Encore — which also operates as Midland Capital Management — also files sheaves of lawsuits against customers who do not respond. Sometimes the debt is so old that the statute of limitations for filing a suit has passed, and it may already have vanished from a person’s credit report. If the debtor makes a new payment, though, the statute of limitations starts all over again.
Credit counselors in the United States say more and more of their clients are being contacted by debt collectors based in India. Sometimes, it can cause problems. When clients “run into someone who doesn’t speak English well or there is a communication gap, it can add to the frustration of the customer,” said Bill Druliner, manager and financial counselor for GreenPath Debt Solutions in Milwaukee.
Debt collection, no matter who does it, can have “a devastating impact on people’s lives,” Mr. Druliner said, because calls can stress family relationships and sometimes debtors are pressed into paying late bills instead of buying necessities like prescriptions. Still, he said, he had not run into any specific problems with overseas debt collectors. “What they may lack in authority or ability to handle slang, they do handle the process very well and are very well spoken,” he said.
Mortgage loans, which involve complex state and national laws, are nearly always handled by collectors in the United States. But credit card, auto and other debt are prime candidates for collection overseas.
Just over 4.5 percent of all bank credit card accounts were delinquent in the fourth quarter of 2007, according to the Federal Reserve, up from 3.5 percent two years before. Businesses in the United States put $141 billion in delinquent consumer debt up for collection in 2005, according to a PriceWaterhouseCoopers survey commissioned by an industry group, and debt collection agencies collected $51 billion that year. They kept nearly a quarter of that in profits.
Collection veterans are seeing an unusual phenomena in this economic downturn. “People are walking away from their homes and hanging on to their credit cards, because that is their lifeline,” said Rajinder Singh, the head of global analytic services for Genpact.
Encore hires people with call center experience in India, and then trains them in unexpected skills like sympathy. Clients “get very abusive, very emotional, very sad,” said Manu Rikhye, vice president at the Encore unit in Gurgaon. The collector’s job is to “try to empathize with the consumer,” he said and try to figure out, if they’re angry, why. “Maybe it’s us, maybe it’s someone else,” he said. “You have to hear what they have to say.”
Collectors are taught to handle abuse by telling debtors: “This attitude is not going to get you anywhere. We can either work with you or refer you for further action,” implying a lawsuit. Collectors who raise their voices or try “tough” tactics are warned, Mr. Rikhye said, and those who misrepresent facts can be fired.
Manju Muddanna, 27, who uses the name Michelle Green when she is on the phone, is one of Encore’s best collectors. With laced-up stiletto sandals, wood bangles and a wad of chewing gum, she wheedles work and cellphone numbers out of debtors’ relatives to track them down. Like most Encore collectors, Ms. Muddanna handles several hundred calls a day, but actually makes contact with only a handful of borrowers.
Ms. Muddanna’s telephone voice veers to the school-marmish, her learned American accent into Blanche DuBois territory . When people on the other end of the phone mumble, she upbraids them, politely, “Ahhh just can’t understand you, ma’am.”
Encore pays its collectors in India an average base salary of 17,000 rupees ($425) a month, and they earn bonuses — sometimes more than $1,000 a month — for getting customers to pay. In contrast, collectors in the United States, make about $6,500 a month. Thanks to the income, a windfall in India, where the average monthly income is $63, collectors are amassing some of the status symbols that probably got their clients into trouble in the first place — new scooters, iPods, Swatch watches and exotic vacations.