Charge off question
Date: Wed, 07/08/2009 - 04:12
Sometimes when a debt is charged off it is "placed" with a colle
Sometimes when a debt is charged off it is "placed" with a collection agency....the original creditor still owns the debt but the collection agency is responsible for collecting it. Other times the debt is sold to junk debt buyer CA's for pennies on the dollar.
It's ok, it's a common misconception. Creditors don't normally s
It's ok, it's a common misconception. Creditors don't normally sell the account until at least 2 years on noncollectability, after all their options have run their course. They pay the debt collector a percentage of what is collected. But they are increasingly opting to sell it much sooner these days. The best way to find out if it is sent out on a contingency basis or sold is to ask the original creditor.
That's why they sell it, just to get at least something from it. And that's why junk debt buyers are officially known as "Purchasers of Distressed Receivables" and other such epithets.
But it's usually 3 to 4 cents on the dollar from what I've seen, at least for the older ones....
Here is a detailed article on the ways of Accounts Receivable Management:
"http://www.allbusiness.com/business-finance/business-loans-business-credit/532626-1.html"
