‘Bad Paper’ by Jake Halpern

Jake Halpern presents an entertaining sociology of the debt-collecting fraternity. Kasia Lipska

A former armed robber and jailbird with a long rap sheet, Brandon Wilson doesn’t seem like anyone you’d want to encounter in a dark alley.

But one of the surprises of Jake Halpern’s wonderful inquiry into the seamy, multilayered world of consumer debt collection is that the colorful, street-smart Wilson is actually a stand-up guy — a man whose word, as he loudly proclaims, is his bond.

“Bad Paper,” which originated as a New Yorker magazine article, starts off as the literary equivalent of a buddy picture. It stars Wilson and his unlikely partner, Aaron Siegel, scion of an aristocratic Buffalo family. (Brad Pitt’s production company, Plan B, is reported to be planning a TV miniseries.)

A banking executive accoutered with an MBA and apparently destined for a bright Wall Street future, Siegel made the unorthodox decision to return to Buffalo in 2008 to launch a private equity fund specializing in “distressed” consumer debt. He teams up with Wilson, a skilled Bangor, Maine-based operator whose specialty is old paper — years-old debt that can be cheap to buy and highly profitable to collect.

Halpern’s accomplishment goes well beyond delineating this odd-couple relationship, though he does so with astonishing intimacy. (Both men, unlike most of the book’s other characters, allow him to use their real names.)

“Bad Paper” turns out to be both an entertaining sociology of the debt-collecting fraternity and a picaresque romp through the industry’s most unsavory byways. Its cast includes “publicly traded companies, hedge fund operators, professional debt collectors, street hustlers, ex-cons, and lawyers” — all working “together, and against one another, to recoup every penny on every dollar” in what Halpern convincingly describes as an “often-lawless marketplace.”

This is, to many of us, an unfamiliar world. Yet, according to Halpern, its practices affect as many as 30 million consumers — many seduced by easy credit, then impoverished by the Great Recession — who are “currently being hounded over at least one loan.”

Halpern takes the time to find a few of them — not chronic deadbeats, for the most part, but sympathetic figures whose meager economic prospects have left them unable to pay what they owe (or, in some particularly egregious cases, don’t owe).

The book’s title refers to near-worthless or uncollectible debt of uncertain or tainted provenance, sometimes based on information illegally sold to multiple agencies or stolen and resold. (Some debtors reach a settlement with one company, only to be approached by another for the same debt.)

Buffalo, which happens to be Halpern’s hometown, is a veritable debt-collection mecca, riddled with bad paper and ex-cons. Nevertheless, “[t]here was, quite clearly, a ladder of honor and propriety among collectors,” Halpern reports.

Jimmy, a former coke dealer with his own agency, “believed in collecting aggressively, but never threatening people or unnecessarily bullying them.” He tells Halpern: “We are professional nags, not con men.” Yet Jimmy’s collectors have (misleadingly) threatened debtors with legal action — a violation of federal law.

Apart from a touch of humor, Halpern is an unobtrusive narrator. But his reporting is clearly fueled by an advocacy journalist’s disgust at the industry’s continuing abuses. Even the recently established Consumer Financial Protection Bureau, a federal agency, has the budget to police only the largest debt collectors, Halpern says, and state law enforcement is woefully understaffed.

While Halpern ably charts the evolving legal landscape, he never addresses the impact of new telephone technology. It seems arguable that the ubiquity of Caller ID and the disappearance of landlines represent real threats to the profession. After all, who these days routinely answers phone calls from strangers?

Halpern does, however, offer intriguing advice to those facing a credit-related lawsuit: Show up in court and ask for the evidence. So tortuous and ill-documented is the credit trail in most cases that just posing the question often triggers a dismissal.

“Bad Paper” reveals that the whole enterprise, involving transactions with virtually no warranties of accuracy, depends on consumer gullibility and fear. In the words of one legal expert quoted by Halpern, if debtors started contesting their cases in court, “[i]t would bring the debt-buying industry, as we know it, to a grinding halt.”