Credit Debt Trap #8

By Mike Wayman

How are you “sold” to other debt collectors? This is an interesting concept. When you apply for credit one of the things that many people don’t ever realize is that credit issuers have the right to sell or assign your debt for pennies on the dollar to debt collectors. This is how and why many people begin receiving collection notices from agencies that seem to have no relation to the original creditor. The worst part about this whole process is that the collectors can make far more money than the original credit issuer.

If the collector buys your debt for pennies on the dollar and you actually pay the debt the profit margins are enormous. The benefit for the original creditor is that they earn some money from the sale of your debt but they also gain a large tax break. They get to write your debt off as a loss and this really helps credit card companies decrease the taxes they have to pay. It’s a win-win for the credit industry and a big loss for the consumer.

What’s even worse is that when you have a collection, it hurts your credit in two ways. First, you have a negative tradeline from the original credit issuer. Second, you can have a collection for the same debt on your credit from the collection company. This can make the credit repair process exceedingly difficult. If you want help stopping the damage to your credit then call us today and we will help you repair your credit fast.