Skip to main content

How Collection Agencies Work

 So many businesses that offer credit to customers do not want to take real strong action on customers who do not pay their bills.  So they work with Collect Agencies.

After a certain period of time without getting paid the business will write off the debt and sell the debt, or turn the debt over to a Collection Agency.

Selling  the Debt to the Collection Agency
The Agency will pay between 4% and 10% of the debt balance depending on several factors involving the debt.  Those factors include Age of debt, last payment on debt, amount of debt, how much other business the collection agency does with the lender.

Turning the Debt over to the Collection Agency

There are a couple of ways this can work.  The lender can pay a fee per bad debt or the lender can give the Agency a percentage of the collection.

After being contacted by a Collection Agency

Never admit to owing money until the debt is verified.  A lot of collection attempts are made that are actually for someone elses Debt.  

Before you Pay a Collection Agency
I would never pay a Collection Agency unless I had a signed written agreement that they would remove the collection from my credit.

Get the Debt Verified

I would demand that they verified that I owed the debt.  Check on the web for Debt Verification letter.

After the Collection Agency Verifies the Debt Negotiate

I would also negotiate hard to get the amount down to at most 50% of the Verified amount owed.  Don't be afraid to walk away during the negotiations.  They have 7 years to collect, in some states up to 10 years.  Unless the amount is significant they will not sue you.



.

Labels:

Comments

Post a Comment

Popular posts from this blog

New Account Notification

I have four different Free ways to be notified of a new account being opened in my name on my Social Security number.  This is the critical notification that your Identity is being stolen if you did not just open a new credit line. My Discover card, Credit Karma, Chase Bank, and Credit Sesame accounts all notify me if there has been a new account opened in my name with my Social Security number.   New Credit Account I recently opened a new Home Depot* credit card.  You know those Black Friday tool sales sucked me in again.  I do it almost every year.   Anyway right on time the next day and the day after I opened a new account I was notified by Credit Karma, Discover, Chase Bank, and Credit Sessame. Why This is Important Any time your credit is checked you need to be notified.  If you did not apply for new credit it is likely to mean someone is attempting to STEAL Your Identity.   The first step in Identity Theft is for the thief to apply...
Post a Comment
Read more

My Introduction to Airline Miles

 I was first introduced to airline miles by a friend who had just gotten a United Airline Chase Credit Card .   I signed up and started getting airline miles for all of my business purchases.  Just for signing up I received 50,000 miles.  I believe I had to spend $3,000 in the first three months to get the 50,000 points.  This was a great bonus, two free flights anywhere in the US for spending $3,000 which I would have spent anyway.   The annual fee for this card is $95 which is waived for the first year. It took 25,000 airline miles to get one round trip ticket anywhere in the US.  Short flights would only cost 20,000 airline miles. I used just this Chase United card for a couple of years and earned a couple hundred thousand Airline Miles on the purchases my business made.   More Chase Points Cards I applied for and got more Chase credit cards for points.  I got the first Chase Freedom card with no annual fee.  This ca...
Post a Comment
Read more

Bank Fees and How to Avoid Them

I hate to pay fees. Little fees, big fees, they all irritate me. In the old days of checking accounts where local companies all accepted checks, banks used to charge $15 to $25 on bounced checks. In my area of Montana they made enough in Bad Check fees to pay all of their full time tellers.  A friend who was a banker told me this. Fees are a huge revenue source for banks. I try to avoid most bank fees. My checking account is does not have a monthly fee. My savings account does not have a yearly fee.   I do have an annual fee on my lines of credit, HELOCs, but I have not been able to talk my banker out of those fees. Debit Cards Fees will grow quickly if you don't pay attention. Debit card fees can vary depending on the bank or financial institution you use, as well as the type of account and the transaction type. Here are some common fees associated with debit card usage: ATM withdrawal fees : When you use an ATM that is not owned by your bank or financial institutio...
Post a Comment
Read more