My daughter has moved out of the house and I no longer pay her bills. I am giving her tough love and letting her pay her own bills. She has ran up $8900.00 of credit card debt and cannot pay for them and makes 8.00 an hour. In the State of Alabama how soon will the credit card companies turn it over to a collection agency (which she is already 2 months behind) and how long will it stay on her credit report? Also, they are charging her a $35.00 late fee and interest rate of 29.9 percent – will those additional charges be added to the balance she owes when it goes to the collection agency?
Also, when she applied for a credit card she had a 790 beacon score and they started her out with a $1000.00 credit limit then the next month they increased it to $6,000.00 Back in the 70’s a credit card would give you a limit of $500.00 and would not up the limit till about 6 months later after you have showed them how you will pay them back.
What would you recommend her to do?
A Concerned Mother
Dear Concerned Mother,
It is great that you are showing her tough love. The good news is, she may never do it again! She can learn at a young age about credit and hopefully have this be her only issue.
Unfortunately, there is no set amount of time until companies turn over the account to a collection agency. Except for American Express, it is safe to assume this will be 90-180 days. In a good economy, this will be closer to 180, in one like this, maybe more like 90 days.
After the 180 day past due mark has been met, this will drop off her credit in 7 years. Once it has been turned over to a collection agency, this will remain on her credit report for 7 years as well. Those fees will be added into the principal balance as well.
Tell her to call the credit card company and try to work something out. The main reason why these companies turn over these accounts is because people just don’t communicate. They may cut her off and set up a payment arrangement that she can pay. The most important thing is for her to not just ignore the bills and phone calls.
Melissa Douros Dovco Collection Solutions, Inc.
As the owner of Dovco Collection Solutions, Inc., Melissa Douros uses her eight years of being a collections specialists to offer advice and answer questions pertaining to . With running her own successful collection agency, she seeks to keep debt collectors accountable for their actions and in line with the law.
Do YOU have a question for Melissa? Email her at melissa@dovcocs.
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