kane

Sorry this may be a long ass post. I've got some knowlege in this area. I have a friend that used to work for a collection agency and about 5 years ago my mom became disabled, was unable to work and had a lot of creditors coming after her and I was the one that ended up dealing with them.

Much of what he says is true. A lot of them now hire one lawyer (or are owned by a lawyer) so that the letter comes from a law office and looks really bad.

What they will do really depends on how much he owes them. It will cost them anywhere for several hundred to several thousand dollars to take him to court so if he owes anything near or under $1000 the chances are next to none that they will actually sue him. If he owes a large amount like $5K or more they might then go after him. Typically they will get a judgement against him and the first thing they will do is attach his bank accounts so any money he has in the bank will go to them. They will also garnish his wages until the debt is paid off.

If he has any way of paying a decent size monthly payment he should offer them a settlement offer. He can offer them around 10% less than original balance. So if the original credit card had a limit of 2K and he now owes the 4K because of all the fees and interest he can offer them around $1800 and pay it off over 6 months. Just about any collection agency on the planet will accept that. He may have to give them post dated checks for those 6 months to show them his intent on paying it and those 6 months are going to suck, but at least he will be done with it.

If he owes a lot of money and has no way of paying it then he might want to consider bankruptcy.

Tell him to figure how much he makes a month VS how much he would lose to a garnishment. How much they can take varies but the rule of thumb is that it can be up to 25% of his "disposable" income. This means they figure out how much he makes after taxes, subtracts an amount for housing and food and then they can go after up to 25% of what is left. The housing and food thing can vary and may not be what he actually pays, but what the court decides he should pay. Tell him when he makes his settlement offer to let them know how much he makes per month, what his take home is and basically what they would get in a garnishment and he can offer to pay that to them directly instead of having to go through the court.

Most creditors use scare tactics to come after you like this and may never pursue it. They look at the debt and decide what the chance and expense would be that with a judgement and if they would ever recover their money and often they end up just charging it off.

So tell him to tell him to figure out his income and to do some searches on garnishment amounts and decide about how much they would get from him. Then have him call the collection agency and offer up a settlement that is fair and will be paid off in a reasonable amount of time. when he calls have him tell them, "I make this much per week and you would only get around this much in a garnishment and I have no assets." or something along those lines they will know you did your homework and will probably work with you.

however, like I said, if he owes a lot of money they may just come after him in hopes of getting something. If that is the case he should look into a bankruptcy.