Unsecured debts are often sold to debt collection agencies.
Let’s say your credit card balance is $1000. The card company “sells” the debt to a collector. The collector pays the card company $500. The collector will then come after you for the full $1000. If he gets the $1000, he gets to keep $500 profit.
If the collector is unsuccessful, he can sell the debt to ANOTHER collector.
All collectors typically employ a “boiler room” of phone people. These guys are simply given your name, your phone number, and the amount of money you owe. They legally can only call you between the hours of 8 AM and 9 PM, I believe. If you tell them not to call you at work, they must abide by your request.
There are unscrupulous phone collectors who don’t follow the rules. They call any hour of the day or night, call you at work, call your employer, they’d probably call your mother if they could get that information. They threaten all kinds of mayhem, to bully you into paying. I’ve heard of them telling the debtor that the cops have been dispatched, they are enroute to come bust your ass and throw you in jail.
While that is complete bullshit, there are people who believe it, and leave their homes in the middle of the night to escape this supposed incarceration.
(quite frankly, if someone threatened ME with that scenario, I’d laugh in their face, because in SCal, you can’t even get the police to respond to a ROBBERY IN PROGRESS)
If you have ANY income, you might be interested in debt consolidation. There are a lot of scammers trying to get people to sign up with their service, so check out the business thoroughly before you go with this choice. A legitimate debt consolidation service is nonprofit, and your customized plan with them will pay off the debts in full. The service negotiates with the credit card companies to get a lower (MUCH!) interest rate, and gets an agreement with the company to accept the negotiated payment. The service takes all your expenses and income into consideration, and while austere, the budget is livable. Your credit score will ultimately benefit. A scammer consolidation company does NOT work with the credit cards. Instead, your payments go into a savings account the company manages, and after accumulating a percentage of what you owe, will negotiate with the credit cards into accepting a reduced amount to cancel the debt. This hits your credit score HARD.
I used a debt consolidation service, and I cannot recommend them highly enough. With the legitimate service, all calls STOP. The accounts CANNOT be turned over to collection. And in the end, your butt is safe.
~VOW