topic Re: How Does Credit Companies handle Unpaid debt? What is the process in General Credit Topics

How Does Credit Companies handle Unpaid debt? What is the process

terren2000 — Wed, 31 Mar 2010 18:30:19 GMT

meaning, how do they get paid? Do they write it off? Can some1 give me details?

Say I owe JCPenny $2000.00, and I never pay them. Do they write it off and get paid? Or do they take a big loss?

How much is the credit collectors likely to pay for it?

Re: How Does Credit Companies handle Unpaid debt? What is the process

Anonymous — Wed, 31 Mar 2010 20:27:28 GMT

If you don't pay it, you will get a CO and/or a collection on your CR and possibly get sued for what you owe.

If they write it off as bad debt, it does not mean you do not still owe it. The debt never expires until it is paid.

Re: How Does Credit Companies handle Unpaid debt? What is the process

terren2000 — Wed, 31 Mar 2010 20:53:28 GMT

thats not what I maan, sorry, if my question wasnt clear.

Im tryin to see how are the credit companies protecting themselves from loss. Are they insured. And by how much.

Say for instance im Sears. I sell the debt for peanuts. Do I get some protection as Sears, for the debt I just sold? Can I write it off.

Re: How Does Credit Companies handle Unpaid debt? What is the process

LIGHTNIN — Thu, 01 Apr 2010 00:34:34 GMT

Profits and losses works the same for most businesses.

Ok let's says you are Sears.You have a $-1000 debt someone didnt pay,you sell it for +$50, now you have -$950.

You can get a tax break for writing off the $950 because you didnt have that income to being with.

The tax break gave you +$50, so now you have -$900.

You have to make up $900 somewhere, so you raise your store prices to new customers.

So your new customers will have to pay the for what they lost from a CC customer that didnt pay.

Another example.

same with shoplifting, the company raises prices to make up the for the loss from the shoplifters.

This is the way I understand it works,

Re: How Does Credit Companies handle Unpaid debt? What is the process

terren2000 — Thu, 01 Apr 2010 00:59:22 GMT

thanks, gotcha. i always thought they were able to write off the loss somehow and got back the money some through some legal or tax tactic, to get most of there money back. Some type of insurance.

but that clears it up thanks.

Re: How Does Credit Companies handle Unpaid debt? What is the process

LIGHTNIN — Thu, 01 Apr 2010 01:07:35 GMT

No problem, the company gets a very small tax break, but thats all,from what I understand.