Some times I wonder, what is worst thing that can happen to me, If I do not pay my credit card bills. I can not make regular payments as I have to keep up with increased house payments.
Earlier, I did write in detail about what would possibly happen if you do not pay your credit card bills. I am still of the opinion that mortgage payment should be first priority. It is better to pay mortgage than paying the rent.
If you recall that article, I said following things will happen is same order.
- Collection Calls
- Credit Card Cancellation
- Collection Agents on your Door
- Increased Interest Rates
- Bad Credit Score
- Legal Action
- Bankruptcy
By the way, If you don’t care much about your credit scores (due to current crisis they are worthless anyway), you should consider re-negotiating with your creditor. people have been able to get up to 50% weaver on their balances. Take a look at some of the articles below to find more credit related facts and advice.
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With bankruptcy it depends on what is there, after the feds and state get paid, and proportionally distributed by amount owed to each creditor.
Ignore the phone calls for about a year, gather up about half owed, call the collection agency and tell them this is all you got, and it’s all you are going to get to settle this account. They may bicker 100 bucks one way or the other. If you don’t like it hang up, and call back in a month, and do it over. Hell I have had them even send me unsolicited offers that reflect the above scenario.
I used to run a collections department for 8 years, we had over 20,000 accounts, with local districts, HMO’s, Veteran’s Affairs and private citizens, guess how many people worked there? 4. The stress of legitimizing an amount is not worth the payoff because that debt is really purchased for maybe forty cents on the dollar, at most. Sometimes they use a fee based collection system where a flat fee is taken for each account to see it through litigation beginning to end. Those are usually just as willing to deal before it goes to court.
Another method is setting up a payment plan, or just start sending them small amounts every month in order to keep out of court.
Here’s a great letter for responding to collection agencies, making them legally put EVERY thing in line is a great way to get them to drop the debt all together. I prefer this when I feel like I am getting screwed. Either way.
Today’s Date
Your Name Your Address
Collector’s Name Collector’s Address
Dear {},
I am writing in response to your (letter or phone call) dated {}, (copy enclosed) because I do not believe I owe what you say I owe.
This is the first I’ve heard from you, or any other company on this matter therefore, in accordance with the Fair Debt Collection Practices Act, Section 809(b): Validating Debts:
(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
I respectfully request that you provide me with the following information: (1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) Provide a verification or copy of any judgment (if applicable); (4) Proof that you are licensed to collect debts in (insert name of your state)
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