Posts Tagged debt collection

When you default on your credit card and refuse to arrange a payment program with your credit card company, it’s almost certain that your debt will end up in the hands of collectors. That’s right - hounding, scheming debt collectors who will do all they can to retrieve as much of that money from you.

Debt collection agencies are a money-grubbing bunch - no subtler way of going about it.  They’ll harass you, insult you and pretty much do anything they can, short of breaking state regulations and being liable for a damaging lawsuit.  Once they get you to actually work out a payment deal, they’ll tack on hundreds, sometimes thousands, of dollars on your debt, in the form of “debt collection fees.”

By law, debt collectors are entitled to “tack on” a reasonable fee for their troubles.  However, what’s reasonable to them will likely be an exorbitant and ridiculous expense to you.  There was a documented instance, in fact, when a collection agency claimed a $240,000 expense in retrieving a $1,000 debt.  While that example may be extreme and wouldn’t pass through a judge with his senses intact, most collection companies will be appending expenses that actually make sense.

When a debt collector tacks on amounts to your existing debt, ask them for a written verification of debt request, with an itemized list of the total amount you’ll need to settle.  That way, they’ll forced to present their expenses in a sensible way.  An even better way, however, and one we recommend, is to consult a debt specialist before dealing with collectors.  Experienced in working out debt after debt for consumers like you, these services can actually negotiate with collectors on your behalf.  I have personally seen cases where the debt was reduced to less than 40% of the originally money owed.