I am trying to clear up some 'charge off' credit cards on my credit report. Some have $0 under balance due. If I get a notice from a collection agency, how do I know if this is the correct balance due???
2006-09-16 00:02:46 · 12 answers · asked by Barbara T 2 in Business & Finance ➔ Credit
A collection agency can only charge interest and fees if it is in the contract that you had with the original creditor (which it usually is) AND if your state allows it. If your state does not allow it, then no matter if it is in the contract, they cannot charge it.
When an original creditor sells a debt and the collector starts to report, the original creditor "must" show a zero balance - so it sounds like the original creditor is following the legal requirments.
There can be two of the same account on your reports, but both accounts cannot show that there is a balance due, one has to show a zero balance.
Send the collection agency a debt validation letter to make sure that they are the legal holders of the debt and that the amount is true and correct. Send it certified mail return receipt.
Also, check the statute of limitations (SOL) for your state to be sure you are still within the legal collection time limits. If you are out of SOL, you are not legally obligated to pay.
After you receive validation, whether you are still within SOL or out of it and you want to pay, send a pay for delete letter.
Request to pay a percentage of the debt as payment in full
Request that after payment they will:
Not continue to collect the debt or the remainder of the debt (if they agree to take a percentage)
That they will not sell the debt or the remainder of the debt.
That they will remove anything they have placed on your reports.
You might check out the site I've linked. Learn your rights. Learn how to deal with a collection agency, and original creditor, in reporting, validating and with pay for delete.
2006-09-16 10:26:28 · answer #1 · answered by echo 7 · 1⤊ 0⤋
The way it works is: the original credit agency from which you borrowed will eventually get tired of spending their resources and energy trying to collect the debt you owe. They can sell that debt to a collection agency, then they zero out the balance. Now you no longer owe them, you owe the collection agency that bought the debt. The collection agency can and will make up for their cost by charging an extremely high interest rate, and extra fees for the trouble. This is all legal, and the best you can do on your own is to talk to them directly and try to work something out.
2006-09-16 00:16:49 · answer #2 · answered by Silvax 3 · 0⤊ 0⤋
When a company turns a debt over to a collection agency, they are out of it. You now have to deal with the collection agency and they can charge you just about anything they want. Most will make an offer of a lesser amount in the hopes you'll be attracted to pay it. But if you don't go for it, that's when they get pissed and start applying interest, penalties, late fees, etc.
2006-09-16 00:19:08 · answer #3 · answered by north79004487 5 · 0⤊ 0⤋
From personal experience, I've had the total sum billed to me.With late charges and interest. I think to add anything but interest, and late payment charges is illegal. But I think only the billing company can make those charges not the collection agency.Unless they have a certain fee, I have had some interest accrued to my total sum of a phone bill years ago. I refused to pay it, due to a disagreement. Later the collection agency cut the total sum in half to resolve the issue, and move on.Maybe you can work something out. For me this did not damage my credit score, it barely came up! Also this might look bad on your credit report. Good luck!
2006-09-16 00:17:11 · answer #4 · answered by liz_milhans 2 · 1⤊ 1⤋
depends on state you're in.
they make money by "buying" the debt from the previous creditor
in some states they can add on extra usually up to 1/3 of original debt
you can settle with them for less but how less depends on how old the debt is.
the closer to 7 years old the debt is the less they will take on a settlement
never pay any money on the debt unless you plan on paying in full or settling (in exchange for paid in full).
if you do the debt will stay on credit report from last time you made partial payment
if you settle on debt, get agreement in writing on debt collectors letterhead, however make sure you pay within 30 days of aggreement
2006-09-16 02:23:54 · answer #5 · answered by Anonymous · 1⤊ 0⤋
They are required by law, specifically the Fair Debt Collection Practices Act to verify the debt upon a written request within 30 days of receipt of your letter. tip: send it return receipt requested certified mail.
2006-09-16 01:05:42 · answer #6 · answered by Credit Expert 5 · 0⤊ 1⤋
Yes they can. This is how they make their money. The creditor gets what he is owed and the agency gets paid (by you) for it's services. Answerer one is obviously giving any answer for the points.
2006-09-16 00:13:09 · answer #7 · answered by malcy 6 · 0⤊ 0⤋
Yes they can as they are covering the overheads of recovering the debt.
You can ask for a copy of their rates etc. They have to provide these to you in writing so you know what you are paying and why.
2006-09-16 00:16:13 · answer #8 · answered by mrmaccnz 2 · 0⤊ 0⤋
they charge delinquency fees that they set themselves-- and they add interest,
In fact they can pretty well charge you what they like and you have no comeback. Give them what they want because with every request you make you get charged extra
Just get out of there as fast as you can
they are a law unto themselves
2006-09-16 00:13:31 · answer #9 · answered by virginia o 3 · 0⤊ 1⤋
Yes, unpaid debts will accrue interest and fees.
2006-09-16 00:28:10 · answer #10 · answered by Sandie 6 · 0⤊ 0⤋