Don't walk away from your credit card debt! That is what millions of people are told, and for good reason. If you say bye bye to your obligations you can incur into big trouble, which I'll explain in a little bit. But first, let's take a look at what happens behind the scenes, when consumers decide to just stop paying their debt.
Credit card debt collection a huge, multi billion dollar enterprise. Just in 2005 businesses made over $66 billion (with the B) collecting on delinquent accounts from 8 million users. It is not unknown that the average debt holder gets repeated phone calls, letters in the mail, lawsuits, wage garnishments, property seizure, debt collectors knocking at the door, and even arrests as a result of not paying on time, and walking away from their payment obligations.
Now let's put it in perspective, debt collectors and debt buyers pay only fractions of the real amount users owe and use different methods to reclaim their share. Some of the largest debt buyers purchase vast portfolios of credit card debt, then divide that debt into small chunks for resale. Then, the companies that buy this credit card debt make the first attempt to collect the money, then re-sell uncollected amounts to others further down the collection food chain.
Because credit card debt is sold and re-sold over and over, ultimately companies that acquire the right to collect the last bits know little about the debtor, only the name, last known address, card issuer and account number, and amount due. To make matters worse, the large banks that sell off debt sell it as-is, nothing more is given.
For the businesses involved in debt collecting is tight, very restrained situation. It is highly speculative and debt buyers can potentially lose some of the money, or all of their money very quickly. But there are more methods.
Debt buyers can buy additional documentation for a fee from the banks, attempt to find consumers and sue them. Is not uncommon to target the wrong individuals due to change of address, phone numbers, and even names.
Then there are state and federal regulations that protect customers from debt sharks and their predatory practices. What would you do if you get sued and don't know anything about the court system?
A lot of the problems with this arise with you as a customer by changing address and not updating it, repaying debt and not asking for a Paid-in-Full notification in written for your records, and by not communicating with the bank or lender when a problem arises. In some states debt collectors who win court judgments are required to inform the court when a judgment is paid, however many do not. It is for your own good to contact them and make sure they do call or send in written when you have paid off.
Regulators, policy makers, and legislators who could intervene to right the balance between collectors and consumers are either unaware of the debt collection problems, the tens of millions on Americans caught up in them, or are simply unwilling to act. The Federal Trade Commission, responsible for enforcing a federal law that regulates the behavior of debt collectors, has done little despite a surge in consumer dissatisfaction. From 1998 to 2005, the number of consumer complaints regarding debt collectors, no surprise here, surged tenfold to 66,627 from 6,678. But in the last six years, the FTC has taken enforcement action against only 10 corporations.
Creditors have the legal right to collect what is you owe, and it is your responsibility as a consumer to pay what you owe. And yes, you have a right to dispute fees and interest in that debt. Sometimes due to carelessness, unfounded optimism or extreme need, whatever the scenario, you can get into debt beyond your means. Other causes for unbearable debt are life obstacles such as a family member's death, a divorce, illness, or job loss. That is why it is important for credit card users to keep up-to-date with their monthly payments in good times and avoiding unnecessary spending on their credit cards.Source: www.creditcards.com
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