Best of Slow Journalism: Paper Boys
Consumer debt collection is big business in the US. Here’s how it works: when a bank is unable to collect debt from a customer, they can sell that debt on to a private collection company. This happens at a big discount because the investment is inherently risky.
Portfolios that perform poorly can be sold again, and again, and again, at increasing discounts. From 2006 to 2009, 90 million debt records were purchased by the US’s top nine debt buyers, for an average price of 4.5 cents per dollar of actual debt.
Last week, NY Times Magazine ran this excellent story about the murky world of private debt collection, a world which deals in large spreadsheets where “the various columns and rows told the stories of several thousand Americans whose financial lives had fallen into ruin and whose futures dangled precariously in the balance.”
Jake Halpern introduces us to ‘Paper Boys’ Aaron Siegel and Brandon Wilson who deal with large portfolios of heavily downgraded debts, also known as “crap”. Wilson: “I’m the king of crap.”
In his 8,000-word piece, Halpern exposes the inner workings of an industry in which “a gamut of players — including debt buyers, collectors, brokers, street hustlers and criminals — all work together, and against one another, to recoup every penny on every dollar,” and details what happens when debt collectors get swindled.
Read the piece here.
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