In helping clients become better managers of their finances, Specialized Consumer Strategies comes across various situations that require the right knowledge to navigate. One of these is collection accounts. Collection accounts are those that have fallen so far behind that the creditor writes them off as bad debt, and probably assigned or sold them to a collection agency. For credit card debt, an account can be assigned or sold after a set period, for example, 180 days.
The agreements between the collection agencies and creditors are varied, but when debt is sold, the collection agency pays the creditor a percentage of the face value and can keep the full amount (if it’s able to collect). Where debt is assigned, the creditor agrees to give the agency a commission or flat fee for collection.
While federal laws lay out what collection agencies can or can’t do, Specialized Consumer Strategies encourages clients to familiarize themselves with the laws.
When debt collectors come calling
Debt collectors work fast, and they generally have better collection rates on recent defaulters than old ones. If your account goes into collection, expect the phone to ring off the hook. The collection agency will try to contact you through every possible means.
You should know some debts are negotiable. This mainly depends on whether the debt has been assigned or sold to the agency. A debt collector handling an assigned debt will stay on the creditor’s leash. Debt collectors that handle sold debts might have room to reach a settlement.
The agreements between the collection agencies and creditors are varied, but when debt is sold, the collection agency pays the creditor a percentage of the face value and can keep the full amount (if it’s able to collect). Where debt is assigned, the creditor agrees to give the agency a commission or flat fee for collection.
While federal laws lay out what collection agencies can or can’t do, Specialized Consumer Strategies encourages clients to familiarize themselves with the laws.
When debt collectors come calling
Debt collectors work fast, and they generally have better collection rates on recent defaulters than old ones. If your account goes into collection, expect the phone to ring off the hook. The collection agency will try to contact you through every possible means.
You should know some debts are negotiable. This mainly depends on whether the debt has been assigned or sold to the agency. A debt collector handling an assigned debt will stay on the creditor’s leash. Debt collectors that handle sold debts might have room to reach a settlement.
