On a debt collection agency's letter, what does “balance” refer to?
"Without more info to go on (such as a screenshot of the relevant portion of the statement or what country you're in), I will run with the answer that ""balance"" is the amount the collection agency is attempting to collect from you, including any and all fees the agency may have added. One important idea to keep in mind is that depending on how old the debt is, the amount involved, and the importance to the agency to collect it, you may be able to negotiate a settlement for less than the full amount.  This isn't always possible, but sometimes you get lucky, and it doesn't hurt to try. Collection agencies work in several ways.  Some will actually buy the outstanding debt from the original creditor for some percentage of the debt's face value and then take their chances on whether they collect anything at all, while others work on behalf of the creditor and earn some percentage of what they manage to recover.  In the latter case, your chance of negotiating a reduced amount is better, because the agency is being evaluated by the creditor on how quickly and efficiently they collect debts.  An agency that is slower or less effective than another is less likely to continue earning the creditor's business. I hope this helps. Good luck!" The balance is the amount due.
"This does not seem, to me, to be a very good indication regarding the   risk of the person not paying their balances off. If you do not have a source of income then how are you going to repay your debt.  Not to mention there is recource for creditors to garnish wages.  That is not possible if you have no income.  The risk assessment is about the ability of the creditor to recover any moneys loaned and costs and still make a profit. For example, students have their parents pay them some pocket money to   cover for expenses, or a person might be working sporadically on   consulting gigs that do not have a fixed monthly or yearly component. Most credit card companies that are willing to issue to college students will allow you to include money from your parents in your income.  Credit card companies are looking for customers that will carry a balance and incur fees but be able to pay them.  These companies do not make money off of fees and interest that they do not collect.  As such, sporatic work increases risk. Is it possible for people to get approved for unsecured credit cards   if they don't hold (or have not held for some time) a job at the time   of application? I was able to while I was in college.  Though I did have a part time job.  If you can show that you have the ability to pay you can usually get a credit card if you do not have bad credit.  It will probably be high interest and have alot of fees some of them you will have to pay upfront.  But what you probably mean to ask is ""Is it possible to get a no cost unsecured credit card with out a reliable source of income?""  The answer to that is: probably not.  Even the ones that look like they are free probably have hidden fees." "You should hire a lawyer. The fact that they told you your personal information shows that they actually had it, and are not imposters, which is a good thing. The fact that they mislead you means that their intentions are not pure (which is not surprising coming from a collection agency of course). When dealing with collections (or any matter of significance for that matter), don't rely on their recording of the call, because they can always conveniently lose it. Make sure to write down every single detail discussed, including the date and time of the call, and the ID/name of the person on the other side. If possible - make your own recording (notifying them of it of course). It's too late to record the calls now, but do try to reconstruct as much information as possible to provide to your lawyer to deal with it. In the end of the day they will either provide you with the recording (and then you might be surprised to hear that what they said was not in fact what you thought they said, and it was just your wishful thinking, it is very possible to be indeed the case), or claim ""we lost it"" and then it will be a problem to either of you to prove who said what, but they'll have the better hand (having better lawyers) in convincing the court that you're the one trying to avoid paying your debts. That is why proper representation at all stages is important. As to the bankruptcy - it won't help for student loans, student loans is one of the very few types of debts you can't really run away from. You have to solve this, the sooner the better. Get a professional advice. For the future (and for the other readers) - you should have gotten the professional advice before defaulting on these loans, and certainly after the first call." "Several people here have highlighted the incentive/agency problems that tend to naturally arise when securitizing mortgages. However, the market for mortgage-backed securities has existed for decades, and during most of that time these agency problems were held in check. Moreover, academics knew about this problem even before the credit crisis and actually *recommended* the use of trenching in order to avoid the moral hazard problems associated with securitization (see DeMarzo 2005).  So, to give a compelling historical explanation for why the crisis happened *when* it did, you need to explain what changed in the mortgage securitization market to enable these previously unproblematic agency relationships to breakdown.  So what changed? In short, the growth of the market for CDOs (collateralized debt obligations) composed of mortgage-backed securities), and not the MBS market itself. This market grew so rapidly in the mid-2000s because the ratings agencies created an opportunity for banks to take low-rated MBS debt and give it a higher rating by merely repackaging it into a CDO. It was ratings arbitrage, through and through. Explanations that place the brunt of the blame on the GSAs (i.e. Fannie and Freddie) cannot adequately explain why the majority of mortgage-related losses during the credit crisis were concentrated in CDOs of MBSs, and not in the vanilla MBS market.  Here's what happened. Back in the day -- say, pre-early 2000s -- the agency/incentive problems that naturally arise in mortgage securitization were held in check by careful institutional investors who would rigorously assess the default risk of the higher-risk MBS tranches. They had a deep knowledge of the mortgage business. Sometimes they would even go so far as manually examining the loan documentation, the profile of the borrowers, the quality of the collateral, and so on. There were a lot of indiscriminating buyers who were happy to purchase the AAA and AA tranches, but they could afford to be indiscriminating because the banks who were securitizing MBSs knew that without selling to the discriminating buyers of higher-risk debt, they wouldn't be able to break even.   It worked a bit like a market for fine wines. I don't know much about wine, but when I walk into a shop that sells fine wines, I can be reasonably certain that there will be a reasonably strong relationship between price and the quality of the wine. Basically, I get to free-ride off the superior discrimination of the wine connoisseurs who regularly visit the shop.  Once the ratings agencies created the now infamous ""ratings arbitrage"" between the MBS and CDO markets, the market for CDOs on MBSs expanded. As this market grew, these ""discriminating"" buyers became a proportionally smaller part of the MBS market. The folks building CDOs of MBSs didn't know very much about the mortgage business itself; instead, they tended to rely on statistical default models provided by the ratings agencies that predicted the probability of mortgage default based on quantitative variables such as borrowers' credit scores, loan-to-value ratios, etc.   The problem is that these models used historical data that was collected back when the ""discriminating"" institutional investors kept the agency problems in the MBS market in check. The growth of the CDO market spurred even more mortgage securitization, which led lending standards to deteriorate because firms like Countrywide knew that the CDO buyers only cared about credit scores, LTV ratios, etc. However, undiscriminating buyers of MBS were unable to detect these changes in default risk because the models they were using to ""see"" those changes were becoming invalidated by the growth of the CDO market itself  If you want to read more about this, I'd highly recommend MacKenzie's 2011 paper in the American Journal of Sociology [see here]( http://www.sps.ed.ac.uk/__data/assets/pdf_file/0019/36082/CrisisRevised.pdf). It's a detailed historical account of the changes in valuation practices/models used within the MBS and CDO markets, and how these practices became invalidated as the CDO market grew in size.  **TL;DR: the credit ratings created a ""ratings arbitrage"" that the banks took advantage of. They are as much, if not more, at fault as the GSAs.**  For more info on the deterioration in mortgage quality in the mid-2000s, check out:   Keys, Benjamin, Tanmoy Mukherjee, Amit Seru, and Vikrant Vig. 2008. Did Securitization Lead to Lax Screening? Evidence from Subprime Loans.  Rajan, Uday, Amit Seru, and Vikrant Vig. 2008. “The Failure of Models That Predict Failure: Distance, Incentives and Defaults.” SSRN eLibrary (December). http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1296982.  Also, the citation I mentioned above:  DeMarzo, P. (2005) ""The pooling and tranching of securities: a model of informed intermediation"" Review of Economic Studies, 18(1):1-35, 2005" Yea there stock dropped big deal, their former CEO ken Lewis made a massive about of money during the sub prime era.  Not to mention the massive amount of money Anglo mazillo made at country wide which BOA took over.  When BOA foreclosed on people's homes they made even more money selling homes. when the ended mark to mark accounting in march of 09 they got bad assets off their balance sheet.  The stock price means crap, the price of a stock is what the public values u at, make no question they are and have been making money.  As far as ur communist reference u can go fuck yourself I work on the street I don't have time to search the web for the knowledge I've collected working in the industry. You are making an assumption that may not be true: Unbeknownst to me, some apartment debt I paid had already been sold to a collections agency before I actually paid it. Typically debts are sold to a Debt Buyer, whereas a Collection Agency works on commission to collect debts on behalf of the creditor. If your debt was actually sold, you should have been notified in writing of this fact, and who the new creditor was. I suspect your debt was not sold, because if it was the apartment complex would not have been legally allowed to cash your check when you finally paid them. Therefore, it is most likely that the collection agency was working on commission, and the apartment complex never informed them that you had settled your debt. As for what to do about it, here are 3 options, ordered by likelihood of success: Good luck, and if you don't mind, please update us later on what you did and what the result was. Your experience will be helpful for others having this issue in the future. Typically in GnuCash, account balances that exist at the beginning of the time you're keeping records for are balanced by entries in an Equity account “Equity:Opening Balances”, which is part of the default set of accounts created for you. This account is really just a placeholder so that everything balances, and that's perfectly normal. So, just enter “Equity:Opening Balances” as the “other entry” when entering the first, opening balance, transaction in your Liability account for the loan. If you have not already created the liability account, then just use the “Opening Balance” tab of the New Account window to enter the initial balance as you create the account.  (Disclaimer: I have no formal knowledge of accounting; I just use GnuCash and read the users' mailing list.) &gt; After 100 days, we sent a certified letter via USPS. In this letter we included an itemized list of the unpaid projects as well as firmer, more concrete deadlines in which we expected the client to pay.  Interesting idea. I like it :) You should pay things off every month.  You don't want to be paying 10%-25% interest if you don't have to.  If you regularly use you card, the credit agencies can't tell the difference.  The way it works is that every month, they send the credit agencies your current balance and if you paid the last bill on time.  There is nothing that indicates if this is a standing balance, or if you charged all of it since the last payment. Any business that you legitimately owe a debt to can report that to the credit agencies.  Not all of them do.  This includes utilities, cell phone companies, landlords, etc. If any of them report overdue items it will show up on your credit report, and your credit card company can use that to raise you interest rate. Some cards will automatically raise you credit limit.  They are basically looking to make money fro you.  If you often charge near the limit, and pay the minimum balance each month, they may raise your limit to get you to charge more, and pay more interest.  You can also call them and ask.  They have some internal rules to decide if, based on your history with them and your credit history, if you are a good risk.