Collections Timeline Sticky?

[wingnut]

Hello Everybody -

Although each company obviously has its own policies, I have noticed a general trend regarding collection tactics. Perhaps we could all collaborate and create a rough timeline for people to refer to regarding the collection process. The way I see it, there are 4 major phases:

0-30 Days Past Due:

- A late fee.
- Possible interest rate increases.

30-90 Days Past Due:

- Monthly late fees.
- Calls from in house collection representatives.
- Some collection letters.
- Eventually the interest rate is increased to the "Default Rate", usually 30+% APR.

90 - 180 Days Past Due:

- Monthly late and / or overlimit fees.
- Calls from in-house collection representatives.
- Calls from "subsidiary" collection representatives. These companies are typically affiliated or owned by the original creditor. I'm pretty sure that they do this so that they can still charge the usurous "Default Rate", usually 30+% APR.
- OFFERS TO SETTLE THE DEBT FOR 30%-80% of the outstanding balance. Usually in lump sums, however...

180+ Days Past Due:

- Creditor usually sells debt to an outside company. Typically they only received 10-30% of the outstanding debt.
- Calls and letters from new debt owner.
- Offers to settle the debt for a reduced amount. Amount is usually higher than the pre-sale offers, so if you're going to settle, it's usually better to do so before the debt is sold outside of the company.
- Arbitration. Due to extensions and objections, this can take months, and many cases get Dismissed without Prejudice. Typically not the initial choice of debt buyers. Used to secure...
- Garnishments. A court order is necessary first. Once a judgment is rendered, the state's judgment rate applies, usually less than 9 or 10 %

Basically, it seems that at least 9 - 10 months must pass between the 1st missed payment and the inevitable wage garnishments.

Based on personal experience, it probably takes much longer than that. I stopped paying my cards around April of 2006. Only 1 of the outside companies tried Arbitration. The case ran from February to October, and then was Dismissed without Prejudice. They, and no other debt owners, haven't tried again since. So, I'm at least 20 months past due on what used to be my credit cards, and no garnishments yet.

Perhaps if more people were aware of this bill collectors would be a bit more polite and professional. Or, perhaps they act like jerks in order to scare people into believing that the collectors are more powerful than they actually are.

BEST OF LUCK,

WINGNUT

[jp2861]

I wouldn't get too hung up on timelines. It may give someone a false sense of security. There really isn't any timeline that would be of much use to anyone, as each creditor has their own way of doing business.

A better way to approach this would be a step by step guideline that informs someone how to prepare and respond to the process, as it happens, and when it happens.

Let's face it, if we're past due we know there's a good chance someone will come knocking. I think it's better to focus on "what" to do when they come knocking, not the "when" part of it. Knowing when they're coming is useless if a person doesn't know what to do when it happens.

[silverlotus]

From my experience, that's fairly accurate.

Some banks can be very aggressive though and start in motion plans to sue in about 3 months. Citibank and Capital One are examples of this. Especially if you have amounts that are allowable in small claims court. Which are the smaller ones. So, also don't have the false security that a low balance card will leave you alone longer than a high balance one.

I'm concerned because I'm planning my BK very carefully and won't file until the end of March at the soonest. End of April would be better because we need the time to save up for lawyers and filing fees. I'm hoping they will stay away for at least that long.

[MomIcantFindmy]

I found this thread very reasuring. It basically confirms what I thought. We quit paying September/October to save up for BK and will file Feb 1st. For some odd reason the calls have pretty much stopped this week. I guess the collections departments must have employees on vacation.

[ssdsco]

I'm at the 180 day mark and this is exactly what I've experienced.

It's been pretty painless. We were able to give our cell phone numbers to family, friends, doctors and turn the ringer off on the home phone. We check caller ids every now and then. Also we clearly identified our names in the greeting so the creditors aren't calling around looking for us.

[wingnut]

Comparmentalization...

JP2861,

You must be familiar with the saying "Information is power".

There are already stickies regarding how to react to the collection techniques. However, most people don't want to find out the hard way when these tactics are usually applied.

That is why I asked for other board members to collaborate. Although much of the information in the proposed approximate timeline can be found by arduously searching through previous posts, that can be quite time consuming.

Also, the specter of wage garnishments can be quite intimidating. When they MIGHT occur is usually extremely relevant to people who are past due. If only for planning and piece of mind.

Has anybody experienced a collection timeline FASTER than the one proposed? Although it happens, it seems like the exception more than the rule.

Perhaps we could add links to the reactions within the timeline? Open to ideas...

Good Luck,

Wingnut

[jp2861]

Wingnut: If you go back and read through the threads the majority of the questions are asking "what" they should do. That's why I suggested a stcky that explains a step by step explanation of the process. We have absolutely no control over "when" actions will happen but we all have control over "what" we will do to respond.

Maybe you could take your timeline and add "potential actions taken by creditor" and "how to respond" (debt validation, cease and decist, etc) at each step. I think that would be a great sticky.