First, all of the major national credit card companies sell their delinquent debts at some point, whether it has been 6, 12, 18, or 24 months since the last payment or has been charged off.
He claims that after six months of nonpayment, but I cannot confirm this because the agreements between debt purchasers and creditors vary and are not publicly available. The big guys determined years ago that it is no longer worthwhile to pursue old debts. In Michigan and everywhere else, once a debtor files for bankruptcy and the creditor receives notice, they sell the debt for cents on the dollar, per their standard agreement with Midland Funding or Sherman Acquisition or whoever. The bank then closes your file, relieved to be done with you.
The bottom-feeding debt buyer files a proof of claim with the bankruptcy court, wagering that they will collect more on their claims than they paid to purchase the debts.
I am uncertain as to how this would function outside of bankruptcy. The large institutions do employ their own collection personnel.
Again, they hire collection agencies at some point, sometimes one, then another, then another. Third-party debt collectors are paid on a contingency basis, meaning they retain a percentage of the amount they collect. Collect and retain nothing.
If that doesn't work, the bank or credit card company can sue, but they'll have to pay court fees and process servers, which is throwing good money after bad. The company then sells the debt, retains the proceeds, accepts the loss, and closes the file.
As with any risk, there is no assurance of profit in the business of purchasing debt, as one of the largest debt collection firms recently went bankrupt.
Outside of the large banks, who are permitted to acquire money at near-zero interest rates from the Federal Reserve and then purchase Treasury notes for guaranteed money, no one else is permitted to do so.
If you are having difficulty paying your credit card bills, the first stage is to determine your future monthly income and expenses, also known as your monthly budget. There is no way to plan for the future without beginning with the facts: how much do you earn and how much does it cost you to live, excluding credit cards. Bankruptcy is the absolute last resort.
Should you cash in your retirement accounts, deny your children sustenance, and be unable to assist them with college expenses if you do not have enough money to pay your credit card bills? If you have decided to file for Chapter 7 or Chapter 13 bankruptcy, STOP PAYING ALL CREDIT CARDS IMMEDIATELY. You are simply wasting your money.
When I say, ""figure out if you have enough money to pay your credit card bills,"" I mean without using cash advances from other cards or your retirement funds, such as your 401(k). Credit card companies are offering balance reductions in exchange for lump-sum payments. Debt settlement companies collect monthly payments and do not contact creditors until a predetermined sum has been set aside. You can conduct these transactions without compensating a third party.
However, be wary of 1099-C debt forgiveness income.
If you reach an agreement with a creditor to accept $5,000 instead of $10,000, the creditor will report to the IRS that you received $5,000 in debt forgiveness income.
You cannot borrow your way out of debt, so if you are borrowing to pay your credit cards, STOP borrowing and STOP paying until you sort out your direction.
Stop Making Credit Card Payments?""
" - https://www.affordablecebu.com/
