Types of Creditors

When we discuss creditors we mean the original issuer of credit such as credit cards,

banks and credit unions, not the secondary processors like collection agencies or collection attorneys.  Now, we will go over what types of creditors are available and can they be settled using the debt settlement process.

1) Credit Cards:

A) Most cards are issued through banks.  (MBNA now Bank of America, Citibank, and Bank One) are just some of the names of the leading banks among the 6000 issuers of credit cards.  Most use the VISA or Master Card designation.

B) What happens when the credit card becomes delinquent?

@30 days – a nice letter will be sent asking if you have forgotten your payment.

@90 days – the letters will begin to get more serious and even nastier advising that the account is in a delinquent condition and negative credit repercussions are very possible. They may cancel your card privileges.

@150 days – the clock is ticking for the credit card internal collections department.  They know they only have another 30 days to collect before the 180 day charge-off date.  This is the time we have been waiting for, the account and our cash set aside have been aging and growing.  Soon the first settlement letters will be mailed.  Negotiations begin.

@180 days – If collection or settlement agreement is not reached the company must write off account as a loss and will assign account to a 3rd party collection agency which will receive commissions on any monies collected.

C) Note that Discover and American Express Cards are somewhat different from other credit cards.

–  Discover Cards are the same as other credit cards, except their charge-off date is 210 days.  After this time, settlement negotiations are the same as others.

–  American Express cards are personal accounts that can be handled the same as any other card with up to 50% settlements.  Business accounts are different.  Although the card is in the name of the employee, it is the company that is liable for the debt.  This makes settlements more difficult, but possible.

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