Remember that credit card bill you stopped paying a few months ago? Before posting on your favorite social network website that you just got a raise, or that you’re going to Tahiti, think twice. Bill collectors are now using social media to track down customers who aren’t paying. A spokesman for ACA International, a debt collection trade organization, notes that social media has become another resource for debt collection companies. Although not common right now, the use of social media to collect bad debts is expected to expand. Understanding what happens when you don’t pay credit card debt and other bills can help you avoid problems with debt collectors that seemingly stop at nothing to collect unpaid debt.
Credit card debt may be charged off, but it doesn’t go away
Credit card companies are in the business of making loans through issuing credit cards, and once they determine a debt is unlikely to be paid, it’s removed from active accounts. This is a process known as charging off bad debt, but the story doesn’t end there. Financial institutions, credit card companies, and other creditors typically sell their bad debt for pennies on the dollar to “boiler room” collection agencies. Collection agents may work on commission, and their job security depends on meeting goals for collecting debt. Although federal laws govern the practices of debt collectors, they can be relentless. They keep after you until you either pay or file bankruptcy, which stops all collection activity for creditors included in your bankruptcy filing.
Debt consolidation and credit counseling: Calming the wolf and restoring sanity
Ignoring debt doesn’t work. You are slammed with phone calls, snail mail, email, and eventually, someone may visit you at home or work and serve you with a summons. This is generally the first step creditors take toward getting a court order to garnish your wages or levy your bank accounts. Let’s not go there because debt help is available. Take stock of your debts and contact a credit card debt consolidation service, also called a consumer credit counseling agency. These services work with you and your creditors to establish an affordable repayment plan and cash-based budget. You pay a fee for this service, but not until you agree to accept help. You are also required to close your credit lines, but this is a small price to pay for gaining peace of mind and restoring sanity to your household and finances.
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.