it to them. I also had Equifax send me my credit history, and it is blank, with no money owing to anyone..so what do I do from here??

I hate that people think they can just scam other people out of money for no reason. I could understand being contacted for money I actually owed to someone..but sending me a "Form 7A" threatening a lawsuit against me, asking for a cert. cheque or money order, and stating that personal things will be seized and garnishment of wages..what the hell?? This has gone too far!! How can these people get away with this??

Frustrated in Ottawa.
Sarah

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