No way to pay!

[rockyroad]

I've seen posts indicating that collection agencies are much more persistent if you owe them ALOT of money. I'm wondering why that would be the case?
Wouldn't it be more likely for them to collect or negotiate on a debt that is $5-10k vs. a much larger amount?
I owe a large credit card company almost $200k on a biz line of credit. I have no assets and nothing to liquidate to pay them and they are calling relentlessly.
I will definitely be filing at some time in the future, but the main question I have is why they would pursue these larger amounts more agressively than smaller amounts that they are more likely to collect on, if this is a fact?

[lookingforward]

In my experience, I don't think it matters what the amount is. I think it depends on the collection agency and how aggressive they are. I have a couple of accounts that are about the same amount. One with Chase and one with Amex. Chase calls constantly. 20 times a day. All day. Amex just called a few times. Although I think with a balance of 200K on a single account, they would probably treat that more aggressively than usual. Their commission on that would be really high so that would give them an incentive to really push on that account. On the other hand, my smallest amount owed was the first one to call me and is pretty insistent.

[CompTweaker]

one CC account (cant say the name) alleged to be mine, a little over $20,000 was sold to (an anonymous JDB)....long story short, fees tacked onto this debt ran it over $50,000 over the 3 years and they attempted to sue me (filed the complaint) but never served me and now its too late, its past the SOL and has been dismissed.

I think they realized there was some serious FDCPA and FCRA violations, plus they could tell by looking at my assets that they would lose more $$ persuing me than it was worth. And boy was I prepared, I had my answer, affirmative defenses, and counterclaims all laid out and ready to go.

[HHM]

Actually the sweet spot for collections is $2,500 and "under". There are a few of reasons for that.

1. When you consider that debts are sold as a "portfolio" and the yields on portfolios with many smaller debts are much higher than a portfolio of few larger debts.
2. Why is that: when push comes to shove, most people can figure out a way to pay a $2,500 or less debt.
3. Costs of suit are less, for those smaller amounts you can usually go into small claims court.

[treehugger1]

In addition to what HHH stated, I believe the smaller $2K - $3K are easier to resolve if wage garnishment can be attained. In many states writs of garnishment expire after so many days and have to be renewed and re-served on the employer. Bank levies can also be tough in some states. This is especially true in states where a bank levy is a one-time shot, good only the day it is served on the bank. Differenet states have different statutes related to enforcing judgments. The smaller the amounts, the more successful the creditor/CA might be when garnishing wages or bank accounts.

[rockyroad]

I am willing to bet that when you get over about $25K to one creditor you get special attention (or at least not handed off to some really crappy collection agency). Its not the run of the mill collection people that handle your account. What I mean is, its not the Joe Blow idiot who is trying to collect $50 you owe to Finger Hut.

All the creditors I know who I owe large sums >$25K have been very professional, courteous and they are very well versed in collection law. They are wanting to work out something typically and don't really hassle you much. They know when you owe this much its really going to be a BK or law firm that deals with it.

Belive me Big, Nationwide Credit is in NO WAY professional!! What a joke their messages are. They don't even use proper grammar in the messages. I think you've had your share of dealings with these morons, right?

[rockyroad]

I did actually get a couple of calls from James West from Houston (happens to be where I live too.) His messages were "pleasant" however, I never called back.
I am in no position to make any deals. So how long do you think Amex takes to actually to sue?

[rockyroad]

Hmmm...interesting. I did receive a letter on my personal account offering to cut all interest rates and fees if I would work with United Recovery Systems to resolve the debt. I haven't paid in a few months, however that one is not charged off yet, but yeahhhh...right, let me call United right away when I owe 4 times that amount on my Biz card.
These two cards are my only issue, everything else I can deal with and I could probably deal with the personal AMEX if needed, as your friend did. But I can't see paying them at all if I'm going to have to file a BK7 just to rid myself of the personal liability of the 200K balance on the Biz card.

[treehugger1]

BB, I read through the link. WHile it is an argument for not investing in AMEX in these current times, it caused me to stop and think more about how financial institutions relied upon unsecured credit interest.

Here is a thought. The unsecured credit crisis is likely to become much worse in the next 12 - 18 months. First, those that can't pay will continue to walk away or declare BK. Second, those who can afford to pay will probably pay down (or pay off) their unsecured debts and move to a cash economy except for housing and transportation. In both situations, the new consumers unwillingness to take on unsecured credit will result in declining interest revenues for financial institutions. I don't think unsecured credit will disappear, but the true value of companies who bet on the interest from unsecured credit will significantly decline; due to BK and fewer people willing to take on unsecured debt. NEVER underestimate the power of the consumer; solvent or bankrupt.

My roommate recently received a letter from Discover stating that "due to challenging economic times" interest rates on unpaid balances will increase in March. My roomate has the ability to pay the balance off within 6 months, and will probably never use the card again. In the long run, Discover will lose a customer and the potential for interest payments. I seriously doubt that the stock prices of these unsecured lending companies will ever reach the heights they were once at.

It's sad that they want to punish those who are late one or two payments, and now punish those customers who have been faithful for years.

Everyone wants to build up their cash reserves, but the cost of doing so could lead to the future overall decline in value of their corporation. Such short-term reactive business models will get them what they themselves deserve; BK or worthless investments for investors.

[catleg]

treehugger, you're right and what that will mean is not only less business for these "banks" (really credit card issuers that take deposits, not true "banking").
It also means the recession/depression will be longer and deeper because consumer spending won't recover to the previous levels for a long time.

As the baby boomers want to retire, those that can, if they can sell their houses or stock portfolios, .....that will also reduce consumer spending.

It's going to be a tough couple of years here. Forget about hyperinflation bailing us out. We're in a period of massive deflation.

I'm about 90 days late on most of my cards and I'm starting to get settlement offers in the 60%-75% range. That surprised me a little, I thought it would take longer.

I don't think Amex's attitude on collections is from securitization, they all do that, I think it's a heritage of their charge card roots. I do think the securitization is responsible for the reckless overgranting of credit lines.

[treehugger1]

The other thing is that it is likely that as a mass of folks really get set for BK and default, those of us who fell down months ago may not be as "ripe" for pickings as recent defaults might be. Maybe we are ahead of the curve. LOL

At least the big wave (deciding to default) is already behind us and we are sitting on the beach. It's a bit entertaining to be somewhat of an observer.

And , if you go back and read some posts 18 -24 months ago on this forum, many of us stated the housing issue was only the tip of the iceberg for debtors. Everyone was so concerned about "the financial institutions surviving," they forgot about the debtors, especially the unecured debtors.