Debt Settlement, Collection Agencies, and Your P&L Before Bankruptcy

A recent debtor online posed a question on a bankruptcy forum about releasing personal business information about their profit and loss statement to a collection agency. If you are asking a question about sharing a business profit and loss statement with a collection agency, then an assumption must be made your business is currently in default of a loan or you would not be talking to a collection agency to begin with. How much personal information, like your business profit and loss statement, should you share with a collection agency after defaulting on a debt and before bankruptcy?

Some people put off filing bankruptcy thinking a debt settlement might solve their current financial problems. Sometimes it does, but most often, a debt settlement only postpones the inevitable, especially if the underlying cause of the symptom has not been resolved in the first place.

The collection agency you are trying to resolve a loan issue with should determine whether or not you should share a business profit and loss statement and/or income tax information. Under no circumstance should you have to share personal identifying information to a collection agency other than your name and address.

Understanding the process of debt settlement is paramount in you making the right decision in settling a debt, whether or not you should settle in the beginning, and in determining how much information you give the collection agency for those debt settlement purposes.

When default of a debt is fresh, the original creditor often holds the debt for a certain period of time to see if you are going to catch up on your payments. They may send out notices threatening penalties, fees, and interest to entice you to pay your debt in full. During this time, you as a debtor have little or no chance at debt settlement.

After a while creditors will normally turn the debt over to their in house collection agency in order for them to collect the debt. If the creditor does not have an in house collection agency, they often will hire an outside collection agency to collect for a percent of what is owed. After these second handlers of the debt are brought into the picture, they are given certain criteria the make debt settlement a priority. By this time, the original creditor thinks getting a part of what is owed is better than nothing. You can expect to be threatened by lawsuits from the collection agency if you do not comply with the collection agency demands. You can also expect the original loan to be inflated by interest, penalties, and fees that have been added to bolster their settlement.

The last line of collection activity for a creditor is to write off the loan and sell the debt to junk debt buyers who buy the debt at pennies on the dollar. It is this latter group’s collection agencies who normally push the limits of harassment, and who will think nothing of using any kind of information obtained by a profit and loss statement to gain an advantage for attaching liens from a judgment on personal assets you still own. This group is the easiest to get a debt settlement from, but you will not need a profit and loss statement to get it, especially before bankruptcy.

At this time, filing for bankruptcy protection may be your only defense left against collection agencies, and common sense says you might need a bankruptcy lawyer to help you enough bank.

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