I know trhat your bank can tack on late
fees/interest but once it goes into collection
thats the whole idea for it to go into
collection, they start sending you letters
for you to settle for less money so I dont
think collection would add on more, your
bank sold the debt to these collection
agencies and they will collect whatever
they can, lets say you owe 1,500 dls
they might send you a letter saying that
they will accept 800dls if you send in the
payment right away, but it all depends on
how much you owe and how long.
If you stopped paying more than 2-3 yrs
ago then just wait the statute of limitation
for your state unless you want to better
your credit for some reason then talk to
them and settle the debt one less thing
to worry about.
Yes, a collection agency legally can add interest and fees on top of your balance owed. Although, most of this is just the collection agency trying to make extra money. When your debt gets over six months old, the original creditor gives up on collecting the debt and sells it to a collection agency for pennies on the dollar. Whatever the collection agencies collect over 10 percent of the original balance is pure profit for them. It is usually possible to offer a collection agency a lump sum payment that is much less than the original balance owed. Or better yet, if you don’t pay them at all and can avoid being sued until the statute of limitations in your state has past, you’re home free!
The debt can incur interest and fees after collection has begun. Most of this can be negotiated away during the payment process. The original collection agency gets paid 40-60% of the amount collected. If they are unable to collect, the debt will most likely be sold on the secondary market to a debt buyer who will pay 7 -10 cents on the dollar for the debt. So the collection agency can afford to give a little on the fees and interest.
Make an effort to settle. But know the process! It involves more than just getting them to accept an offer and making a payment. Make your original offer at about 20% of the original debt amount. Keep negotiating until you get something that is acceptible.
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July 18th, 2010 at 3:47 pm
Of course, they do it all the time.