Today’s blog is going to discuss I very possible strong shift I am seeing coming soon on how debt buyers could care NOTHING about consumers and the steps they are seeming starting to take, especially this company with the impending recession on its way.

When life happens and you have a credit card (or any defaulted loan as well) if you have to or choose to let go and the ramifications that can come from it.


This is something that majority of credit repair companies out there DO NOT tell you and debt settlement companies NEVER tell you BUT it’s in their fine print so the blame gets put on you.

So we are not going to discuss today what could have happened to get you into this situation as it could be many things, inflation and having to choose gas, food etc. over the bill, job issue or health issue.

LEGALLY, In your credit card agreement it states that they have the right to “sell or assign” your account. So when the credit card account ( known as a revolving account ) gets charged off which means 180 days has passed without a payment the account gets “charged off”. This charge off date is the start of the “seven year clock” for it staying on your credit report.

UNDERSTAND the term charge off is more of an accounting term for the credit card companies NOT you.

Before I start writing any blog when I have a topic I always do a little extra research to find out if it’s been talked about it before then read those articles and I am ALWAYS amazed at the amount of incorrect information in them and this is mostly from pretty good sites with fairly good resumes but when they do not seek out an expert for real world advice this is what you get, semi “general” correct information but the important details consumers need and are most likely looking for advice for are incorrect, thus leading consumers to possible bad choices.

So good for you for finding me and this blog and reading it.    =)


It seems Midland funding has greatly cut back on what they are willing to do when offering settlements on the accounts they buy (more on that towards the end of this blog).

SPECIFICALLY I noticed just recently on the accounts they sue consumers on. I was informed they would be happy to offer a 10% discount. That’s a little crazy especially when there are a few little tricks to make sure they don’t get a court order to go to your bank and take out all your money in there. However they are a HUGE company so suing you and waiting and letting the interest build up is their business model (more about debt buyers at end of this blog)


Now back to business, as I said the term/ reporting on your credit of charge off is more of a term for the bank, they are writing the debt off their books as a loss to count it to offset profits which would then off course lower their taxes.

However thanks to the IRS there is a special provision for big business that still allows them to try to recover the FULL amount of the debt you owe. I had researched this a long time ago and to be honest it took a bit of research to find it and too busy to find it again but if you reach out to your CPA if they have a fair amount of experience they probably can find it if you want to read it for yourself to confirm what I am saying.

HOWEVER… if you get a 1099c from the credit card company they legally got rid of the debt and you have to give that to your CPA But will cover that in another blog soon as it IS IMPORTANT!


NOTE: Charge off and “ profit and loss” have the same meaning


Since most of these articles you read are primarily sponsored by the credit bureaus or credit card companies you do not get told the whole story typically or not to what an expert would give you when consulting with them.

As I get paid by no one with me you get the whole story, everyone’s situation is different so I try to break down all the options then typically I would suggest what I believe is the best option for my clients or someone who is seeking advice or guidance.

From there I have then armed you with the information needed to make the decision that is best for you and your family.

Now that you know if you already didn’t that the charge off remains on your credit report for 7 years let’s talk about what is not mentioned by credit repair companies and ESPECIALLY debt settlement companies.

Once the account is charged off the creditor has 4 options:

  • Try to collect on the debt ( on their own or outsourcing it )
  • Keep the debt on their books to offset their profits ( ex: I have personally seen this with Citibank a lot, they are not trying to collect on the debt and literally said to us you can pay it if you want but you don’t have to).
  • File a lawsuit against you to leverage the debt down the road when you get into a better financial position.
  • Sell the debt to a debt buyer/collection agency for less than .05 cents on the dollar.


3 of the largest debt buyers out there are:

  • Midland Funding
  • Portfolio Recovery Associates
  • LVNV Funding


Note: these entities may legally buy the debt from a similar name company that they own for tax purposes so legally they may “only” be the collecting division but their “parent company” owns the debt.


When the collection company owns your debt they have 2 options:

  • Report on your credit to leverage to get you to pay it & try to collect.
  • File a lawsuit against you to leverage the payment in the future.


If you are sued many times you may not actually know you have been sued. It’s not like the movies where someone tracks you down and then hands you a piece of paper saying you have been served.

NOW state protocols may vary but typically according to a process server I interviewed in Dallas, TX they are required to make 3 attempts to serve you at the last known address that the credit card company has on you. and on the last attempt leave a piece of paper on your door that can easily be taken by the wind.

Now as of 2/10/2023 process serving protocols may have changed so for your count/state you may have to do your own research on the protocols.

The problem of course is odds are you no longer living at the location where you were getting your statements or the address the credit card company had on you.

Now it’s my understanding that the original creditors may not bother trying to do a skip trace which is try to locate your current address but I have seen debt buyers take this extra step. They are most likely hoping that the threat of being sued is enough to get you to start paying them.


Now this is where things get a tad weird and logic just does not seem to apply with them so let’s use a mathematical example to help illustrate it.

The charge off debt is a $5000 credit card, the Consumer Financial Protection Bureau has researched that bank sell this uncollected debt for an average of .02-.04 on the dollar.

So for this example then Midland Credit bought the Citibank debt for approximately $100 -$200. However as the new owners of the debt they are entitled to collect the full $5,000 by law.

Now you would think that if a consumer reached out to settle the debt and said they could settle and pay this debt owed for $2000 the debt buyer would be ecstatic since that is approximately a 1000% investment.

Pay $100-$200 and collect $2,000?   Math was never one of my strong suits but I think that’s approximately one hell of a profit margin for a business!

HOWEVER they will flat out say NO to you and offer you a 10% discount off the original amount maybe 20% ( bless their hearts if you know this phrase ). Typically the longer they have it they usually will offer more of a discount.


Now if you’re the proactive type that did the research on what they paid for the account and you going to hit them with that information….. IT DOESN’T MATTER.

You are talking to a low level collection agent outside of the United States, they will tell you that they have no clue about that but their computer system says this is what they are willing to give you.

WHY do they say no you ask? Because they are buying several hundreds of millions of dollars of debt and not everyone wants to or can pay so they take it out on the people who want to settle or try to.

Now at the end of the day a professional will be able to get you a bigger discount than you can yourself but what are they charging? We will cover that in later blogs.

NOW, let’s talk about how things used to be.

In more recent times past debt buyers wanted to buy the debt from a creditor and turn around give a discount and make money as quickly as possible. Those times are changing rapidly it seems.

We are getting close to lawsuit season as I call it as they know you are getting your tax refunds and they could care less about what your plans are with it they want it.

And with all the talk of the recession coming in my 17 years of experience I see them ramping up lawsuits and use it as leverage as once you have a judgement against you it stops a lot of things you want to do to move forward in life.

Awhile back I had a client who had a $6000 credit card lawsuit against him that was maybe 7-8 years old.

He thought because it was so old it would have disappeared like it did on his credit report. When I informed him that’s not how it works he wanted to to get ahold of them to handle it. Law suits (in Texas) can charge 5% interest on a judgement.

When I called the law firm they told me he owed over $36,000 with the interest.

I won’t get into all the crazy details or how I dealt with it but let’s just say the interest was fully waived and he paid approximately $3000. But seeing how these law firm collectors were trained and how they tried to get A LOT more scares me for people who don’t know what can or cannot be done and its only gotten worse.

SO, understand it may only get worse from here I’m sorry to say, DO NOT try this on your own talk to me or talk to at least 2-3 companies who claim they can be of help, listen to what they say and you can smell the sales pitch it you pay attention.

When you call put yourself in the shoes as if you were calling for a friend or family member that you are trying to help. It will help you sniff out the sales pitches.

REMEMBER… no matter what their title is you are talking to someone whose job is to sell you on their services, so understand that. It’s like going to a car dealership and you know that sales person is going to try to get you to buy.

As for me, I look at is as putting good karma out in the world, I will tell you what the options you have available, you may not like any of them BUT as least you know.

Moral of this blog ( as you get tell I get sidetracked on occasion ) is these debt buyers are getting less likely to help you and I expect lawsuits to start ramping up and if it is successfully deleted from your credit report you can still be sued so call someone to discuss your options.

Good luck and hope you reach out to me to give you your realistic options and compare what the other companies try to sell you on since you will now be better educated and more informed!


Wayne @ CreditBureauInc . com   (spaced out to prevent spam)