Negotiating With Credit Card Collection Agencies
Due to the difficult financial climate we live in, collection agencies which collect credit card debt have become busier. This is due mainly because it has become harder and harder for people to make their payments.
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.
Before things get worse, it is best to contact your credit card provider and explain your situation. Most credit card providers are willing to work with you. It is best to put a stop to things at this point instead of letting things get out-of-hand, resulting in the credit card provider selling your debt to a credit card collection agency.
If the credit card provider decides to sell your debt to a collection agency, normally at cents on the dollar, the credit card collection agency will want to collect from you as much as possible since this is how they make their living. Because of this, credit card collection agencies may be nasty with you and threaten court 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.
Negotiating a settlement with the credit card collection agency should begin with an offer to reduce the original amount owed to about 25% of the original debt. This still means that the credit card collection agency will make a profit on their investment. The credit card collection agency may very well reject this offer and suggest a counteroffer. You may then counter this counteroffer and the process continues until either an agreement is reached or the negotiations fail.
If no agreement is reached, the credit card collection agency may lose the momentum for collecting your debt. It may determine that collecting a smaller amount is better than nothing at all. It may also decide that selling the debt to another credit card collection agency is a better idea. If this happens, the process will begin yet again and run its course.
At any point in this drawn out process, a court action could be filed against you. From beginning to end, your credit score will suffer tremendously; however, a court judgment will send your credit score into a downward spiral.
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