Student Debt Vampires, CollectCorp

FOREIGN COMPANY COLLECTING ON U.S. GRADS:

Candadien-based CollectCorp Inc. has also been awarded a nice spot on the teet of the U.S. government and is now in charge of collecting on many student loans (with the customary big fee for themselves attached.) They are now also trying to pitch the I.R.S. on the idea of using private firms to collect on debt to the governemnt.

In the Western United States - they seem to be operating out of downtown Phoenix, AZ. ...

more below ... about the Phoenix locale ...

455 North 3rd Street Suite 260
Phoenix, Arizona
(602-443-2920), (716-849-9604)
Doug Ream - managing director - az.

Glen Patton - promoted from within - collection supervisor
Mathew Davis - collection supervisor
John Tilley, exec vp


"CollectCorp Incorporated is headquartered in Toronto, Ontario, Canada. It appears they were federally incorporated in the past, but today we can only guess that they are provincially incorporated in Ontario. Note: federal records are accessible, provincial records are not. CollectCorp is a corporation with hundreds, if not thousands of employees, yet this is the only information we can find..."

HQ Address:

415 Yonge Street, Suite 700 / Suite 2000
Toronto, Ontario M5B 2E7
866-821-7325


---- below is their recent pitch to U.S. Ways and Means ----

http://waysandmeans.house.gov/hearings.asp?formmode=view&id=1039

Statement of COLLECTCORP, Inc.

Company Background

COLLECTCORP, Inc. has been in the business of debt collection since 1978, specifically with respect to accounts receivable outsourcing, early-out programs, and third party collection recoveries. The company has enjoyed the respect of those in the industry for a number of years as a result of its long history, reputation, and management style. We hold to a philosophy of working with the largest debt grantors in North America, which affords us a unique opportunity to maximize collectible debt while keeping our client base small. This mind-set has proven to be tremendously successful. With fewer than 30 clients, we have accepted over $2.5 billion for collection in the past 12 months. Our work is exclusively limited to the banking and finance industry, as well we work with government agencies throughout North America. In fact, 41% of the our collections work over the past 12 months was derived from government clients, making government collections and banking/finance collections our largest areas of business activity. COLLECTCORP has established itself to be an undisputed leader with respect to third party collection recoveries for both the private and public sector.

The IRS and Debt Collection

The IRS knows how lengthy and difficult the collection process can be. It is estimated that within the past three years, the amount of uncollected individual IRS tax revenue has risen from $7 billion to approximately $13 billion. The IRS is not able to recover this amount without additional resources and new approaches to collections.

While the outstanding tax money comes from taxpayers of all income brackets, the majority of the backlogged cases account for a small percentage of revenue outstanding. It is estimated that approximately 2/3 of the backlogged cases account for 10% of the missing revenue while the remaining 1/3 account for 90% of outstanding revenue. The IRS needs to be able to focus on the 1/3 of their cases that account for most of the revenue, which requires an amount of time and effort that the IRS does not have when it is saddled with the other 2/3. Furthermore, the number of backlogged cases and uncollected revenue is continuing to increase at an alarming rate.

Private Collection Agencies

Private collection agencies can be used to support the IRS’ collection efforts. The IRS has an opportunity to free up resources through outsourcing to focus the remaining resources on the most important backlogged cases. The private collection agencies would focus their resources on collecting the debts that reap the smallest returns, which would allow the IRS to aggressively pursue the smaller number of cases that yield much higher returns. In other words, the IRS would direct its attention to the more high profile cases, such as tax shelters, while leaving the agencies to the lower profile cases, such as people who just chose not to pay their taxes. COLLECTCORP fully supports the Administration’s initiative and believes that the use of private collection companies is a reasonable addition to the IRS’ collection efforts.

Our main concern, however, lies in the selection process: the IRS needs to closely scrutinize those agencies it is considering for collection work. Each collection agency employs different collection strategies for individual client needs and utilizes different approaches to maximize net collections with differing cost structures and commission rates. Consequently, in order to better assess the ultimate performance of an agency, a greater emphasis in the evaluation criteria should be placed on “how the work will be done” rather than “how much it will cost”. The criteria for selection must be rigid in order to maintain a sense of stability, increase consumer confidence, and allay fears of privacy invasion. Particular to privacy, all employees should be made to sign both a Confidentiality Agreement and a Notice and Acknowledgement of Federal Tax Information and Confidentiality of Child Support Information. COLLECTCORP has a full time Security Officer that ensures full compliance on all security matters including licensing, security clearances, facilities, and database. The application of these security requirements is verified by our Quality Assurance Department prior to the commencement of the contract. The Project Manager then signs off on the project after having reviewed a report from the Security Officer and verification from the Quality Assurance team. Such privacy measures need to be considered when choosing a private collection agency.

Moreover, there is always a danger of putting one’s eggs in too few baskets. COLLECTCORP believes that the key to the success of the IRS collection outsourcing initiative is to spread the case load amongst a large enough pool to be diverse. It has been our experience in working with government clients that fiscal and operational objectives can be more readily achieved when more than one agency is employed. The benefit achieved by using a multiple number of agencies is enhanced competition. With more competition, greater returns are realized as each agency strives to outperform its competitor. Furthermore, the IRS can maximize results by assigning more accounts to those firms that perform well and fewer accounts to those that perform poorly. In the end, the IRS would benefit from the use of the maximum number of agencies your system could administer.

Conclusion

Many states and other government agencies have used private collection companies in the past with much success. The use of such agencies would allow the IRS to focus its resources where they are most needed while making valuable progress in increasing debt collection and decreasing IRS case workloads. If implemented properly through the use of multiple agencies that are selected based on how they plan to achieve the IRS’ objectives and not based on cost, private collection agencies would be a practical and efficient addition to the IRS’ current collection process.

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Imagine if they couldn't get these nice goverment contracts and instead had to work and become productive human beings themselves - instead of useless parasites, sucking life energy out of the working poor. Imagine ...