BAD PAPER

I’m back with comments about the latest book I have read. It’s a non-fiction account of an obscure (to me) aspect of the financial world around us. In BAD PAPER: CHASING DEBT FROM WALL STREET TO THE UNDERWORLD, Jake Halpern writes a narrative that instructs and entertains. He returns to his hometown of Buffalo, which is the infamous hub of the debt collection industry. In the book, which reads like fiction, you meet the colorful characters and criminals who inhabit the world of buying and selling “paper” which usually consists of  Excel spreadsheets with debtors’ names and social security numbers. The paper is purchased for pennies or less on the dollar and then used to try to collect the debts.

Halpern takes the reader into the collectors’ cubicles to observe the techniques used. Some of this paper is resold multiple times; some is stolen. Collection agencies come and go, change names, get new investors, garner huge profits, go broke. Everything happens without formal contracts, so there is ample opportunity for double -dealing of various kinds. Halpern tells enough about the collectors he interviews to give a sense of the life on the street and in the jails that often leads to this career. He also investigates the lives of some of the debtors and the causes and effects of their debts and subsequent “nagging” by the collectors.

One tip from the book: In case you are ever taken to court by a debt collector, ask for written proof of the original charges. Usually no such proof exists and the case is dropped.

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