Their voicemail messages can sound so intimidating. "This is Mr. Stevens. I have a very urgent business matter that needs your immediate attention. Call me back before six o'clock today at 1-800"
Debt collection agencies hire people that can sound and act like the scariest people you've ever met, which makes hiding from them sound like a pretty good strategy. However, if you're sticking your head in the sand over unpaid credit card debt, consider what could happen to you if you keep letting those calls go unanswered:
- Debt collectors could call your loved ones, or your office. Although federal law prohibits debt collectors from divulging your financial situation, it only takes one phone call to cause permanent embarrassment or even job loss.
- Collection agencies can tack on service fees and finance charges. Debt collectors thrive by inflating balances. The longer you wait to deal with outstanding credit card debt, the more they'll ask for.
- Bill collectors can wreck your credit score. Some collection agencies have been known to inflate balances to three or four times their original amounts, then report those figures to national credit bureaus.
- Collection attorneys can file suit against you and win a default judgment. In the worst cases, collection agencies can sue you for the amount they claim you owe. Though some judges have taken collectors to task for failing to properly serve notice of a pending lawsuit, many credit card cases result in default judgments when debtors fail to defend themselves.
Losing a judgment to a bill collector can hurt you in a variety of ways. You'll no longer be able to dispute the amount you owe, even if a collector jacked up your balance. A winning collector can garnish up to 25% of your paycheck in many states, causing you even more embarrassment at work. The judge may even allow a creditor to seize your savings accounts or put liens on your property, which can join the black mark left by the judgment on your credit report.
If you're scared of the voice on the phone, remember that federal and state laws protect you from abusive debt collection tactics. You can demand that all of your negotiation take place in writing, allowing you the ability to control your emotions while preserving the right to dispute inaccurate information. Because most debt collectors buy charged-off accounts at pennies on the dollar, you may be able to negotiate a settlement at a fraction of the amount you originally owed. Start communicating with your creditors, unless you want your credit card bill to turn into a court case.