The collection agency industry is a billion dollar industry. According to R.K. Hammer Investment Bankers, income from late fees and over-the-limit fees accounted for $14.8 billion dollars in the year 2004.
A collection account is defined as a delinquent account that has been forwarded to a collection agency, usually when it has become 90 to 120 days late. Creditors send accounts to collection agencies to remove them from their accounts receivables, then write-off the full debt owed as a loss. Creditors benefit in two ways: first, for writing off the debt as a loss on their taxes, and second, when the money is collected which can be recorded as a profit or accounts receivable. Collection accounts are purchased from the original creditor for a fraction of the original amount owed.
When you receive a letter from a collection agency, verify that the company contacting you has a legal right to collect money on your account. A collection agency holds a collection account for a few months, and if they are unsuccessful in collecting on the debt owed, the account is forwarded to another collection agency. This process continues until the account is paid or legal action is taken against you.
Collection agencies obtain […]

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Over the last month you have seen the news about the Federal reserve cutting the interest rates. Every time this happens I get hundreds of calls, from old clients of mine, wondering what the rates are at? What they don’t understand is that the news media is getting this completely wrong. Many people and news experts have a misunderstanding about the change in the federal funds rate and how it affects mortgage rates. Not understanding this can cost you a lot of money on a 30 year mortgage. You need to have an understanding that the Federal Reserve does not determine mortgage rates.Let me explain how mortgage rates are determined. Basically, when you take out a mortgage, the bank or mortgage company is making you a loan at a given interest rate. Sometimes the firm that makes the loan holds onto it, like a local bank. But more often than not, the lender or mortgage company sells that loan to an institution that packages it with other mortgages into what’s known as a mortgage-backed security and then sells that security to investors. That investor, whether it’s a mutual fund or a large institutional investor, earns a return by collecting the […]

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