With consumer debt at an all time high, owing a debt can seem very overwhelming. A great deal of people have looked into the world wide web and have seen advertisements alleging that they can offer debt relief as a quick fix. As alluring as these ads may seem, it is important to be on the lookout for the validity of the claim.

Many of these claim they can offer a quick fix, but that quick fix might be bankruptcy. And while bankruptcy is one way to attack your financial problems, in most cases it should be a last resort. The fact that you claim bankruptcy will stay on your credit report for ten years which means that your chances of getting credit, jobs, a place of residence, or insurance are significantly lowered.

It is always wise to think over other options before deciding to file for bankruptcy. Talk with your creditors. Oftentimes, a re-payment plan can be chisled out that is modified or can be paid in installments. Credit counseling services can work with you and your creditors to work out debt repayment plans.

If you are thinking about a second mortgage, be wary. These loans need your house as collateral. Bankruptcy can put an end to foreclosures, debt collection activities and it may rid you of unsecured debts. Exemptions are also provided that allow you to you hold on to certain assets. However, personal bankruptcy does not usually eliminate child support, fines, taxes, alimony and in some cases student loans.

Usually it will not let you hold on to your property if your creditor has a mortgage or security lien that hasn’t been paid. A relatively recent change in bankruptcy laws makes certain hurdles that you must get through before you can even file for it, no matter what type of bankruptcy. First, you have to get credit counseling from an organization approved by the government within six months before filling.

Keep in mind that in some cases you must pass a test that requires you to confirm that your income level doesn’t exceed a certain amount.

Rapid Recovery Solution is a New York collection agency. This and other unique content ‘collections’ articles are available with free reprint rights.

What are debt collection agencies?

Two possibilities exist.

A few creditors will try to deter a debtor by utilizing a separate company name, address, and phone number for their internal collection departments, with the purpose of giving the impression of an “outside” agency. This strategy is should only be used when the debt is recent (under six months past due.)

Yet the majority of debt collecting activity is done by a third-party collection agency; these are separate from the original creditors, and “work” debts on behalf of various lenders. They may also buy bad debts which have been designated as charge-offs by the original creditor.

This series of articles will be focused on third party debt collection agencies.

How does a debt collection company get money?

Third-party debt collection agencies typically work on commission, this is where they receive a percentage of the amount that they collect. Individual collectors are often paid a low base wage plus commissions based on their personal performance.

A number of companies buy huge groups of charged-off bad debts for a small percentage of the face value (amount owed.) After a debt is sold, the debtor now owes the full amount to the purchaser. Since the chances of recovery decrease substantially with time, an agency might only pay 1% – 5% of face value. The agencies’ profits come from the difference between the purchase price and the amounts that are eventually collected.

How do debt collection agencies work?

The main tools of a debt collection agency are telephone calls and letters.

What is the deal with collections letters?

The 1st demand letter has to say that the recipient has the right to dispute the validity of the debt or request verification of the debt (in writing). Legally, the debt collection company has to send some confirmation after they verif it with the original creditor. Demand letters also must contain the statement that they come from a debt collector, and that any information obtained will be used for the purpose of collecting the debt. Collectors are forbidden to print anything on the outside of the envelope which may indicate or suggest that this is a collection attempt. The return address label must also be discreet, so many companies will just use their company’s initials, or some other nondescript name.

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She used her debit card at a motel in Milwaukee to pay for the state and found on her next month’s bank statement that someone had racked up a $3,500 bill at different hotel of the same brand in Chicago. At first her bank couldn’t, (or wouldn’t) solve the problem, and the hotel accused her of running up the charges. Only after threatening to go to the police and offering proof that she had been out of town for the time did she have the ability to get the charges reversed.

So here, for your reading pleasure, is a list of DON’Ts and DO’s to keep in mind when you use your debit card. Don’t mistakenly believe that your debit card will enjoy the same protections you get from your credit card. If someone steals your credit card number and racks up a fraudulent bill, you will not be held responsible for the illegal charges, not until the card company finishes its investigation, and most likely not at all if they find evidence of true identity theft.

But, if someone takes your debit card information and starts charging away, you can expect to be held responsible, because the money comes straight out of your bank account. Not only are they your funds directly- with no one out there to cover you, but getting the money back can be a timely hassle, easily taking a month, or more to sort through.

Even if your money is only put on freeze temporarily, it can still be harmful to your finances, especially if you do not have a large amount of money to tide you over. On top of this, if the hold is greater than your balance, it can set up an overdraft protection and later transactions can be denied or added to your overdraft fees.

To Be Continued In Part Three…

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