How much debt would a person have to owe for a collection agency to go to court and sue you?
Sam S asked:
I have a depatment store credit card debt for about $2500 and simply can’t pay it. What I want to know is, how much of a debt would a person have to be in to make it worthwhile for the collection agency to take them to court.
I have a depatment store credit card debt for about $2500 and simply can’t pay it. What I want to know is, how much of a debt would a person have to be in to make it worthwhile for the collection agency to take them to court.
October 9th, 2009 at 10:40 am
Sorry to break it to you but the amount you owe there is reasonable enough for them to sue you.
I’d say anything under 500 just isn’t worth their time and court fees to sue anyone for—not unless you pist them off so much so that they’ll just sue you for the sake of getting even.
October 11th, 2009 at 3:20 am
It is what collection agencies do, so it is always worth their while. Of course, they may take some time to get to you, and during that time, outrageous fees will continue to pile on top of the original debt, and by the time you get to court you may owe much much more than the original debt. You’d best try to settle this now in whatever manner you can before the hole gets deeper.
October 13th, 2009 at 11:53 pm
The amount is unfortunately irrelevant… it all depends on how aggressive your particular credit card company usually is.
The reason why they don’t care how much you owe is because they can tag on all the costs for suing you in court plus add a bunch of late fees, etc. etc.
By the time they are done with you (especially if you are a no show in court) you will owe them more than twice the original amount and they get to garnish your wages (if allowed in your state) and definitely will seize any money they find in your bank accounts. (including overdrafting your accounts if the bank allows it).
October 15th, 2009 at 3:02 am
Collection agencies make their money by going after people, not by writing off bad debt.
The collectors will go after you for the $2,500 balance plus added fees, interest charges, attorney costs, and a whole lot more. I recently read about a consumer who started with a $300 debt and, by the time the collection agency got them to court, it had ballooned to $3,000 with add-on fees.
The damage a collection does to your credit rating lasts a long time too. The best solution is to try negotiating a settlement with the collectors. If it goes to court, it will be impossible for this to turn out well for you. Your wages could be garnished or God knows what.
October 17th, 2009 at 1:23 pm
Any amount.
They sue and win,you pay for it all.
They can send you a 1099-C and you will have to declare that amount on your income taxes as other income.
If they do that,then you have the option of including it as income and not have to pay the card off or you can take up to 3 yrs. to pay the money and file an amended return for the year.
October 17th, 2009 at 6:46 pm
I’ve taken people to court for as little as £101.
October 19th, 2009 at 8:04 pm
The answer is all about context I’m afraid. The answer varies by so much depending upon how long the debt has been around (e.g. highly unlikely that a $50 catalog bill would be chased years later due to costs involved in tracing people, to give a concrete example), how much the debt actually is in total, how much it would cost them to issue proceedings against the agreer. Having said all of that, however, in debt collection, there is one constant: any company will try its utmost to recover debts owed to it, unless the negatives outweigh its gains. I’ve seen companies obtaining reposession orders on only a few pounds worth of outstanding credit. The bottom line is that it is almost certain that a store card debt worth $2500 will be chased by the creditor, as they have relatively little outlay to attempt a recovery in terms of what they would get back.
On a lighter note, please don’t panic at this answer – there are lots of things that you can do here to resolve the situation. It isn’t as black and white as “pay it all” or “involve a collection agency”… there is room for negotiation, lowered interest, reduced settlement sums… tonnes of techniques and strategies that allow you to work WITH your creditor for a favourable outcome for you all.
Good luck!