Collection agencies devoted to credit card collections have in recent times become busier and busier. This is because more and more people are having trouble keeping up with their bills.
One missed payment can result in an additional penalty which might just be what hurls you over your credit limit. Know what happens if you exceed your credit limit? That’s right. You get an over-limit fee assessed against your credit card. At this point you might be $100 over your credit limit and you still owe the initial monthly payment as well.
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.
Debt sold to a credit card collection agency will normally be purchased at a fraction of what you actually owe, typically cents on the dollar. As credit card collection agencies make their bread and butter from collecting as much as possible from those who owe debt which they have subsequently purchased, they may at times be harassing and even threaten legal action.
It makes more sense for the credit card collection agency to work with you than to file a costly and time-consuming law suit. If you can acquire the funds, try making an offer to the credit card collection agency to reduce the amount of the original debt and pay the negotiated amount in full. You will want to make sure that the agreement is in writing. Also, be sure to keep copies of all documentation to and from the credit card collection company, and to mail all correspondence by certified mail, return receipt requested.
Typically, it is a good idea to begin the negotiation somewhere around 25% of the original balance. Though this sounds low, remember that the collection company probably purchased your entire debt at only about 10% of the original amount. It is likely that the collection company will decline this offer and will issue a counteroffer, which you then should counter as well. This will continue until you either come to an agreement or the negotiations discontinue.
As time goes by, the credit card collection agency may well pay less attention to the debt and stop calling you. It may decide to accept a smaller amount than it was initially willing to accept or, alternately, it may decide to sell the debt to yet another collection agency, for yet again a reduced amount, and the process will begin all over again.
It is good to remember that at any point in this process, beginning with the credit card provider itself, a legal action could be filed against you. Additionally, your credit score is continually and quickly decreasing. A court judgment will anihilate your credit score even more.
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