Debtor Profiles
An understanding of typical debtor profiles will help a collector categorize a delinquent account, weigh collection potential, and map a collection strategy. The most common types of debtor include the following:
• Prompt payer. This debtor pays bills on time, is a good risk, and represents the majority of credit account holders.
• Slow payer. This debtor resorts to stalls, broken promises, and tends to procrastinate. There are two subcategories:
1. The unintentional slow payer falls behind in meeting obligations because of circumstances, but ultimately does come to terms with creditors. The unintentional slow payer is the easiest of all collections to effect.
2. The intentional slow payer initiates ploys to evade payment, has the earmarks of a potential skip, may be contemplating bankruptcy, or has taken steps to make himself judgment-proof.
• Careless debtor. This debtor is not concerned with details, is often negligent, and usually disregards payment notices.
• Recalcitrant debtor. This debtor takes the position that the debtor is in control. This debtor will pay debts at his convenience, on his own terms. This kind of person will challenge the creditor on every front, but ultimately will meet the obligation.
• Impenetrable judgment-proof debtor. This debtor is a virtuoso at the art of concealing assets, does not respond to pressure, makes a mockery of the legal system, and thrives on controversy.
• Deadbeat. This debtor never intended to satisfy the obligation. The debt was incurred with intent to defraud. This debtor is an out-and-out credit criminal.
• Liar. This debtor, a habitual or pathological liar, propounds reassurances. This person usually pays at the eleventh hour, when litigation ensues or when he fears other consequences in greater proportion to the amount of the debt. Discretionary corporate debtor. Maintains an exemplary payment history with select creditors (owing to maintenance of a relationship), but defaults on obligations where this mentality customer has no further use for creditors. Most common in corporate environment (i.e., officer pays his consumer debts but defaults on corporate obligations).
• Skip. Skips come in two categories:
1. The unintentional skip moves out of town without paying, but leaves a forwarding address and is easy to locate. Usually, this debtor is easily motivated to satisfy the obligation.
2. The intentional skip does not leave a forwarding address and covers his tracks. In this respect, the intentional skip, depending on the person’s degree of expertise, can range anywhere from mild (i.e., minimal effort to locate) all the way to the “professional” skip, who initiates extraordinary maneuvers to evade creditors. Nonetheless, even the professional skip does leave a paper trail that a proficient skip tracer can follow.
• Discretionary consumer debtor. This type of debtor tends to pay primary bills (i.e., Telephone Company, utilities, and prestigious credit cards) but ignores such other bills as department store invoices, minor charges, mail-order transactions, and so forth. This debtor is a “schizophrenic” personality, usually has a good credit rating, and knows which credit transactions are reported. An unsuspecting credit grantor might be misled as a result of this debtor’s favorable credit profile. (See Chapter 8 for more on credit profiles.)
• Intermediate credit criminal. This type of debtor deliberately, and with actual malice, makes a livelihood by ripping off creditors.
• Professional commercial “credit criminal.” This is the truly criminally minded debtor. Such a person resorts to elaborate, sophisticated schemes to procure hundreds of thousands of dollars’ worth of credit. Usually this criminal establishes a shell corporation as a front, incorporating a name similar to that of another, legitimate business. The credit criminal, gifted with a “silver tongue,” capitalizes on the legitimate business’s good credit standing to lull creditors’ suspicions and order hundreds of thousands of dollars in merchandise. The debtor will then liquidate merchandise quickly, usually below cost, on a grand scale, and walk away with megabucks, all the while shielded by a corporate umbrella. This professional credit criminal is definitely the most dangerous. Interestingly, this debtor pays most small, common obligations and usually has an impeccable credit history at the consumer level. This debtor may even be a well-respected citizen within a community. This scam is also known as a “bust out” scheme.
• Transient debtor. This type of debtor is a perpetual skip, moving frequently with the intent to evade creditors. This debtor moves out on a Friday night, leaving no forwarding address.
• Threat-of-harassment debtor. This type of debtor threatens creditors with a harassment suit, creates frivolous excuses, makes up disputes, and thrives on beating the system. An expert at fabricating stories as a smoke screen, this debtor is “always right.” Another version of this mentality debtor will threaten a harassment suit by way of an attorney.
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