Now, add to that the fact that the US economy is credit-fueled and debt-based. This means our entire spend and borrow system must have a debt collection function built into it.
The fact that not everyone will be able to repay their debt gives rise to the multi-billion dollar yearly revenues that the collection industry feeds on.
Be sure to read through my article about handling collection calls and how to use technology to limit your exposure to them. In the early stages of credit card collection, there aren’t many teeth behind the debt collector bark.
Repeated collection calls and letters from your bank are about the only tool available to the collector (other than suing you in court), in order to get you to make a payment.
Example: You have a ,000.00 credit card balance outstanding and the account can be negotiated down to ,300.00 in your fifth month of missed payments (between 150 and 180 days late).
Some banks want to offer better terms, but they can’t due to regulations.
You need to know how to manage the calls and prepare yourself in advance for them.
If you are behind with payments at this time, you already know all about the frequency of collection phone calls. Missing credit card payments is not like skipping payments on cars and homes, which can lead to repossession and foreclosure.
Because debt settlement typically only begins to be an option after you have missed making the minimum payments due for 3 months in a row, the debt settlement process, once started, can have irreversible implications.
If you have fallen behind with your credit card payments temporarily, and are able to get back on track with some form of normal monthly payments – look into a credit counseling service, or talk to your credit card banks about any internal hardship repayment plan they may make available to you.