When Times Are Bad, These Jobs Are Good

Forbes reports:

In his 40-some year career, recovery agent Hank Leleu has witnessed enough economic downturns to know how they'll play out. Once people start missing payments on their "toys," a storm starts brewing. He knows that just from experience.

The country has fallen on hard times once during each of the decades of Leleu's career, and he says it's always the same old story. When times are good, people buy, often beyond their means. When times are bad, as is the case at present in the U.S., debt collectors and recovery agents come calling. In a sense, they're profiting from other people's misery--and there's usually plenty to go round.

There's something different about this one though, he says, particularly about the people who are receiving these calls.

"It seems like no one is really exempt from this cycle," says Leleu, who operates ARB Las Vegas.

From November 2006 to March 2007, ARB was averaging a recovery of 43 high-line cars a month. For the same period a year later, ARB is averaging 55 high-line cars a month. These figures include brand names such as Mercedes, Porsche and Bentley.

Leleu says that a year ago, approximately 75% of the cars recovered were C- and E-class Mercedes Benz, carrying sticker prices of $35,000 to $80,000. A year later, the numbers are up by 20% or so, but the true picture here is that now 75% of the high-line cars ARB is recovering are valued in the range of $100,000 to $500,000.

We're pulling cars from mortgage bankers, real-estate firms,” Leleu says. “We're talking about upper-echelon people. It's like nobody seems to have that savings or extra borrowing ability to get them over the hump.

There has been no clear forecast on the size of this hump. Until we're on the other side, people who profit from others' financial losses, whether they operate pawn shops or run bankruptcy law firms, will thrive. It's nothing personal; it's just business--and a counter-cyclical one at that. These are industries that see a spike in demand during the economic downside.

Collateral recovery is a popular one. These individuals have been affectionately dubbed, throughout economic history, the "repo men."

How does he find you? Skip Smasher is one way.

The company, run by former California-based private investigator Robert Scott, is basically a people finder. It's a legal database of contact information recovery agents and creditors can access for a price.

Scott says the number of users on his Web-based service has jumped 30%, and it's remained at that level since November. He wouldn't specify numbers.

"In my mind, there is no doubt that a recession is here, based on an increase in our business activity," he says.

Perhaps Leleu's story is a clearer sign of how bad it actually is out there. He says that since October-November last year, ARB Las Vegas has gone from handling 18 to 20 accounts daily to 40 to 45 accounts. The amount of items for each account varies; it could be one car or two street sweepers or a bevy of construction equipment.

Leleu recalled recovering a plane from someone 10 or 15 years ago. He even had to take a set of false teeth once.

As for cars, which are still the most frequently recovered item, Leleu says his company is seizing as many as 160 a month, up from 100 a month last year. He has two agents earning as much as $2,000 a week, or between $65 and $100 per car. ARB Las Vegas charges creditors an average of $300 and $325 for a repossession and an additional $125 to $150 for the vehicle's keys.

That increase in volume isn't exclusive to Leleu's region, either. He says he has met with other recovery agents from across the country, and they've reported the same--from Oklahoma to Virginia, Colorado to Florida.

It's nothing personal.

Just ask Bill Bartmann. This former Forbes billionaire took out a $13,000 bank loan in the mid 1980s to start a debt-collection agency with his wife. The now defunct company, Commercial Financial Services, eventually went public, and at its peak, had a market capitalization of $3.5 billion and annual revenues of $1 billion.

"It was a business, and they owed the money," Bartmann says. At the same time, he expresses empathy for those in debt, since he once stood in those shoes.

"They had enjoyed the fruits of the expenditure or whatever it was, and I was trying to help them resolve their obligations."

Bartmann says he had a special approach to a business that relied much on phone calls that were either ignored or never returned. He soon learned that 90% of people wanted to pay their debts, but could only afford to pay about six of the 10 bills they had. His business goal was to be one of the six that did get paid.

If he had to do it all over again, he says, this is the market in which he'd want to be doing it.