Collection agencies devoted to credit card collections have in recent times become busier and busier. This is because more and more people are having trouble keeping up with their bills.
One missed payment can result in an additional penalty which might just be what hurls you over your credit limit. Know what happens if you exceed your credit limit? That’s right. You get an over-limit fee assessed against your credit card. At this point you might be $100 over your credit limit and you still owe the initial monthly payment as well.
If you contact your credit card provider, it may be willing to work with you to arrange a payment plan to get your account back on track. Credit card providers are normally willing to work with you if you show that you are being responsible by calling them and explaining your situation. It is always best to hammer things out at this point than to wind up dealing with a collection agency.
If you do not work with your credit card provider to reach an agreement, it may decide to sell your debt to a credit card collection agency. Typically, credit card collection agencies purchase debt for cents on the dollar, which is a fraction of what you actually owe. The collection agency will want to collect as much as possible from you in order to increase its profits. In order to obtain as much as possible from you, collection agencies may be nasty and may even threaten a law suit if you do not pay.
In reality, most credit card collection agencies would prefer to work with you to obtain payment of the debt than to launch a legal action which will be time-consuming and costly. If at all possible, this would be a good time to offer to pay the debt in full at a reduced amount. Make sure that the resulting agreement is in writing, that you retain copies of all the negotiation documentation, and mail all correspondence to the credit card collection agency by certified mail, return receipt requested.
If you decide to try to negotiate a settlement with the credit card collection company, start by trying to reduce the original amount owed. Remember the credit card collection company purchased your debt at a reduced rate, normally somewhere between 8 cents and 12 cents on the dollar. A good starting point would be around 25% of the original debt. The credit card collection agency will probably reject this amount but will counteroffer with a different, higher amount. You might want to counter this counteroffer and the process continues in this manner until you reach a settlement or the negotiations fail.
As time goes by, the credit card collection agency may well pay less attention to the debt and stop calling you. It may decide to accept a smaller amount than it was initially willing to accept or, alternately, it may decide to sell the debt to yet another collection agency, for yet again a reduced amount, and the process will begin all over again.
Keep in mind that all along this process you are running the risk that one of these companies may indeed decide to file a law suit against you and that your credit score will be decreasing at an alarming rate. Additionally, a court judgment against you will devastate your credit score even further.
How I Stopped Midland Credit. I Erased a $14,072 Midland Credit Debt and Fixed my Bad Credit. www.MidlandCreditDebt.com
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