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Re: C&D, expired SOL and other ways to be debt free


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Posted by Linda (65.120.51.129) on October 13, 2002 at 13:01:39:

In Reply to: C&D, expired SOL and other ways to be debt free posted by Katherine on October 12, 2002 at 23:12:38:

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“That debt was written off years ago/You bought this debt and made a bad investment.” – The actual term is a charge off. That means the account is placed as an R9 rating (credit goes from R1 to R9—R9 being the worst) and sent to collections. A “write-off” very rarely occurs (usually and only if the original creditor is responsible for payment default). The collection industry may be unpleasant to deal with however it is very necessary. Think about it this way- There are really only about 5 major banks in the world, all of who have many subsidiaries. Say for example you had a credit card issued through ABC Bank, who down the line the line is actually owned by Citibank. You stop paying on your credit card and the balance is 2,000$. Obviously Citibank isn’t going to say “oh well”. They send it to their in-house collections and if they are unsuccessful, the account is then “charged off” meaning sold. Here is where the necessary part comes in. If collection agencies/acquisition firms were abolished nobody would buy our debts – therefore all banks would suffer great losses on a constant basis – therefore banks would stop providing credit because they (being the billion dollar industries they are) wouldn’t even be able to afford to extend of credit. Point being- debt will always be passed on until satisfied to keep credit as it is.
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Where did you get this BS? Yes, banks must make money to continue in business. A debt doesn't become an R9, LOL. R9 is a designation on a credit report for charged-off debt. Charging a debt off is an ACCOUNTING PROCEDURE, and it is what the bank has to do once a debt reaches a specific time frame of delinquency. Once the debt is charged off, the original creditor sells it and forgets it - they have gotten what they could from that debt.

When a collection agency buys a debt, they are gambling that they can wring money out of the debtor, despite whatever circumstance led to the charge off. Fact is, if the debtor has a serious illness or unemployment to deal with they are going to ignore the CA because they are simply surviving at that point - they have no money to pay, nothing even to sue for. You can't get blood out of a turnip.

Linda





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