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 alone can cause havoc with your credit card. Let\’s say that you miss a payment and then are assessed a fee. This fee may mean that you now have exceeded your credit limit. Having exceeded your credit limit, you are charged a penalty. You may now be $100 over your credit limit and you haven\’t even paid your monthly minimum payment yet.
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.
Debt sold to a credit card collection agency will normally be purchased at a fraction of what you actually owe, typically cents on the dollar. As credit card collection agencies make their bread and butter from collecting as much as possible from those who owe debt which they have subsequently purchased, they may at times be harassing and even threaten legal action.
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.
It is good to remember that at any point in this process, beginning with the credit card provider itself, a legal action could be filed against you. Additionally, your credit score is continually and quickly decreasing. A court judgment will anihilate your credit score even more.
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