Debt Sale Off — Prosper to Apply Post Charge Off Collection Techniques | P2P Lending, Peer to Peer Lending, People to People Lending

Doug Fuller on Friday announced that the debt sale has been called off and that Prosper was going to “apply post charge off collection techniques” to the loans in the sale…

The reason given for the cancellation of the sale is that highest bid without “unacceptable contract conditions” was only 1.5%, as opposed to the roughly 3 cents originally estimated.

When researching what these techniques might be I ran across this old (originally published in 1918) how to manual on collecting debt… I wonder if Prosper is going to employ The Sweating Process or The Awkward Call…

The Awkward Call

This is an unpleasant but frequently effective method of collecting bad accounts. A festivity is perhaps in progress at the debtor’s house. The collector, having ascertained this fact, calls, inquires for the debtor, and, if he can secure an entry, presents his account and insists on payment. The debtor naturally demurs. The col-lector insists more urgently and more loudly; the attention of the guests is attracted; and the debtor naturally finds the situation very embarrassing. If he be strong of mind and muscle he will occasionally make it embarrassing for the collector, and add to his friends’ entertainment by a number not scheduled on the original program. Barring such unhappy incidents, however, the final result of the call depends entirely upon the ability of the collector and the financial resources of the debtor. If the collector is persistent, and refuses to be daunted by threats or cajoled by promises, the money, in whole or in part, is very apt to be forthcoming.

The collector may vary this proceeding in several ways. He may present his bill when the victim is attending an entertainment in the house of a friend, or he may interrupt him in the middle of an important business interview. If the debtor is an employee, the presentation of the bill at his place of employment may be resorted to, but, as this might result in the employee’s discharge and thus incapacitate him from paying the debt, a threat of resorting to this measure may be more effective than its actual fulfilment.

The Sweating Process

This is another variation of the awkward call, and requires a collector of good conversational powers, considerable nerve, and, preferably, some physical ability. He calls with the overdue account at the debtor’s house, and simply stays there until he gets his money, or becomes convinced that no money is to be had. As may be imagined, the process is a disagreeable one for both col-lector and debtor. Argument, persuasion, threats, and discussion are all used according to the conditions, until either collector or debtor becomes exhausted and gives up.

This method, of course, requires some judgment in its use, and is available only with a certain class of accounts; but with these it is very effective.

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