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Tips From a Former Debt Collector

Hannah Locklear | January 05, 2024

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Bill, a former debt collector, shares tips on how to stop collection calls and settle a debt. Sending a Debt Validation Letter is the best way to stop debt collector calls. To settle your debt, check the statute of limitations on your debt first and try negotiating with collectors near the end of the month.

Hey, everybody, it's me, Hannah, with Solosuit.

Today I'm going to show you an interview that I recently had with a real former debt collector named Bill. Bill used to work for Avante USA, Ltd Financial, and Maximum Recovery Solutions, which are three debt collection agencies based out of Houston, Texas.

In our interview, he spills secrets and tactics that he used while working as a debt collector to get people to pay up. He also shares how debtors can 1) stop debt collector calls, and 2) settle a debt. Note that Bill is not an attorney. He is just an average former debt collector. But he does have a lot of experience in the game because he worked, quote unquote, on the floor and doing what he was told to do to get people to pay off their debts.

You can watch this short video for the key points of my conversation with Bill, or keep reading for the full interview transcript.

Now, without further ado, here's my conversation with a former debt collector.

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Transcript begins here: Interview with a former debt collector

Hannah: Thanks so much again, Bill, for joining us and being willing to tell us a little bit about the secrets of debt collectors and just learn more about how to communicate with debt collectors. We really appreciate you joining.

Bill: I'm excited.

Hannah: Can you tell us a little bit about your background as a debt collector? What agencies you worked for? How long did you work as a debt collector?

Bill: Yeah.

Hannah: What's your experience with that?

Bill: I worked for five years undercover as a debt collector. And so because I had a background in sales, telemarketing, what have you, I was able to get in with some of the top collection agencies in the country. One of them was a company called Avante USA. I was with them for, like, two years.

Bill: Avante, the owner that owned it now, had sold out another company, a big collection company, and he had started a company in one division, which I was working in, it was fairly recent debt. And then he had a company that, another division, where they took old debt that the statute of limitations about to know where they couldn't report on the credit reports anymore or whatever. It was just really old debt, but they would just harass people and get them to pay just the old debts, and we'll address that later on. But Avante USA was two years.

Bill: I worked for a company called Ltd Financial for another two years, and I worked for another year, I worked for a company called Maximum Recovery Solutions. And they weren't quite as big as the other companies were. They were like a ma and pa type operation.

Bill: So in the collection world, you're going to see companies that are just small ma and pa type operations all the way up to the companies that do hundreds of millions of dollars every year. It's a heck of a racket.

Hannah: So you said you worked for Avante USA and Ltd collections, right?

Bill: Yeah, Ltd Financial.

Settle debt before your court date.

What do debt collectors do for work?

Hannah: Oh, Ltd financial. And what was your role with those companies? What did you do? What was a typical day like for you?

How do debt collectors find your address?

Bill: A typical day was kind of a combination of being a detective and a salesman. The first half of the day, what we do is what's known as skip tracing. And we use databases. One of them was LexisNexis. There's a lot of different databases we would use.

Bill: And what we would do is we'd put in the consumer the debtor's information. We had the Social Security numbers, we had all the vital information we needed. And we could pull up their credit reports. And it's called a header. And you go in, and the debt collection companies, that's how they find a lot of people.

Bill: Like, if you just applied for a loan and you've got your cell phone number in there, whatever information you've got, it's going to pull up. It's called the header part. And I won't go into all that in the book, but I'll go into it with you. So what we would do is we'd find the debtor and then the rest of the day we'd be contacting the debtor and getting them to call back, and we would say things to them that would make them want to call back. For instance, if Hannah gets a call from Bill Davis at Avante USA, I've got some paperwork on my desk, and your name is involved in this paperwork. Naturally you're going to want to call me back. Right. So that's just one of the tricks that we've used to get people to call back.

Bill: Now, Ltd financial, I didn't participate in this because that wasn't my way. They were contacting people and telling them, your Social Security number is in some paperwork on my desk. And they got a lot of calls. And because of using this ploy, they got fined like 1.5 million for misrepresentation and 1.5 million.

Bill:When you collect hundreds of millions of dollars every year in fees and everything, it's nothing. 1.5 million is nothing. So the collection agencies, they don't mind paying those fees, they'll just pay the fees and they're still allowed to stay in business. So that's why I wrote the book, to allow people to fight back and become the victor, not the victim. Okay. Yeah.

What is the debt collection process like?

Hannah: So can you tell me, it sounds like you would help with skip tracing, so you would help find the debtors where they were living currently so that you could contact them and get the collections process started once you found the debtors. What was the collection process like then? I know you mentioned a few tactics that you would use to get people to call you back. What was the typical debt collection process like at these agencies?

Bill: You wanted to create a sense of urgency. Being a magician. I'm a master at illusions. That's my business, so I can make you think anything I want you to. Right. And the collection agency is no different. They're creating illusions. One of the illusions they create is they'll call you and they'll tell you they're with the law office of Smith and Jones or whatever, and some scumbag attorney who couldn't make it as a legitimate attorney.

Bill: What they'll do is they'll give the collection agencies, and sometimes they're partners, sometimes they're just paid money, know, use their license. And when you get a call from a regular collection agency versus one that says, I'm from the law office of Smith and Jones, you're going to be more prone to call back. You're going to be more prone to want to settle out, because I want to give you a chance to settle this so we can get it taken care of and my client doesn't have to pursue further actions against you.

Bill: And if you allude to legal things that are going to happen against them, like them getting sued or whatever, then the debtor is going to be more prone to want to settle. And it's in the book, it's called good cop bad cop. And one of the things is they'll say, well, I'd like to settle. Can you work a deal with me? Well, let me talk to my manager. And then they put the manager on the phone, and the manager is going to be just as mean and nasty as you were, and they'll give them a deadline.

Bill: Okay, if I get this money by 03:00 today, then we won't pursue further actions against you. And I talked to the attorney. He said we can go ahead and get this settled. They never talk to the attorney. The attorney is up in some ivory tower somewhere, and a lot of times they're not even that office. So it's just all kinds of scams that they pull to intimidate folks. I mean, there's been cases, I've never participated in it, where they make you think you're going to jail if you don't pay it, if you don't know the law and you don't know your rights as a debtor, they're going to take advantage of that.

Respond to a debt lawsuit.

Can debt collectors lie?

Hannah: You mentioned in your previous answer that you guys would call people and say that you were with a law firm? Basically, yeah. A lot of the time, you actually weren't. Is that true?

Bill: There was an attorney that the collection agency was able to use his name, and he was a real attorney, and he was really licensed. But let's say we're calling Arkansas. He may not be licensed in Arkansas, so he couldn't sue you if he wanted to. But when you have the pretense of, okay, I mean, he really was an attorney, and then a lot of times they'll think you're an attorney because I'm with the law office of Smith and Jones, and if you talk a certain way with a legal tone, you don't even have to say you're an attorney. You can just let them assume things.

Can debt collectors lie about who they are?

Hannah: Yeah. If a debtor were to push back and say, do you have a license to practice in my state? Or if they were to ask you more about the law firm, would that maybe be a way to kind of get these debt collectors to, I don't know, maybe be more forthcoming about who they actually are? Or would it maybe even prevent them from continuing to contact you?

Bill: Excellent question. Yes. That's one of the powerful weapons that I give you to put in your arsenal when you're fighting back with the debt collectors. If they call and say, I'm with the law office of Smith and Jones, and a lot of debt collectors will lie and tell you that they're an attorney or allude to that fact and let you think that, say, okay, fine. What's your state bar number? Because an attorney has to have that number.

Bill: And there's a website you can go to here in Texas. It's a state bar association, and you should be able to do it in any state. You can put in an attorney's name, and it'll come up. And if they've been suspended or they're on know, and that's when an attorney is guilty of misconduct, they'll suspend his license for a while, or they'll put him on probation. You've been a bad boy, but if you're a good boy, we won't punish you. We won't spank you, so to speak.

Bill: And so it's a wealth of information that you can find just by going on like the state bar association. Another thing you can ask them is, are you licensed and bonded to collect in the state of Texas? Oh, I'm sure we are. Okay, well, what's your state bonding number? What's your bond number? What's your license number, when you start hitting them with that, they're like, man, this guy knows his stuff. We better just back off and leave him alone. So if you know your rights and what they can and can't do, you're going to win.

Hannah: So one of the rights that I'm familiar with under the Fair Debt Collection Practices Act, which is a federal law, right, is that debt collectors are prohibited from pretending to be something that they're not. So they can't call you and say, I'm a lawyer. If they are not a lawyer, they cannot lie to consumers, they cannot lie to debtors. So I think that's a great tool that you mentioned, like asking them what's your bar number?

Hannah: Because that could be a way not only to get them off your back, but also to catch them in violating the FDCPA. And if you do catch them in violating the law, you could potentially have a case against them. Kind of turn the, that's, that's, that's really great advice.

File an FDCPA Complaint Against Your Debt Collector.

Who does Avante USE and LTD Financial collect for?

Hannah: I have another question for you, Bill. Can you tell me a little bit more about, I don't know, I guess what clients Avante USA and Ltd financial worked with. I don't know if that's proprietary information, but who did they collect for?

Bill: They collected for bank of America, they collected for capital one. I mean, all the big names. They did everything from, I mean, they collected what we call in the industry all types of paper. And also, I can't remember the names, that's been a while back.

Bill: But Avante USA, they had a client that had a line of credit for a couple hundred million dollars. They would go in and buy these debts really cheap and then they would give them to Avante USA. And these guys, the banks are backing them up, they're giving them hundreds of millions of dollars.

How much do debt collectors pay for debt?

Bill: And a lot of folks think that they're paying like twenty cents on the dollar or ten cents on the dollar. And I can tell you that's not the case. It's just like a mailing list.

Bill: When you get a list of prospects to sell products and services to, I was there, I know they only paid a few pennies a name, so it's just like a mailing list. And all you need is just a few off of that list. So if you've got a list of 1000 people and you only collect 10% to 20%, you're making a lot of money. And the junk debt buyers, they've got a line of credit, they'll go to the bank, they'll get the money that they need. They'll buy all those debts, and then they'll upload it and send it into Avante USA or whoever you're working with.

Bill: And then they get like a percentage of what they collect, depending on how old the debt is. If it's fairly recent, like a couple of months, they get 20, 30%. If it's older, they'll get 40% to 60%.And Avante USA, their division, where they reflect an old debt that I was talking about earlier, they were the ones buying the paper. They were the junk debt buyers. And that's what the website's going to go into is they're called junk debt buyers.

Bill: And they buy these debts, these bad debts. And then when they go to court to sue you, they can sue you under the original creditor's name. Even though Bank of America may not own that account anymore, they can still sue you under the name of Bank of America. And so that's why when you're validating the debt, you want to have what's known as, and I'm getting a little bit ahead, but you want to have what's known as an assignment of debt that shows that they have the right to collect that debt, whether know that they're getting paid a commission, know a fee to collect that, that they bought.

Bill: You just, it's just like when you go to court and you do what's known as discovery, and they have to prove this and prove that, and they got to have this evidence when they come in front of the judge, the same thing. And if you know that you're going to win, I can guarantee it.

How can you validate your debt?

Hannah: That's actually a service that we help with at SoloSuit. If someone has received a notice from a debt collector about a debt that was from years ago, or maybe they think they've already paid it off or something, or maybe it could even be a fraudulent debt. We have a service, it's a letter template called the Debt Validation Letter that people can use to send to these debt collectors, which will force them, according to law, to validate the debt before they continue with collection practices. Right? Technically, they can't sue you for it.

Bill: Right.

Hannah: If the debt is invalid.

Bill: Not once, when I worked at these collection agencies, did I see any of the debt collectors, myself included, validate the debts. Because when you buy or you get 50,000 accounts at one time, they're not going to have the supporting documentation because it's just like a mailing list. All it is is just names, who owes what, what they owe, how long they vote it. That's it

Bill: And the owner of Avante USA actually sat there. He was looking at a computer screen, and he said, well, I've got the paperwork here on my desk, and I see your signature. You signed this contract, and it was just a computer screen. That's all they're doing. They're looking at a computer screen and they're going by what's on the computer. There is no documentation, and it's very rare.

Bill: What happens is a lot of folks will go to, they won't show up in court. And these collection agencies, they're getting like a couple of million dollars a day, they're making, because a lot of people don't show up in court. And even though the statute is out, it's out of statute, they can't collect on it, and they can't sue you anymore. Just the fact that you didn't show up, it doesn't matter. You got a default judgment against you. If you showed up, you could have won.

Make debt collectors validate your debt.

How do you stop debt collection calls?

Hannah: Why don't you tell us a little bit about… One problem that a lot of people have who may be dealing with debt issues is they get a lot of calls from debt collectors. What is the way to stop those calls?

Bill: Well, there's a couple of ways you can do it. One of the ways is the Debt Validation, and it's the law, it's FDCPA law. When you're disputing a debt, they're not allowed to do any type of collection activity. And even though they might say it's disputed on the credit report, they're still not supposed to be able to put it on your credit report because that's still construed as collection activity. They're not supposed to contact you.

Bill: And we had a client one time where the debt collector, even though it was with an attorney, and they weren't even supposed to contact them, they did anyway, because some of these collectors, a lot of them, they think they're above the law. They just do what they want to, and they're going to get away with it.

Bill:Another thing you can do is you can tell them on the phone, but it's best to just send them what's known as a cease and desist letter. Don't contact me anymore. The only communication they're allowed to have with you is when they write you a letter and tell you they're not going to be calling you anymore. But I still believe that the Debt Validation Letter is the best, because cease and desist, yes, it will get them to quit calling you and leave you alone. But they can still come after you for the debt.

Bill:So the debt validation, they can still report it on your credit report. Like I said, if you've got the ammunition which the book gives you, you're going to beat them and they're not ready for this.

Hannah: Yeah. A couple of good ways to stop debt collectors, just to recap, to stop them from calling. I mean, number one, send them a debt validation letter. Number two, send them a cease and desist letter. The cease and desist will get them to stop calling, but they may continue to try to take legal action against you. If they're not having to validate the debt, they might still continue to try to collect it.

Hannah: But with a Debt Validation Letter, if the debt is invalid, they have to stop all communications, they have to stop collection efforts, and they should change the report to the credit bureaus as well.

Bill: When it's being disputed, they can't contact you. I mean, when debt is in dispute, if that's what you're saying. Yeah, you're correct on that.

How do you negotiate with a debt collector?

Hannah: So that's actually another question I have. At Solosuit, we want to help people have the tools that they need to defend themselves in court, but we also like to take it a step further and help people resolve their debt and settle their debts if they actually do owe the debt so that they don't have to worry about it anymore. And the best way to do that is through debt settlement.

Hannah: We don't consider ourselves like the debt collector's enemy. We just consider ourselves a resource for people who want to resolve debt. And so my question for you is, having worked as a debt collector, what are some good ways for people who do owe a debt, who have been sued for a debt, what are good ways for them to negotiate a debt settlement?

Hannah: Like what kind of things can they say to debt collectors or debt law firms when they call to negotiate an offer to settle the debt for less than the original amount in order to clear their name of the debt, what are some good ways to do that?

Bill: Okay, well, number one, I always say don't pay them anything. But there may be cases where, let's say you're going to close on a house and the lender says, look, you've got this $5,000 Mastercard that you owe and we can't loan you the money until you get that taken care of or whatever. Or you may be in the process of getting a loan and you've got to get it taken care of within the next month or so, then that would be ideal to use the tools like what you all use. But to get to your question, to answer your question, it depends on how old the debt is you can negotiate.

Hannah: Sorry to interrupt you, but let's say hypothetically, the debt is valid. It's within the statute of limitations. You're being sued for, let's say, a credit card debt. What could you do? When you call the collector or the debt law firm or the attorney that's suing you, what are good things to say to try to get them to settle for a smaller amount?

Bill: You could tell them, hey, I want to get this taken care of. And the older the debt is, the higher percentage discount you can get. And just tell them, say, what would it take to settle this?

Bill: And the collectors, they have a certain authority where they can settle for a certain amount, but what they'll do is they will not settle at that amount that they're authorized for. So in other words, if you got a $10,000 Mastercard debt and I'm authorized to settle it with you for $4,000, I'm not going to do that because I'm going to make more money off of my bonuses.

Bill: If I get you to sell us for say, 7000, $8,000, I say, well, look, let me go talk to my manager. I'll see what I can do. And then towards the end of the month is usually the best times to negotiate because they want to get that cash flow in and the collectors, they get paid these bonuses and they want to get paid their bonuses.

Bill: So if you're calling like towards the end of the month, they're more prone to make a settlement with you. But I would say get it in writing and maybe it might cost you. Have an attorney look it over or whatever. Have an agreement drawn up or use someone like your service, SoloSuit.. Have SoloSuit send them an agreement and just settle out.

Learn more: How to Settle Debt in 3 Steps

What should my debt settlement agreement include?

Bill: But you want to make sure that they know that I don't want it to read paid collections. It will say paid as agreed or paid satisfactory because if it says paid collection, you've done yourself a disservice, if that makes sense.Yeah.

Bill: And then you just say, okay, I'm going to pay this, but I want it taken off or I want it paid satisfactory. And they'll say, well, we can't do this because it has to be fraud before we can delete the trade line. Don't believe all that. Say, well, you don't have any proof. You haven't validated the debt. But I want to go ahead and get this taken care of.

Hannah: You're saying, before you settle, make sure that you get it in writing an agreement. And as a part of the agreement, make sure that you get them to commit to removing any negative marks on your credit score once you pay off the debt and once you sell it.

Bill: Yeah, correct.

What percentage of a debt is typically accepted in a settlement?

Hannah: Actually, that leads to another question I have for you. In your experience in the debt collection agencies that you worked with, what was a, I guess, common amount that the collection agencies would settle for, 60%, or what amount do most debt collectors settle for?

Bill: It depends on how old the debt was. Let's say we had a $10,000 mastercard. I'm just throwing things out there. But say we have a $10,000 Mastercard and it's got about another two months to a year, and it's not going to be valid anymore. We won't be able to collect on it. Well, we can give you a discount, 60%-70% discount or whatever, because that's the hardest paper to collect on because once the statute is up, we can't sue you. We can't call you anymore. I mean, we can call you, but we can't do anything legal about it.

Bill: So that's why a lot of those companies, they'll reage it where they can still collect on it. But that's the hardest paper to collect on, is the older. So now, if it's, say, I don't know, two months to a year, then maybe a 10%-20% percent reduction. So in other words, $10,000, they might sell it out for $8,000 or $9,000.

Hannah: Because you're saying if the debt isn't super old, if it's only like a couple of years old or something, they might only take off like 10% to 20%.

Bill: Yeah, but also another variable is, let's say, bill collectors, as you may well know, a lot of people don't, is they get paid a salary and they have to make about three to four times their salary when they collect money in fees, not what they collect in debt, but in fees.

Bill: So let's say a bill collector is collecting $50,000 a month and the collection agency is getting 40% of that, then that's $20,000 a month. Well, the bill collector, if he's making $2,500 a month, he's got to bring in $10,000 a month in fees just to justify him being there. And so anything over that, they're going to get like 20%-30% commission.So say 20,000 in fees, and they got to pull in ten just to maintain their status quo just to justify them being there, they're going to make a $3,000 bonus check.

Bill: So a lot of times it can be up to how much money the collector wants to make, and sometimes they'll just settle out. Because if they settle with you right now, I'm going to have more money coming in and I'm going to get a bigger bonus check, especially if it's towards the end of the month, because that's when all your collections are getting figured up and they're determined how much you're going to get as a bonus for that next month or so, if that answers your question. Yeah, it does.

When is the best time to settle debt?

Hannah: So it sounds to me like good ways to settle are maybe wait until the end of the month because a lot of collectors may be more willing to negotiate a lower settlement trying to get their bonuses near the end of the month, right? Absolutely.

Bill: Or towards the end of the month like 25th, 26th, something like that. Well, awesome.

Hannah: Well, thank you so much, Bill, for joining me and gving us a few tips on how to communicate with debt collectors.

Bill: Thank you.

SoloSuit is rooting for you

Hopefully this interview is helpful and gives you an idea of the steps you can take to resolve a debt with debt collectors. Remember: to stop debt collection calls, send a Debt Validation Letter, and the older your debt is, the better your chances are of reaching a debt settlement agreement.

SoloSuit can help you respond to debt collectors at any stage of the collections process. Our software can help you draft a personalized Debt Validation Letter, respond to a debt lawsuit, and settle your debt before going to court.

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