Twenty years ago, few creditors tried to collect on old accounts, figuring that it wasn’t worth the collection expense. Unfortunately today, collecting on old charged off accounts (especially credit cards) is BIG BUSINESS and a rapidly expanding industry.
Companies can buy charged off debt from your original lender for pennies on the dollar. It’s not uncommon for these debts to be bought & sold over and over…..and over again AND many of these companies use various aliases in order to further confuse the debtor.
What does this mean?
Well, say you had an old credit card from 1999 that you defaulted on and eventually stopped paying. The original creditor (OC) charges off the debt, closes their books and sells YOUR debt to a third-party junk debt buyer (JDB). The JDB pays maybe $100 for your $4,000 debt.
If you agree to settle for even half of the debt (if you are going to pay a collector, always negotiate down the debt, they’ll often settle for 70% of the original amount because they are still making HUGE profits!) the JDB is still making an obscene profit of YOU.
One of the nation’s top junk debt buyers, Asset Acceptance, bought debt worth $4.2 BILLION in 2004 and paid 102.3 MILLION for it….that’s 2.4 cents on the dollar!
The biggest part of settlement negotiation is not only pay off the debt, but to negotiate the removal of the debt. Remember, if you never ask the JDB won’t offer to remove the account from our credit report. Your chances are 50/50, but doesn’t that beat 0/0!!
