Submitted by Rachel R on Wed, 02/27/2013 - 11:02pm
Image source: FrugalDad.com
If you are struggling with debt and behind on your bills, you’re probably dealing with harassing or threatening phone calls from collectors and an endless stream of collection letters. This can be stressful, leaving you jumpy every time the phone rings and dreading the walk to the mailbox, worried what bad news you’ll find there. Even worse than being hounded at home, debt collectors love to call your place of work, trying to shame you into paying up, even when they know you can’t afford to.
What’s interesting (and unfair) is that not all debtors are treated the same way by bill collectors. Some are singled out and harassed far more than others and you may be one of the unlucky on the receiving end of this shoddy treatment. So what’s the trigger for out of control collections many consumers are subjected to?
Image source: FrugalDad.com
There are a few factors that impact how aggressive collectors will be, including:
Collection scores. FICO, the company that invented the credit score that we all live in fear of, didn’t stop their number crunching with assessing your credit risk and worthiness. They’ve got myriad data to draw on (everyone’s credit, payment and delinquency numbers) and they don’t just let the information they have lie fallow – they use this to develop metrics on collection efforts and recovery probability.
Debt collectors have a collection score attached to your name that predicts the probability of recovery (i.e. the chance they can get you to pay up). If your number is high, you will be relentlessly pursued because they think they can get money out of you. What’s worse, often multiple debt collectors may be competing to collect on your delinquent account. If you have a favorable collection score, you may be hounded by more than one firm, all eager to be the first to get you to pony up your past-due debt!
Activity triggers. Because the same firms that monitor your credit sell information to collectors, certain types of activity on your account can trigger an uptick in aggressive collections activities. For instance, if you pay down other debt, that’s an indicator that you have money on hand to pay debts and can trigger an alert message to debt collectors that subscribe to the service that you have cash to pay and they should call to get a piece.
An increase in credit inquiries may indicate you are seeking credit for something which will also be interpreted as a sign that you’ve got money available to pay down debt. If you’ve been unemployed, a new job reported to the credit bureaus can be a trigger to let the aggressive debt collections begin anew. Any activity attached to your credit that’s an indicator of improved financial status can instigate a wave of collection efforts.
Image source: FrugalDad.com
Bankruptcy risk scores. The last thing a creditor wants is for you to file bankruptcy (particularly Chapter 7). Once you file, they have to shut up and go away and likely will get no money out of you ever. The only debts that may survive a bankruptcy filing are student loans and income taxes (and even those can be reduced or eliminated depending on your circumstances).If your bankruptcy risk score rises, even as you are the deepest in debt you’ve ever been and least able to pay, collection efforts may grow particularly aggressive as creditors and their dogs of collection see this as their last chance to get anything from you before you are off limits!
If debt and aggressive collections are ruining your life and you feel like you have nowhere to turn for relief, don’t fret. You do have alternatives. Filing for Chapter 7 bankruptcy can be a great option if you are hopelessly mired in past-due debt. Sometimes life throws up roadblocks that can cause you to get behind and prevent you from recovering. Whether it’s the high cost of caring for a special needs child, an accident, illness or bout of unemployment, you deserve the peace of mind of a fresh financial start.
Contact a reputable North Carolina bankruptcy attorney to see if Chapter 7 will work for you, whether you qualify for bankruptcy relief and how to get started. Even if you think you are too broke to afford the protection that bankruptcy offers, think again – many attorneys offer zero-down plans to get your protection started right away!
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