The amount that a debt collector will settle for is often 30% to 50% of the total balance that is owed.
Although some debt collection agencies will accept as little as 20% of the debt owed under specific conditions, and some may insist on 75% to 80% of the debt owed.
And original creditors often push for higher payouts of the debt owed, which can be closer to 50% to 80%, whereas third party debt buyers often have more flexibility.
And older, charged off debts often see and have deeper discounts because debt collection agencies bought the debt for pennies on the dollar.
The worst a debt collector can do is take you to court and sue you in court to obtain a judgement against you.
If the debt collector takes you to court and wins a judgement against you, the debt collector can by court order garnish your wages, levy your bank account or even place a lien on your property.
The debt collector cannot have you arrested or threaten any jail time for unpaid debt.
But you can be sued for the debt you owed.
However the debt collector does not always take someone to court over debt, especially if it's a debt that is a small amount and not worth the court costs.
If the debt collector does sue you and you fail to appear in court, then the judge can place a judgement against you in the debt collectors favor.
That means that if the debt is true and correct and you owe it, the debt collector will automatically win the judgement against you, if you fail to show up to the court for the lawsuit.
Debt collectors will first try to contact you, through mail and phone to try to get you to pay the debt and may even settle with you for less than the full amount.
Some debt collectors buy your debt for pennies on the dollar and will settle for smaller amounts to get their money back and some profit.
But some debt collectors are simply hired by the companies you owe the money to and won't settle for a smaller amount and in that case, you would owe the full amount.
If the debt goes unpaid and it's a large enough amount, the debt collector will take you to court and seek a judgement against you and if they win the judgement, the court may authorize the debt collector to garnish wages, levy bank accounts and even do property liens.
The judge can force your employer to divert a portion of your paycheck directly to the debt collector until the debt is paid off.
The debt collector can also freeze and seize funds from your checking or savings account with a court ordered judgement.
And they can also attach a claim to your real estate or home, which means they get paid out of the proceeds if you ever refinance or sell the home.
Before or during any legal action, with unpaid debt you face several ongoing penalties and consequences, which include destroyed credit score, relentless contact and accruing interest.
Debt collectors report your debt to major credit bureaus, which include Equifax, Experian and TransUnion, which can also prevent you from securing loans, credit cards, buying a car or even renting a home or apartment.
The debt collector can also legally call you repeatedly, send letters and email you until the matter is resolved.
And the original balance that you owe, can grow significantly due to added interest, court costs and collection fees, assuming your original contract permits it.