How to Deal with Credit Card Debt Collectors
Posted February 10th, 2010
It is an all too familiar experience; you overspend in a holiday period like Christmas maxing out your credit card. You go on holidays in January and you find that you go back to work in February frantically trying to pay off your credit card debt. By the end of February the interest charges on the credit card are starting to go on making it harder to pay off the debt. Then in March or April the credit card company is calling you wondering why you haven’t paid your credit card debt off this month.
What happens if you can’t afford to pay back the debt?
Firstly, the easiest way to deal with credit card debt collection companies is to repay the money. If you have purchases on your credit card that you did not make, you should immediately report these to the credit card company’s fraud area to get them reversed. If you don’t pay your credit card debt the following things may happen:
- Extra Interest Charged – You debt will incur interest and be added to your credit card balance.
- Extra Fees Charged – The credit card company may charge you extra fees for not making a repayment in a particular month.
- Your account will receive a debt collector – If don’t pay at all for a prolonged period of time, they might refer your account to their collector’s team.
- A professional Debt Collector is assigned - If the Bank’s Collectors can’t get the money – The credit card company may sell your account to a professional debt collection company who will aggressively pursue the debt recovery process.
So how do you handle them and what can you do if you get in too deep?
What to expect from a Credit Card collection Company
On the surface it seems very simple – the debt collectors in the credit card company just want the money. However, there are some things you need to realize about the debt collection process which will enable you to get some breathing space when a credit card collector is breathing down your neck.
Often for the sake of avoiding greater administration costs, the costs of collection agencies and eventually lawyers, credit card companies will often accept a reduced lump sum amount or an agreement to pay by installments. If for example you owe $1,200.00 and you offer to pay it off over 12 months at $100.00 a month, the credit card company may accept this, although you need to realize that this not guaranteed and is something that is entirely within their discretion when you put a proposal to them. You want to get this in writing from the company before you proceed with this.
What can they do to you?
The credit card company does have a right to recover its money. The can contact you in reasonable ways, at reasonable hours with a reasonable frequency of contact. They can eventually sue you if you simply do not pay your debt and you make no arrangements for the settlement of this matter with the creditor. In serious cases, they can eventually repossess some of your property and even seek bankruptcy proceedings against you. So be under no illusions, it is important that you work through this situation.
4 stages of Debt Collector goes through to collect the money
- Send letters – A debt collector has a sequence of letters that they will send you to get you to repay the money. Usually the letters will be with increasing urgency.
- Call – If you do not pay from the letters they will commence calling you to try and recover the debt. These calls usually start very pleasantly and tend to get more assertive.
- Commence legal action – If you haven’t paid by this time and the debt is over $3,000 they will consider commencing legal action. At this point if you lose the legal case, this will be marked on your credit file.
- Repossession or Bankruptcy – Debt collectors may take the route of repossessing your assets or even applying to the court to bankrupt you if the debt is big enough. If you are made bankrupt your credit file will show this permanently and make it near impossible to borrow money again.
What can’t they do?
One of the other all too familiar experiences in the debt collection industry is harassment. Some unscrupulous debt collection agencies will do any of the following:
- Pressure debtors by calling at very odd hours or incessantly with the same message,
- Refuse to provide details of the debt,
- Threaten violence,
- Threaten to put you in jail,
- Threaten to tell your employer or your friends and family without your authorization,
- Or generally scare and intimidate you.
None of this type of behavior is either ethical or legal. In many jurisdictions, debt collectors can have their license removed for this type of behavior or they can be investigated by bodies like ASIC or the ACCC.
If you think that you have been the victim of harassment you should definitely seek legal advice in relation to this matter. For more information and advice about how to handle credit card debt collection harassment or to contact an online legal debt collection advisors head to DebtCollectionLetter.com.au.
Related posts:
- How To Deal With Family Breakdown, Divorce And Debt
- How To Get Out Of Debt
- Handling Debt Collection
- Debt Problems: How To Deal With Debt Problems
- How To Prepare A Plan To Deal With Debt
- How to get on top of Bad Debt
- Where To Get Help With Debt Problems
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