Bitcoin Forum

This is it kids, we've discussed it again and again and I think it's time we do this properly.

We need two things:

1. A debt collection agency
2. A way of registering and scoring individuals.

For the first I propose the following:

I am creating a debt collection agency. On behalf of the agency I will need local collectors in various areas. The financials will be arranged as follows:

a. "Buy Out Plan": I will buy off the debt off your back for 20% of its value; or
b. "Collection Plan": I will collect it on your behalf and keep as a fee 60% of it.

As I can't be everywhere I will require the assistance fo local debt collectors who will receive (risk-free) 40% of the fee in Plan A (Buy Out) and 60% in Plan B (Collection). As I will be buying the dept in Plan A and thus putting myself in risk the collectors will get less obviously so the Agency can brake even. In Plan B (simple collection) the agency gets a minimal fee for doing the background research and facilitating the service but the collectors get the bulk of it.

I provide you with the following example for a debt of 200BTC:

http://new.tinygrab.com/73105c8bf5e3c6ac6669d0ca671484baffc2c6d5af.png

If the collector gets the debt from the debtor they get paid their percentage either way they have nothing to lose.


In regards to part 2 of my proposal, I propose a scoring system similar to that used by Dun & Bradstreet. Each physical or legal person gets assigned a nine digit number. This number is linked to a historic score that changes as the legal of physical person's situation changes. The Agency will be responsible for veryfing their identity and maintaining an up-to-date database. Participation is voluntary.

As an example, Party A would like to do business with Party B, Party A can request for a fee Party B's number, score (based on trading history, character, age, location and other risk factors) and associated report (private and confidential information of Party B will NOT be released to Party A just an indication that they are on file). In the occasion where Party B is not in the database,  a request will be made directly to Party B by the Agency without necessarily naming Party A.

1. Party B retains the freedom to decline to voluntarily provide that information. Party A will be informed and they can make their own conclusions if they want to go ahead.
2. Party B, chooses to participate in the database, pays a fee, provides the relative documentation and is assigned a number and a score.

It goes without saying that anyone can volunteer without waiting for a request.

In case Party B is indeed a scammer and the information provided by the Agency have been wrong and a debt cannot be collected by the Agency, the Agency will use its own funds to repay up to 60% of total sum to Party A.


Ideas, Input, Interest, Corrections? Let's discuss...

The first thing you may want to do before getting in the debt collection business, debt collection 101 let's call it, is learn the correct spelling of the word debt.

Debt collection is something that is highly regulated by law, at least in the US.  So is credit reporting.

I could see an existing debt collection business getting into collecting bitcoin debt if they really wanted a challenge, but I don't see someone just reinventing the wheel from scratch.  Half the problem is people don't know or can't prove the real world identity of the people they're doing business with.

Ironically, companies like PayPal, Visa, and MasterCard have solved this problem for a small fee of around 2.99%.  Get burned, initiate a chargeback, problem solved.

The solution is realizing that Bitcoin is the wrong tool for certain jobs, and to not use it where that's the case.

noted! ;)

In regards to the legality of it, I think this is open to interpretation. Not paying a peer loan is still considered theft. Also, in the spirit of System D and bitcoin creating a government-free, independent database again seems like the right way and nothing more than a more elaborate OTC implementation.

Again, I'm open to discussion... This is just an idea and a proposal...

One thing you may wish to be careful about is that violating debt collection laws in the US opens YOURSELF up to significant damages even if the debt is legit.  I can't speak for other countries but US actually gives debtors pretty significant legal protection.

We are talking up to $1000 per violation.   Those damages are punitive so the debtor doesn't have to suffer any actual damages (in the legal sense) to win.   A debtor could collect more in damages then the amount of the debt.

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm

If you go forward you will want to become very aware of the FDCPA.  There are debtors in the US who use the FDCPA and sloppy debt collection practices by some companies to rack up hundreds of violations and then sue debt collection agencies for six figures.   You will definately want to form an LLC or Corporation to protect your personal assets.

"Not paying a peer loan is still considered theft."
This is one example.  Something as simple as this statement (even made casually) while attempting to collect a debt that would be a violation of the FDCPA.  Not paying a debt isn't theft under US law.   Failing to pay a debt is a contract dispute not a criminal matter.  Indicating it is theft is a "false or misleading representation" regarding the legal status of the debt (see section 807).

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

That is just one example of the hundreds of regs which you could find yourself in violation of.    Debt collection agencies spend a significant amount of money training collector, and continually monitoring/coaching/evaluating collectors to protect the company from damages.  Good agencies know how to bend the rules without breaking them.

Now will any of your Bitcoin debtors ever decide to press you for violating the FDCPA? Probably not but you should be aware of the risk.  It would be an interesting court case.

Very good information, thanks.

I offer up DI's debt to me (see https://bitcointalk.org/index.php?topic=67731.0) of 10.41472 BTC (more if you count the interest since then) for your buyout plan.

Please pay 2.082944 BTC to 1FAH49VMFa4BXgV75eZhdUA8rVrwZB3aHs.

I thought I went without saying but just in case nobody is talking about breaking anyone's bones. You track them down, have a chat with them and sort a payment plan out. If they insist on ignoring you, then you involve lawyers.

On the other hand if we had a decent scoring system then we would know who to trust.

I'm just interested in everyone's input especially those who have bad debt and/or do a lot of peer to peer business.

I'm interested! When will you be "launching" the service?

I think DI could be a good first-case for you, since you live in the U.K. (I think?), several members are willing to sell their debt to you and plenty of investigative work has already been done.

Are you interested?

I'm very interested in DI's debt. I will buy all available debt in a couple of days when my Intersango funds clear...

Very cool! I'm interested to see how the DI saga plays out since he hasn't made any effort to hide himself (public-facing facebook account!?). PM when you're ready to purchase, I can forward you pertinent information.

Sounds fun, like a bounty in the old wild west.

Are you still interested in doing this or should I start my own DI collection efforts. ;)

How about everyone just sends all the money they owe people to me?

You'll buy any debt for 20% value?  :o

You're going bankrupt, dude! And it won't take long!

Asking for 60% is a bit high.

I think it depends on the debt. I really don't think this will work with a one-size-fits-all rate for debt purchases. Otherwise, there's nothing to stop me from creating a fake account, lending it some bitcoin, claiming default and then on-selling the debt here for 20%.

Some debt is worth more than other debt!

I agree with this.

I think the collection agency would also have to come up with some sort of risk scoring system to help calculate what a certain debt is worth. Also, when first deciding on taking a new collection account, the agency would consider how much information the orginal grantor has on the debtor. i.e., real name, address, phone would be worth more than an account with only internet info.

And most definetly, what D&T mentioned. A good lawyer friend and a thorough read of the FDCPA are in order...

Cheers

I have a 200btc debt I would like repaid.

Yes debt has different value. However, I was looking up debt collectors in the U.K. and they typically charge between 10%-20% depending on the difficulty. Granted, bitcoin debt it a unique animal, but I think if Kaos advertised a range or a maximum purchase price, he could make quite a bit of money. Especially with that DI debt.  ;D

Really, your taking on DI's?? :)  I still have that outstanding loan with him, cool :)

You don't have anyone in Alabama do you? ha ha I have a guy that owe's me around $500 in bandwidth overages, not worth it to take to court, but for debt collection :)