There is a little know fact of lending that most people are not aware of and which that the banking industry is more than happy to keep as a quasi secret. Banks and other regulated lenders must charge off retail debts like credit cards and store cards when the debt becomes more than 180 days past due.
This does not mean that you merely have to stop making payments for 180 days and your debt will be eliminated. It does however mean that after a loan or credit card balance becomes 180 days past due it is basically worthless to the lender.
Once a loan becomes 180 days past due the lender will in most cases sell the debt to a collection company for literally pennies on the dollar.
As anyone who has ever had a debt sold to a collection agency will tell you, collection agencies are restless, heartless and willing to tell any lie in the book to get money from a debtor.
Most people become so intimidated by the sometimes illegal practices of the collection agency that they willingly pay them to go away and stop the harassing phone calls and threats.
Regardless of what the collection agency tells you regarding your credit the truth is that if you are over 180 days past due on your debt then your credit is already ruined and will remain that way for 7 years.
If you check out your credit report you will find that the bank or initial lender will have informed the credit reporting agencies of your non payment. This will remain on your credit report for 7 years unless the reporting bank has it removed.
Do not trust a collection service to have this removed. Unless you have a document from the reporting lender that they will remove it, then the collection service is merely lying to you to get some money from you.
What the banks fail to tell creditors for some unknown reason is that they would rather settle with the creditor on the outstanding debt than sell it to a collection service for cents on the dollar. But remember that the window for negotiating with the Credit Card Company or lender is 180 days.
After the 180 day window has closed the bank by law will charge off the debt and sell the debt to a collection service. At this stage the bank is out of the picture, you literally do not owe the bank a red cent, your indebtedness has been transferred to the collection service.
A really important point to understand is that the collection service is not working for the bank, they are not collecting an outstanding debt for the bank, they are working for themselves, trying to maximize their return at your expense.
So do not believe anything that the collection agency representative tells you in relation to the Credit Card Company or lender. The original lender in not a factor after the loan becomes 180 days past due.
Settlement negotiations with a creditor who is not yet 180 days past due will ensure that the original lender makes money than by dealing with a collection service.
It is also possible to negotiate with your credit card company or lender to have them report your outstanding debt as “paid as agreed” or “settled” with the credit reporting bureaus and have the notation of “charged off” removed.
If you feel that this is too much for you to accomplish alone you could appoint a debt counsellors to act for you.
Why struggle under a burden of debt when you can actively work to debt relief.
This will have the result of vastly improving your credit score.
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