Collection Information for Subprime Mortgage
Bad Credit Mortgages

Collection Agencies:

They are not your friend. They pretend to be your friend by being nice but they want your money. They will ask about your personal problems stating it's in confidence. Don't be fooled. Their underlying motive is to know your financial status and to collect the debt.

A collection agency is a company or lawyer hired by a creditor to collect the creditor's debt. The creditor is a business or person who first extended you credit. A creditor who sets up a separate office to collect its debts, under a different name, is also considered a collection agency.

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Most creditors won't settle the outstanding amount until your account is past due. That means your account has to be in collection status first before they are willing to settle for less than the full amount.

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Understanding Collection Agencies:

1. A collection agency is hired by the creditor.
   The creditor decides if they will collect the full debt or allow a partial payment as full payment. The collection agency can't agree to a reduced payment without asking the creditor first. They can't sue you without the creditor's authorization either.
   
   
2. Early contact means more money.
   The collection agency will contact you immediately after the creditor hires them. The earlier they contact you, the more chance of collecting the full debt. According to Credit Repair by Robin Leonard and Deanne Loonin, there is a 75% chance of collecting if the account is three months overdue. The percentage drops to 50% if the account is six months late. After a year late, the collectors have a one in four chance of recovering the debt.
   
   
3. The collection agency is very aggressive.
   Since the collection agency's fees are based on the amount of letters and phone calls they make, the agency gets very aggressive. They will contact you more often as that will increase their fees. They usually get a percentage of the amount of the debt they collect.
   
   
4. Delay collection efforts
   There are some legitimate ways to delay the collection agency's efforts. If the balance owed is not accurate, you can question it. If the quality of good received was less than promised, you can question it. The collection agency will then inform the creditor and the creditor will have to research the information.
   
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